diff --git a/packages/@ngtools/webpack/src/plugin.ts b/packages/@ngtools/webpack/src/plugin.ts
index 60da107cb4..87e729efe4 100644
--- a/packages/@ngtools/webpack/src/plugin.ts
+++ b/packages/@ngtools/webpack/src/plugin.ts
@@ -2,6 +2,7 @@
 import * as fs from 'fs';
 import * as path from 'path';
 import * as ts from 'typescript';
+import * as SourceMap from 'source-map';
 
 const {__NGTOOLS_PRIVATE_API_2} = require('@angular/compiler-cli');
 const ContextElementDependency = require('webpack/lib/dependencies/ContextElementDependency');
@@ -36,6 +37,9 @@ export interface AotPluginOptions {
 }
 
 
+const inlineSourceMapRe = /\/\/# sourceMappingURL=data:application\/json;base64,([\s\S]+)$/;
+
+
 export class AotPlugin implements Tapable {
   private _options: AotPluginOptions;
 
@@ -342,6 +346,30 @@ export class AotPlugin implements Tapable {
     });
   }
 
+  private _translateSourceMap(sourceText: string, fileName: string,
+                              {line, character}: {line: number, character: number}) {
+    const match = sourceText.match(inlineSourceMapRe);
+
+    if (!match) {
+      return {line, character, fileName};
+    }
+
+    // On any error, return line and character.
+    try {
+      const sourceMapJson = JSON.parse(Buffer.from(match[1], 'base64').toString());
+      const consumer = new SourceMap.SourceMapConsumer(sourceMapJson);
+
+      const original = consumer.originalPositionFor({ line, column: character });
+      return {
+        line: original.line,
+        character: original.column,
+        fileName: original.source || fileName
+      };
+    } catch (e) {
+      return {line, character, fileName};
+    }
+  }
+
   diagnose(fileName: string) {
     if (this._diagnoseFiles[fileName]) {
       return;
@@ -349,9 +377,9 @@ export class AotPlugin implements Tapable {
     this._diagnoseFiles[fileName] = true;
 
     const sourceFile = this._program.getSourceFile(fileName);
-      if (!sourceFile) {
-        return;
-      }
+    if (!sourceFile) {
+      return;
+    }
 
     const diagnostics: ts.Diagnostic[] = []
       .concat(
@@ -364,9 +392,14 @@ export class AotPlugin implements Tapable {
     if (diagnostics.length > 0) {
       const message = diagnostics
         .map(diagnostic => {
-          const {line, character} = diagnostic.file.getLineAndCharacterOfPosition(diagnostic.start);
+          const position = diagnostic.file.getLineAndCharacterOfPosition(diagnostic.start);
+
+          const sourceText = diagnostic.file.getFullText();
+          let {line, character, fileName} = this._translateSourceMap(sourceText,
+            diagnostic.file.fileName, position);
+
           const message = ts.flattenDiagnosticMessageText(diagnostic.messageText, '\n');
-          return `${diagnostic.file.fileName} (${line + 1},${character + 1}): ${message})`;
+          return `${fileName} (${line + 1},${character + 1}): ${message}`;
         })
         .join('\n');
       this._compilation.errors.push(message);
@@ -404,6 +437,15 @@ export class AotPlugin implements Tapable {
         });
       })
       .then(() => {
+        // Get the ngfactory that were created by the previous step, and add them to the root
+        // file path (if those files exists).
+        const newRootFilePath = this._compilerHost.getChangedFilePaths()
+          .filter(x => x.match(/\.ngfactory\.ts$/));
+        // Remove files that don't exist anymore, and add new files.
+        this._rootFilePath = this._rootFilePath
+          .filter(x => this._compilerHost.fileExists(x))
+          .concat(newRootFilePath);
+
         // Create a new Program, based on the old one. This will trigger a resolution of all
         // transitive modules, which include files that might just have been generated.
         // This needs to happen after the code generator has been created for generated files