diff --git a/NuGet.config b/NuGet.config
index 0fd623ffdd..3957d769d2 100644
--- a/NuGet.config
+++ b/NuGet.config
@@ -1,6 +1,8 @@
 <?xml version="1.0" encoding="utf-8"?>
 <configuration>
   <packageSources>
+    <add key="dotnet-core" value="https://dotnet.myget.org/F/dotnet-core/api/v3/index.json" />
+    <add key="nugetbuild" value="https://www.myget.org/F/nugetbuild/api/v3/index.json" />
     <add key="AspNetCore" value="https://dotnet.myget.org/F/aspnetcore-ci-dev/api/v3/index.json" />
     <add key="NuGet" value="https://api.nuget.org/v3/index.json" />
   </packageSources>
diff --git a/src/Microsoft.DotNet.Watcher.Tools/CommandLineOptions.cs b/src/Microsoft.DotNet.Watcher.Tools/CommandLineOptions.cs
index dfd27756bd..08c9b473f5 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/CommandLineOptions.cs
+++ b/src/Microsoft.DotNet.Watcher.Tools/CommandLineOptions.cs
@@ -12,6 +12,7 @@ namespace Microsoft.DotNet.Watcher
 {
     internal class CommandLineOptions
     {
+        public string Project { get; private set; }
         public bool IsHelp { get; private set; }
         public bool IsQuiet { get; private set; }
         public bool IsVerbose { get; private set; }
@@ -30,6 +31,8 @@ namespace Microsoft.DotNet.Watcher
             };
 
             app.HelpOption("-?|-h|--help");
+            var optProjects = app.Option("-p|--project", "The project to watch",
+                CommandOptionType.SingleValue); // TODO multiple shouldn't be too hard to support
             var optQuiet = app.Option("-q|--quiet", "Suppresses all output except warnings and errors",
                 CommandOptionType.NoValue);
             var optVerbose = app.Option("-v|--verbose", "Show verbose output",
@@ -58,6 +61,7 @@ namespace Microsoft.DotNet.Watcher
 
             return new CommandLineOptions
             {
+                Project = optProjects.Value(),
                 IsQuiet = optQuiet.HasValue(),
                 IsVerbose = optVerbose.HasValue(),
                 RemainingArguments = app.RemainingArguments,
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/FileSetWatcher.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/FileSetWatcher.cs
index a1f56d9650..b97b547a52 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/FileSetWatcher.cs
+++ b/src/Microsoft.DotNet.Watcher.Tools/Internal/FileSetWatcher.cs
@@ -10,13 +10,14 @@ namespace Microsoft.DotNet.Watcher.Internal
 {
     public class FileSetWatcher : IDisposable
     {
-        private readonly IFileWatcher _fileWatcher;
+        private readonly FileWatcher _fileWatcher = new FileWatcher();
         private readonly IFileSet _fileSet;
 
         public FileSetWatcher(IFileSet fileSet)
         {
+            Ensure.NotNull(fileSet, nameof(fileSet));
+
             _fileSet = fileSet;
-            _fileWatcher = new FileWatcher();
         }
 
         public async Task<string> GetChangedFileAsync(CancellationToken cancellationToken)
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher.cs
index 79036c28de..20840f40b9 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher.cs
+++ b/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher.cs
@@ -8,7 +8,7 @@ using System.Linq;
 
 namespace Microsoft.DotNet.Watcher.Internal
 {
-    public class FileWatcher : IFileWatcher
+    public class FileWatcher
     {
         private bool _disposed;
 
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher/PollingFileWatcher.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher/PollingFileWatcher.cs
index 9ca5084347..d26dcc54f2 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher/PollingFileWatcher.cs
+++ b/src/Microsoft.DotNet.Watcher.Tools/Internal/FileWatcher/PollingFileWatcher.cs
@@ -182,6 +182,11 @@ namespace Microsoft.DotNet.Watcher.Internal
 
         private void ForeachEntityInDirectory(DirectoryInfo dirInfo, Action<FileSystemInfo> fileAction)
         {
+            if (!dirInfo.Exists)
+            {
+                return;
+            }
+            
             var entities = dirInfo.EnumerateFileSystemInfos("*.*");
             foreach (var entity in entities)
             {
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/IFileWatcher.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/IFileWatcher.cs
deleted file mode 100644
index 1e43363789..0000000000
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/IFileWatcher.cs
+++ /dev/null
@@ -1,14 +0,0 @@
-// Copyright (c) .NET Foundation. All rights reserved.
-// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
-
-using System;
-
-namespace Microsoft.DotNet.Watcher.Internal
-{
-    public interface IFileWatcher : IDisposable
-    {
-        event Action<string> OnFileChange;
-
-        void WatchDirectory(string directory);
-    }
-}
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/IncludeContextExtensions.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/IncludeContextExtensions.cs
deleted file mode 100644
index bd7cf0b8ad..0000000000
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/IncludeContextExtensions.cs
+++ /dev/null
@@ -1,21 +0,0 @@
-// Copyright (c) .NET Foundation. All rights reserved.
-// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
-
-using System.Collections.Generic;
-using System.Linq;
-using Microsoft.DotNet.ProjectModel.Files;
-
-namespace Microsoft.DotNet.Watcher.Internal
-{
-    internal static class IncludeContextExtensions
-    {
-        public static IEnumerable<string> ResolveFiles(this IncludeContext context)
-        {
-            Ensure.NotNull(context, nameof(context));
-
-            return IncludeFilesResolver
-                .GetIncludeFiles(context, "/", diagnostics: null)
-                .Select(f => f.SourcePath);
-        }
-    }
-}
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/MsBuildFileSetFactory.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/MsBuildFileSetFactory.cs
new file mode 100644
index 0000000000..f40a43732a
--- /dev/null
+++ b/src/Microsoft.DotNet.Watcher.Tools/Internal/MsBuildFileSetFactory.cs
@@ -0,0 +1,164 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.Diagnostics;
+using System.IO;
+using System.Linq;
+using System.Reflection;
+using System.Threading;
+using System.Threading.Tasks;
+using Microsoft.DotNet.Cli.Utils;
+using Microsoft.DotNet.Watcher.Tools;
+using Microsoft.Extensions.Logging;
+
+namespace Microsoft.DotNet.Watcher.Internal
+{
+    public class MsBuildFileSetFactory : IFileSetFactory
+    {
+        private const string ProjectExtensionFileExtension = ".dotnetwatch.targets";
+        private const string WatchTargetsFileName = "DotNetWatchCommon.targets";
+        private readonly ILogger _logger;
+        private readonly string _projectFile;
+        private readonly string _watchTargetsDir;
+        private readonly OutputSink _outputSink;
+
+        public MsBuildFileSetFactory(ILogger logger, string projectFile)
+            : this(logger, projectFile, new OutputSink())
+        {
+        }
+
+        // output sink is for testing
+        internal MsBuildFileSetFactory(ILogger logger, string projectFile, OutputSink outputSink)
+        {
+            Ensure.NotNull(logger, nameof(logger));
+            Ensure.NotNullOrEmpty(projectFile, nameof(projectFile));
+            Ensure.NotNull(outputSink, nameof(outputSink));
+
+            _logger = logger;
+            _projectFile = projectFile;
+            _watchTargetsDir = FindWatchTargetsDir();
+            _outputSink = outputSink;
+        }
+
+        internal List<string> BuildFlags { get; } = new List<string>
+        {
+            "/nologo",
+            "/v:n",
+            "/t:GenerateWatchList",
+            "/p:DotNetWatchBuild=true", // extensibility point for users
+            "/p:DesignTimeBuild=true", // don't do expensive things
+        };
+
+        public async Task<IFileSet> CreateAsync(CancellationToken cancellationToken)
+        {
+            EnsureInitialized();
+
+            var watchList = Path.GetTempFileName();
+            try
+            {
+                var projectDir = Path.GetDirectoryName(_projectFile);
+
+                while (true)
+                {
+                    cancellationToken.ThrowIfCancellationRequested();
+
+#if DEBUG
+                    var stopwatch = new Stopwatch();
+                    stopwatch.Start();
+#endif
+                    var capture = _outputSink.StartCapture();
+                    // TODO adding files doesn't currently work. Need to provide a way to detect new files
+                    // find files
+                    var exitCode = Command.CreateDotNet("msbuild",
+                        new[]
+                        {
+                            _projectFile,
+                            $"/p:_DotNetWatchTargetsLocation={_watchTargetsDir}", // add our dotnet-watch targets
+                            $"/p:_DotNetWatchListFile={watchList}",
