diff --git a/README.md b/README.md
index b2eff9e..7d28901 100644
--- a/README.md
+++ b/README.md
@@ -66,12 +66,52 @@ e.g.:
 ```
 
 ### `banner`-option
-To add a "banner" prefix to each generated `*.d.ts` file, you can pass a string to this option as shown below. The prefix is quite literally prefixed into the generated file, so please ensure it conforms to the type definition syntax.
+To add a "banner" prefix to each generated `.d.ts` file, you can pass a string to this option as shown below. The prefix is quite literally prefixed into the generated file, so please ensure it conforms to the type definition syntax.
 
 ```js
   { test: /\.css$/, loader: 'typings-for-css-modules?banner="// This file is automatically generated by typings-for-css-modules.\n// Please do not change this file!"' }
 ```
 
+### `pathPrefix`-option
+By default, `.d.ts` files are generated in the same directory as the CSS module source. To place them in a different directory, pass the `pathPrefix` option as a string or function:
+* String:
+  * The path prefix must i) not be absolute, and ii) the imported CSS module must lie within the [webpack context](https://webpack.github.io/docs/configuration.html#context). Otherwise the `.d.ts` will be generated in the same directory as the CSS module, as though the `pathPrefix` option was ignored. The reason here is that there isn't a straightforward compiler configuration that will allow TypeScript to find the type definition files in the above two cases.
+  * Paths satisfying the above constraint result in generated `.d.ts` files placed in a directory of the given name relative to the webpack context, wedged before the module path (see example, next, and compiler configuration below).
+  * For example, if your webpack context is `./src`, the `pathPrefix` option is `generated/styles`, and your CSS module is imported as `component/widget.css`, then the generated file will be `./src/generated/styles/component/widget.d.ts`.
+* Function:
+  * You have full control of the generated `.d.ts` path and filename.
+  * The function interface is given by `(sourcePath: string, contextPath: string) => string` where `sourcePath` is the path to the source CSS module, and `contextPath` is the webpack context path. The function must return the full path (including filename) of the generated `.d.ts` file, or `undefined` to abort with error. The loader will create any intermediate folders as is required to write the generated file.
+
+When placing the `.d.ts` files in a directory separate to the CSS module, you also need to configure the TypeScript compiler to find these type definitions. You can do this by adding a `paths` section to your tsconfig.json `compilerOptions`.
+
+For example, say we have a project having all `.ts` files in the `src` tree, and where generated `.d.ts` files should be placed into the `src/generated` tree. Our basic `tssconfig.json` is then as follows:
+```json
+{
+  "compilerOptions": {
+      "baseUrl": "./src",
+      "paths": {
+        "*": [
+          "*",
+          "generated/*"
+        ]
+      }
+  }
+}
+```
+where it the [webpack context](https://webpack.github.io/docs/configuration.html#context) is also configured to be `path.resolve(__dirname, "src")`.
+
+Finally, when importing your CSS modules, use a path relative to your `baseUrl` path for import. For example, use
+```ts
+// [./src/component/widget.ts]
+import * as styles from "component/widget.css"; // do this
+```
+instead of
+```ts
+// [./src/component/widget.ts]
+import * as styles from "./widget.css"; // don't do this
+```
+otherwise TypeScript may not search the configured paths for the associated `.d.ts` file.
+
 ## Usage
 
 Keep your `webpack.config` as is just instead of using `css-loader` use `typings-for-css-modules-loader`
diff --git a/src/cssModuleToInterface.js b/src/cssModuleToInterface.js
index 5c8ccb2..f43505c 100644
--- a/src/cssModuleToInterface.js
+++ b/src/cssModuleToInterface.js
@@ -28,10 +28,52 @@ export const filterNonWordClasses = (cssModuleKeys) => {
   return [filteredClassNames, nonWordClassNames,];
 };
 
-export const filenameToTypingsFilename = (filename) => {
-  const dirName = path.dirname(filename);
-  const baseName = path.basename(filename);
-  return path.join(dirName, `${baseName}.d.ts`);
+export const filenameToTypingsFilename = (filename, pathPrefix, contextPath) => {
+  // Default implementation: co-locate .d.ts with the resource
+  const pathPrefixCallbackDefault = function (filename) {
+    const dirName = path.dirname(filename);
+    const baseName = path.basename(filename);
+    return path.join(dirName, baseName + '.d.ts');
+  };
+
+  let pathPrefixCallback = pathPrefixCallbackDefault;
+
+  if (pathPrefix) {
+    switch (typeof pathPrefix) {
+    case 'string': {
+      if (pathPrefix.endsWith(path.sep)) {
+        pathPrefix = pathPrefix.slice(0, -1);
+      }
+      let dirName = path.dirname(filename);
+      const baseName = path.basename(filename);
+      // There are three cases here:
+      //  1. filename is within the webpack context: add the prefix
+      if (dirName.startsWith(contextPath)) {
+        dirName = dirName.slice(contextPath.length);
+        pathPrefixCallback = function () {
+          return path.join(contextPath, pathPrefix, dirName, baseName + '.d.ts');
+        };
+      }
+      //  2. pathPrefix is absolute
+      //  3. filename is outside the webpack context
+      else {
+        // Use the default implementation for co-locating the .d.ts
+      }
+      break;
+    }
+
+    case 'function':
+      // Use the user-configured filename mapping function
+      pathPrefixCallback = pathPrefix;
+      break;
+
+    default:
+      // Bad configuration
+      return undefined;
+    }
+  }
+
+  return pathPrefixCallback(filename, contextPath);
 };
 
 export const generateNamedExports = (cssModuleKeys) => {
diff --git a/src/index.js b/src/index.js
index 9893f4c..36074e1 100644
--- a/src/index.js
+++ b/src/index.js
@@ -38,13 +38,16 @@ module.exports = function(...input) {
       return callback(err);
     }
     const filename = this.resourcePath;
-    const cssModuleInterfaceFilename = filenameToTypingsFilename(filename);
+    const cssModuleInterfaceFilename = filenameToTypingsFilename(filename, query.pathPrefix, this.options.context);
+    if (!cssModuleInterfaceFilename) {
+      return callback('invalid typings filename; check your typings-for-css-modules loader configuration.');
+    }
 
     const keyRegex = /"([^\\"]+)":/g;
     let match;
     const cssModuleKeys = [];
 
-    while (match = keyRegex.exec(content)) {
+    while ((match = keyRegex.exec(content))) {
       if (cssModuleKeys.indexOf(match[1]) < 0) {
         cssModuleKeys.push(match[1]);
       }
diff --git a/src/persist.js b/src/persist.js
index 5609a9b..a7de0be 100644
--- a/src/persist.js
+++ b/src/persist.js
@@ -1,7 +1,22 @@
 import fs from 'graceful-fs';
 import os from 'os';
+import path from 'path';
 
 export const writeToFileIfChanged = (filename, content) => {
+  // Create the containing folder, as required
+  const dirName = path.dirname(filename);
+  if (!fs.existsSync(dirName)) {
+    const sep = path.sep;
+    const initDir = path.isAbsolute(dirName) ? sep : '';
+    dirName.split(sep).reduce(function (parentDir, childDir) {
+      const curDir = path.resolve(parentDir, childDir);
+      if (!fs.existsSync(curDir)) {
+        fs.mkdirSync(curDir);
+      }
+      return curDir;
+    }, initDir);
+  }
+
   if (fs.existsSync(filename)) {
     const currentInput = fs.readFileSync(filename, 'utf-8');