diff --git a/packages/angular/build/src/tools/angular/compilation/angular-compilation.ts b/packages/angular/build/src/tools/angular/compilation/angular-compilation.ts
index 00a17ccc453e..1e2a59c5b22a 100644
--- a/packages/angular/build/src/tools/angular/compilation/angular-compilation.ts
+++ b/packages/angular/build/src/tools/angular/compilation/angular-compilation.ts
@@ -52,7 +52,6 @@ export abstract class AngularCompilation {
         suppressOutputPathCheck: true,
         outDir: undefined,
         sourceMap: false,
-        declaration: false,
         declarationMap: false,
         allowEmptyCodegenFiles: false,
         annotationsAs: 'decorators',
diff --git a/packages/angular/build/src/tools/esbuild/angular/compiler-plugin.ts b/packages/angular/build/src/tools/esbuild/angular/compiler-plugin.ts
index af4dcaea01fb..1a5a63577ada 100644
--- a/packages/angular/build/src/tools/esbuild/angular/compiler-plugin.ts
+++ b/packages/angular/build/src/tools/esbuild/angular/compiler-plugin.ts
@@ -733,7 +733,9 @@ function createCompilerOptionsTransformer(
     return {
       ...compilerOptions,
       noEmitOnError: false,
-      composite: false,
+      // TypeScript requires either declaration or composite to be true when isolatedDeclarations is set
+      declaration: compilerOptions.isolatedDeclarations ? compilerOptions.declaration : false,
+      composite: compilerOptions.isolatedDeclarations ? compilerOptions.composite : false,
       inlineSources: !!pluginOptions.sourcemap,
       inlineSourceMap: !!pluginOptions.sourcemap,
       sourceMap: undefined,