+                        }.Concat(BuildFlags))
+                        .CaptureStdErr()
+                        .CaptureStdOut()
+                        .OnErrorLine(l => capture.WriteErrorLine(l))
+                        .OnOutputLine(l => capture.WriteOutputLine(l))
+                        .WorkingDirectory(projectDir)
+                        .Execute()
+                        .ExitCode;
+
+                    if (exitCode == 0)
+                    {
+                        var files = File.ReadAllLines(watchList)
+                                .Select(l => l?.Trim())
+                                .Where(l => !string.IsNullOrEmpty(l));
+
+                        var fileset = new FileSet(files);
+
+#if DEBUG
+                        _logger.LogDebug(string.Join(Environment.NewLine, fileset));
+                        Debug.Assert(files.All(Path.IsPathRooted), "All files should be rooted paths");
+                        stopwatch.Stop();
+                        _logger.LogDebug("Gathered project information in {time}ms", stopwatch.ElapsedMilliseconds);
+#endif
+
+                        return fileset;
+                    }
+
+                    _logger.LogError($"Error(s) finding watch items project file '{Path.GetFileName(_projectFile)}': ");
+                    _logger.LogError(capture.GetAllLines("[MSBUILD] : "));
+                    _logger.LogInformation("Fix the error to continue.");
+
+                    var fileSet = new FileSet(new[] { _projectFile });
+
+                    using (var watcher = new FileSetWatcher(fileSet))
+                    {
+                        await watcher.GetChangedFileAsync(cancellationToken);
+
+                        _logger.LogInformation($"File changed: {_projectFile}");
+                    }
+                }
+            }
+            finally
+            {
+                File.Delete(watchList);
+            }
+        }
+
+        // Ensures file exists in $(MSBuildProjectExtensionsPath)/$(MSBuildProjectFile).dotnetwatch.targets
+        private void EnsureInitialized()
+        {
+            // default value for MSBuildProjectExtensionsPath.
+            var projectExtensionsPath = Path.Combine(Path.GetDirectoryName(_projectFile), "obj");
+
+            // see https://github.com/Microsoft/msbuild/blob/bf9b21cc7869b96ea2289ff31f6aaa5e1d525a26/src/XMakeTasks/Microsoft.Common.targets#L127
+            var projectExtensionFile = Path.Combine(projectExtensionsPath, Path.GetFileName(_projectFile) + ProjectExtensionFileExtension);
+
+            if (!File.Exists(projectExtensionFile))
+            {
+                // ensure obj folder is available
+                Directory.CreateDirectory(Path.GetDirectoryName(projectExtensionFile));
+
+                using (var fileStream = new FileStream(projectExtensionFile, FileMode.Create))
+                using (var assemblyStream = GetType().GetTypeInfo().Assembly.GetManifestResourceStream("dotnetwatch.targets"))
+                {
+                    assemblyStream.CopyTo(fileStream);
+                }
+            }
+        }
+
+        private string FindWatchTargetsDir()
+        {
+            var assemblyDir = Path.GetDirectoryName(GetType().GetTypeInfo().Assembly.Location);
+            var searchPaths = new[]
+            {
+                AppContext.BaseDirectory,
+                assemblyDir,
+                Path.Combine(assemblyDir, "../../tools"), // from nuget cache
+                Path.Combine(assemblyDir, "tools") // from local build
+            };
+
+            var targetPath = searchPaths.Select(p => Path.Combine(p, WatchTargetsFileName)).First(File.Exists);
+            return Path.GetDirectoryName(targetPath);
+        }
+    }
+}
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/MsBuildProjectFinder.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/MsBuildProjectFinder.cs
new file mode 100644
index 0000000000..ff3f45b66b
--- /dev/null
+++ b/src/Microsoft.DotNet.Watcher.Tools/Internal/MsBuildProjectFinder.cs
@@ -0,0 +1,57 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.IO;
+using System.Linq;
+using Microsoft.DotNet.Cli.Utils;
+using Microsoft.DotNet.Watcher.Tools;
+
+namespace Microsoft.DotNet.Watcher.Internal
+{
+    internal class MsBuildProjectFinder
+    {
+        /// <summary>
+        /// Finds a compatible MSBuild project.
