diff --git a/change/@fluentui-make-styles-webpack-loader-94516228-2e64-4dc7-b0eb-4b29e75b8697.json b/change/@fluentui-make-styles-webpack-loader-94516228-2e64-4dc7-b0eb-4b29e75b8697.json
new file mode 100644
index 00000000000000..695c011bd26ddf
--- /dev/null
+++ b/change/@fluentui-make-styles-webpack-loader-94516228-2e64-4dc7-b0eb-4b29e75b8697.json
@@ -0,0 +1,7 @@
+{
+  "type": "none",
+  "comment": "update tooling configs",
+  "packageName": "@fluentui/make-styles-webpack-loader",
+  "email": "olfedias@microsoft.com",
+  "dependentChangeType": "none"
+}
diff --git a/packages/make-styles-webpack-loader/.npmignore b/packages/make-styles-webpack-loader/.npmignore
index fa2d3a7f5111ca..e719afb921bc93 100644
--- a/packages/make-styles-webpack-loader/.npmignore
+++ b/packages/make-styles-webpack-loader/.npmignore
@@ -1,4 +1,3 @@
-.cache/
 .storybook/
 .vscode/
 bundle-size/
diff --git a/packages/make-styles-webpack-loader/config/api-extractor.local.json b/packages/make-styles-webpack-loader/config/api-extractor.local.json
index c2ea401c1c3685..7974a129e8a337 100644
--- a/packages/make-styles-webpack-loader/config/api-extractor.local.json
+++ b/packages/make-styles-webpack-loader/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/make-styles-webpack-loader/jest.config.js b/packages/make-styles-webpack-loader/jest.config.js
index ef5e818fec600b..0e79391bed327a 100644
--- a/packages/make-styles-webpack-loader/jest.config.js
+++ b/packages/make-styles-webpack-loader/jest.config.js
@@ -8,7 +8,7 @@ module.exports = {
   preset: '../../jest.preset.js',
   globals: {
     'ts-jest': {
-      tsConfig: '<rootDir>/tsconfig.json',
+      tsConfig: '<rootDir>/tsconfig.spec.json',
       diagnostics: false,
     },
   },
diff --git a/packages/make-styles-webpack-loader/package.json b/packages/make-styles-webpack-loader/package.json
index c2b1d5b323180b..1b80cea781d6a1 100644
--- a/packages/make-styles-webpack-loader/package.json
+++ b/packages/make-styles-webpack-loader/package.json
@@ -17,8 +17,8 @@
     "lint": "just-scripts lint",
     "test": "jest",
     "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/make-styles-webpack-loader/src && yarn docs",
-    "type-check": "tsc -p ./tsconfig.spec.json"
+    "build:local": "tsc -p ./tsconfig.lib.json --module esnext --emitDeclarationOnly && node ../../scripts/typescript/normalize-import --output ./dist/packages/make-styles-webpack-loader/src && yarn docs",
+    "type-check": "tsc -b tsconfig.json"
   },
   "devDependencies": {
     "@fluentui/eslint-plugin": "*",
diff --git a/packages/make-styles-webpack-loader/tsconfig.json b/packages/make-styles-webpack-loader/tsconfig.json
index f8876269793ebc..8dff38e64b0310 100644
--- a/packages/make-styles-webpack-loader/tsconfig.json
+++ b/packages/make-styles-webpack-loader/tsconfig.json
@@ -1,17 +1,22 @@
 {
   "extends": "../../tsconfig.base.json",
-  "include": ["src"],
   "compilerOptions": {
-    "target": "ES2015",
-    "module": "CommonJS",
-    "lib": ["ES2017", "DOM"],
-    "outDir": "dist",
-    "jsx": "react",
-    "declaration": true,
-    "experimentalDecorators": true,
+    "target": "ES2019",
+    "noEmit": true,
+    "isolatedModules": true,
     "importHelpers": true,
+    "jsx": "react",
     "noUnusedLocals": true,
-    "preserveConstEnums": true,
-    "types": ["jest", "custom-global", "inline-style-expand-shorthand", "node"]
-  }
+    "preserveConstEnums": true
+  },
+  "include": [],
+  "files": [],
+  "references": [
+    {
+      "path": "./tsconfig.lib.json"
+    },
+    {
+      "path": "./tsconfig.spec.json"
+    }
+  ]
 }
diff --git a/packages/make-styles-webpack-loader/tsconfig.lib.json b/packages/make-styles-webpack-loader/tsconfig.lib.json
new file mode 100644
index 00000000000000..b54df8cc55e297
--- /dev/null
+++ b/packages/make-styles-webpack-loader/tsconfig.lib.json
@@ -0,0 +1,13 @@
+{
+  "extends": "./tsconfig.json",
+  "compilerOptions": {
+    "noEmit": false,
+    "lib": ["DOM", "ES2019"],
+    "outDir": "dist",
+    "declaration": true,
+    "types": ["static-assets", "environment", "inline-style-expand-shorthand"],
+    "module": "CommonJS"
+  },
+  "exclude": ["**/*.spec.ts", "**/*.spec.tsx", "**/*.test.ts", "**/*.test.tsx"],
+  "include": ["./src/**/*.ts", "./src/**/*.tsx"]
+}
diff --git a/packages/make-styles-webpack-loader/tsconfig.spec.json b/packages/make-styles-webpack-loader/tsconfig.spec.json
index 9d7ad81faf7168..131e01d2839367 100644
--- a/packages/make-styles-webpack-loader/tsconfig.spec.json
+++ b/packages/make-styles-webpack-loader/tsconfig.spec.json
@@ -1,7 +1,9 @@
 {
   "extends": "./tsconfig.json",
   "compilerOptions": {
-    "noEmit": true
+    "module": "CommonJS",
+    "outDir": "dist",
+    "types": ["jest", "node", "inline-style-expand-shorthand"]
   },
-  "include": ["__fixtures__/**/code.ts"]
+  "include": ["**/*.spec.ts", "**/*.spec.tsx", "**/*.test.ts", "**/*.test.tsx", "**/*.d.ts", "__fixtures__/**/code.ts"]
 }