diff --git a/change/@fluentui-keyboard-keys-489ea6dc-51a9-4fa1-8b26-98709142506d.json b/change/@fluentui-keyboard-keys-489ea6dc-51a9-4fa1-8b26-98709142506d.json
new file mode 100644
index 00000000000000..d7f7a0eab844c4
--- /dev/null
+++ b/change/@fluentui-keyboard-keys-489ea6dc-51a9-4fa1-8b26-98709142506d.json
@@ -0,0 +1,7 @@
+{
+  "type": "none",
+  "comment": "update tooling config",
+  "packageName": "@fluentui/keyboard-keys",
+  "email": "olfedias@microsoft.com",
+  "dependentChangeType": "none"
+}
diff --git a/packages/keyboard-keys/.babelrc.json b/packages/keyboard-keys/.babelrc.json
new file mode 100644
index 00000000000000..38bf1f7a945cf8
--- /dev/null
+++ b/packages/keyboard-keys/.babelrc.json
@@ -0,0 +1,3 @@
+{
+  "plugins": ["annotate-pure-calls", "@babel/transform-react-pure-annotations"]
+}
diff --git a/packages/keyboard-keys/.npmignore b/packages/keyboard-keys/.npmignore
index fa2d3a7f5111ca..e719afb921bc93 100644
--- a/packages/keyboard-keys/.npmignore
+++ b/packages/keyboard-keys/.npmignore
@@ -1,4 +1,3 @@
-.cache/
 .storybook/
 .vscode/
 bundle-size/
diff --git a/packages/keyboard-keys/config/api-extractor.local.json b/packages/keyboard-keys/config/api-extractor.local.json
index c2ea401c1c3685..7974a129e8a337 100644
--- a/packages/keyboard-keys/config/api-extractor.local.json
+++ b/packages/keyboard-keys/config/api-extractor.local.json
@@ -1,5 +1,5 @@
 {
   "$schema": "https://developer.microsoft.com/json-schemas/api-extractor/v7/api-extractor.schema.json",
   "extends": "./api-extractor.json",
-  "mainEntryPointFilePath": "<projectFolder>/dist/<unscopedPackageName>/src/index.d.ts"
+  "mainEntryPointFilePath": "<projectFolder>/dist/packages/<unscopedPackageName>/src/index.d.ts"
 }
diff --git a/packages/keyboard-keys/config/tests.js b/packages/keyboard-keys/config/tests.js
new file mode 100644
index 00000000000000..2e211ae9e21420
--- /dev/null
+++ b/packages/keyboard-keys/config/tests.js
@@ -0,0 +1 @@
+/** Jest test setup file. */
diff --git a/packages/keyboard-keys/jest.config.js b/packages/keyboard-keys/jest.config.js
new file mode 100644
index 00000000000000..31e3cab1c6e05c
--- /dev/null
+++ b/packages/keyboard-keys/jest.config.js
@@ -0,0 +1,20 @@
+// @ts-check
+
+/**
+ * @type {jest.InitialOptions}
+ */
+module.exports = {
+  displayName: 'keyboard-keys',
+  preset: '../../jest.preset.js',
+  globals: {
+    'ts-jest': {
+      tsConfig: '<rootDir>/tsconfig.spec.json',
+      diagnostics: false,
+    },
+  },
+  transform: {
+    '^.+\\.tsx?$': 'ts-jest',
+  },
+  coverageDirectory: './coverage',
+  setupFilesAfterEnv: ['./config/tests.js'],
+};
diff --git a/packages/keyboard-keys/package.json b/packages/keyboard-keys/package.json
index a121043649d9fd..94f816db4b4758 100644
--- a/packages/keyboard-keys/package.json
+++ b/packages/keyboard-keys/package.json
@@ -18,7 +18,9 @@
     "just": "just-scripts",
     "lint": "just-scripts lint",
     "docs": "api-extractor run --config=config/api-extractor.local.json --local",
-    "build:local": "tsc -p . --module esnext --emitDeclarationOnly && node ../../scripts/typescript/normalize-import --output dist/keyboard-keys/src && yarn docs"
+    "build:local": "tsc -p ./tsconfig.lib.json --module esnext --emitDeclarationOnly && node ../../scripts/typescript/normalize-import --output ./dist/packages/keyboard-keys/src && yarn docs",
+    "test": "jest --passWithNoTests",
+    "type-check": "tsc -b tsconfig.json"
   },
   "devDependencies": {
     "@fluentui/eslint-plugin": "*",
diff --git a/packages/keyboard-keys/tsconfig.json b/packages/keyboard-keys/tsconfig.json
index 35acdd7315c7fe..8dff38e64b0310 100644
--- a/packages/keyboard-keys/tsconfig.json
+++ b/packages/keyboard-keys/tsconfig.json
@@ -1,17 +1,22 @@
 {
   "extends": "../../tsconfig.base.json",
-  "include": ["src"],
   "compilerOptions": {
-    "target": "ES5",
-    "module": "CommonJS",
-    "lib": ["es5", "dom"],
-    "outDir": "dist",
-    "jsx": "react",
-    "declaration": true,
-    "experimentalDecorators": true,
+    "target": "ES2019",
+    "noEmit": true,
+    "isolatedModules": true,
     "importHelpers": true,
+    "jsx": "react",
     "noUnusedLocals": true,
-    "preserveConstEnums": true,
-    "types": ["custom-global"]
-  }
+    "preserveConstEnums": true
+  },
+  "include": [],
+  "files": [],
+  "references": [
+    {
+      "path": "./tsconfig.lib.json"
+    },
+    {
+      "path": "./tsconfig.spec.json"
+    }
+  ]
 }
diff --git a/packages/keyboard-keys/tsconfig.lib.json b/packages/keyboard-keys/tsconfig.lib.json
new file mode 100644
index 00000000000000..51f5726b71c686
--- /dev/null
+++ b/packages/keyboard-keys/tsconfig.lib.json
@@ -0,0 +1,12 @@
+{
+  "extends": "./tsconfig.json",
+  "compilerOptions": {
+    "noEmit": false,
+    "lib": ["ES2019", "dom"],
+    "outDir": "dist",
+    "declaration": true,
+    "types": ["static-assets", "environment", "inline-style-expand-shorthand"]
+  },
+  "exclude": ["**/*.spec.ts", "**/*.spec.tsx", "**/*.test.ts", "**/*.test.tsx", "**/*.stories.ts", "**/*.stories.tsx"],
+  "include": ["./src/**/*.ts", "./src/**/*.tsx"]
+}
diff --git a/packages/keyboard-keys/tsconfig.spec.json b/packages/keyboard-keys/tsconfig.spec.json
new file mode 100644
index 00000000000000..28fa5226de4204
--- /dev/null
+++ b/packages/keyboard-keys/tsconfig.spec.json
@@ -0,0 +1,9 @@
+{
+  "extends": "./tsconfig.json",
+  "compilerOptions": {
+    "module": "CommonJS",
+    "outDir": "dist",
+    "types": ["jest", "node", "inline-style-expand-shorthand"]
+  },
+  "include": ["**/*.spec.ts", "**/*.spec.tsx", "**/*.test.ts", "**/*.test.tsx", "**/*.d.ts"]
+}