+        /// <param name="searchBase">The base directory to search</param>
+        /// <param name="project">The filename of the project. Can be null.</param>
+        /// </summary>
+        public static string FindMsBuildProject(string searchBase, string project)
+        {
+            Ensure.NotNullOrEmpty(searchBase, nameof(searchBase));
+
+            var projectPath = project ?? searchBase;
+
+            if (!Path.IsPathRooted(projectPath))
+            {
+                projectPath = Path.Combine(searchBase, projectPath);
+            }
+
+            if (Directory.Exists(projectPath))
+            {
+                var projects = Directory.EnumerateFileSystemEntries(projectPath, "*.*proj", SearchOption.TopDirectoryOnly)
+                    .Where(f => !".xproj".Equals(Path.GetExtension(f), StringComparison.OrdinalIgnoreCase))
+                    .ToList();
+
+                if (projects.Count > 1)
+                {
+                    throw new GracefulException(Resources.FormatError_MultipleProjectsFound(projectPath));
+                }
+
+                if (projects.Count == 0)
+                {
+                    throw new GracefulException(Resources.FormatError_NoProjectsFound(projectPath));
+                }
+
+                return projects[0];
+            }
+
+            if (!File.Exists(projectPath))
+            {
+                throw new GracefulException(Resources.FormatError_ProjectPath_NotFound(projectPath));
+            }
+
+            return projectPath;
+        }
+    }
+}
\ No newline at end of file
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/OutputSink.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/OutputSink.cs
new file mode 100644
index 0000000000..aa764437ad
--- /dev/null
+++ b/src/Microsoft.DotNet.Watcher.Tools/Internal/OutputSink.cs
@@ -0,0 +1,27 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.Linq;
+
+namespace Microsoft.DotNet.Watcher.Internal
+{
+    internal class OutputSink
+    {
+        public OutputCapture Current { get; private set; }
+        public OutputCapture StartCapture()
+        {
+            return (Current = new OutputCapture());
+        }
+
+        public class OutputCapture
+        {
+            private readonly List<string> _lines = new List<string>();
+            public IEnumerable<string> Lines => _lines;
+            public void WriteOutputLine(string line) => _lines.Add(line);
+            public void WriteErrorLine(string line) => _lines.Add(line);
+            public string GetAllLines(string prefix) => string.Join(Environment.NewLine, _lines.Select(l => prefix + l));
+        }
+    }
+}
\ No newline at end of file
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/Project.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/Project.cs
deleted file mode 100644
index 8485cc331b..0000000000
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/Project.cs
+++ /dev/null
@@ -1,74 +0,0 @@
-// Copyright (c) .NET Foundation. All rights reserved.
-// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
-
-using System.Collections.Generic;
-using System.IO;
-using System.Linq;
-using Microsoft.DotNet.ProjectModel.Graph;
-
-namespace Microsoft.DotNet.Watcher.Internal
-{
-    public class Project
-    {
-        public Project(ProjectModel.Project runtimeProject)
-        {
-            ProjectFile = runtimeProject.ProjectFilePath;
-            ProjectDirectory = runtimeProject.ProjectDirectory;
-
-            var compilerOptions = runtimeProject.GetCompilerOptions(targetFramework: null, configurationName: null);
-
-            var filesToWatch = new List<string>() { runtimeProject.ProjectFilePath };
-            if (compilerOptions?.CompileInclude != null)
-            {
-                filesToWatch.AddRange(compilerOptions.CompileInclude.ResolveFiles());
-            }
-            else
-            {
-                filesToWatch.AddRange(runtimeProject.Files.SourceFiles);
-            }
-
-            if (compilerOptions?.EmbedInclude != null)
-            {
-                filesToWatch.AddRange(compilerOptions.EmbedInclude.ResolveFiles());
-            }
-            else
-            {
-                // For resource files the key is the name of the file, not the value
-                filesToWatch.AddRange(runtimeProject.Files.ResourceFiles.Keys);
-            }
-
-            filesToWatch.AddRange(runtimeProject.Files.SharedFiles);
-            filesToWatch.AddRange(runtimeProject.Files.PreprocessSourceFiles);
-
-            Files = filesToWatch;
-
-            var projectLockJsonPath = Path.Combine(runtimeProject.ProjectDirectory, "project.lock.json");
-
-            if (File.Exists(projectLockJsonPath))
-            {
-                var lockFile = LockFileReader.Read(projectLockJsonPath, designTime: false);
-                ProjectDependencies = lockFile.ProjectLibraries
-                    .Where(dep => !string.IsNullOrEmpty(dep.Path)) // The dependency path is null for xproj -> csproj reference
-                    .Select(dep => GetProjectRelativeFullPath(dep.Path))
-                    .ToList();
-            }
-            else
-            {
-                ProjectDependencies = new string[0];
-            }
-        }
-
-        public IEnumerable<string> ProjectDependencies { get; private set; }
-
-        public IEnumerable<string> Files { get; private set; }
-
-        public string ProjectFile { get; private set; }
-
-        public string ProjectDirectory { get; private set; }
-
-        private string GetProjectRelativeFullPath(string path)
-        {
-            return Path.GetFullPath(Path.Combine(ProjectDirectory, path));
-        }
-    }
-}
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectJsonFileSet.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectJsonFileSet.cs
deleted file mode 100644
index c9d67daf5c..0000000000
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectJsonFileSet.cs
+++ /dev/null
@@ -1,95 +0,0 @@
-// Copyright (c) .NET Foundation. All rights reserved.
-// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
-
-using System;
-using System.Collections;
-using System.Collections.Generic;
-
-namespace Microsoft.DotNet.Watcher.Internal
-{
-    public class ProjectJsonFileSet : IFileSet
-    {
-        private readonly string _projectFile;
-        private ISet<string> _currentFiles;
-
-        public ProjectJsonFileSet(string projectFile)
-        {
-            _projectFile = projectFile;
-        }
-
-        public bool Contains(string filePath)
-        {
-            // if it was in the original list of files we were watching                 
-            if (_currentFiles?.Contains(filePath) == true)
-            {
-                return true;
-            }
-
-            // It's possible the new file was not in the old set but will be in the new set.
-            // Additions should be considered part of this.
-            RefreshFileList();
-
-            return _currentFiles.Contains(filePath);
-        }
-
-        public IEnumerator<string> GetEnumerator()
-        {
-            EnsureInitialized();
-            return _currentFiles.GetEnumerator();
-        }
-
-        IEnumerator IEnumerable.GetEnumerator()
-        {
-            EnsureInitialized();
-            return _currentFiles.GetEnumerator();
-        }
-
-        private void EnsureInitialized()
-        {
-            if (_currentFiles == null)
-            {
-                RefreshFileList();
-            }
-        }
-
-        private void RefreshFileList()
-        {
-            _currentFiles = new HashSet<string>(FindFiles(), StringComparer.OrdinalIgnoreCase);
-        }
-
-        private IEnumerable<string> FindFiles()
-        {
-            var projects = new HashSet<string>(); // temporary store to prevent re-parsing a project multiple times
-            return GetProjectFilesClosure(_projectFile, projects);
-        }
-
-        private IEnumerable<string> GetProjectFilesClosure(string projectFile, ISet<string> projects)
-        {
-            if (projects.Contains(projectFile))
-            {
-                yield break;
-            }
-
-            projects.Add(projectFile);
-
-            Project project;
-            string errors;
-
-            if (ProjectReader.TryReadProject(projectFile, out project, out errors))
-            {
-                foreach (var file in project.Files)
-                {
-                    yield return file;
-                }
-
-                foreach (var dependency in project.ProjectDependencies)
-                {
-                    foreach (var file in GetProjectFilesClosure(dependency, projects))
-                    {
-                        yield return file;
-                    }
-                }
-            }
-        }
-    }
-}
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectJsonFileSetFactory.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectJsonFileSetFactory.cs
deleted file mode 100644
index 419776d4dc..0000000000
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectJsonFileSetFactory.cs
+++ /dev/null
@@ -1,51 +0,0 @@
-// Copyright (c) .NET Foundation. All rights reserved.
-// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
-
-using System.Threading;
-using System.Threading.Tasks;
-using Microsoft.Extensions.Logging;
-
-namespace Microsoft.DotNet.Watcher.Internal
-{
-    public class ProjectJsonFileSetFactory : IFileSetFactory
-    {
-        private readonly ILogger _logger;
-        private readonly string _projectFile;
-        public ProjectJsonFileSetFactory(ILogger logger, string projectFile)
-        {
-            Ensure.NotNull(logger, nameof(logger));
-            Ensure.NotNullOrEmpty(projectFile, nameof(projectFile));
-
-            _logger = logger;
-            _projectFile = projectFile;
-        }
-
-        public async Task<IFileSet> CreateAsync(CancellationToken cancellationToken)
-        {
-            while (true)
-            {
-                cancellationToken.ThrowIfCancellationRequested();
-
-                Project project;
-                string errors;
-                if (ProjectReader.TryReadProject(_projectFile, out project, out errors))
-                {
-                    return new ProjectJsonFileSet(_projectFile);
-                }
-
-                _logger.LogError($"Error(s) reading project file '{_projectFile}': ");
-                _logger.LogError(errors);
-                _logger.LogInformation("Fix the error to continue.");
-
-                var fileSet = new FileSet(new[] { _projectFile });
-
-                using (var watcher = new FileSetWatcher(fileSet))
-                {
-                    await watcher.GetChangedFileAsync(cancellationToken);
-
-                    _logger.LogInformation($"File changed: {_projectFile}");
-                }
-            }
-        }
-    }
-}
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectReaderUtils.cs b/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectReaderUtils.cs
deleted file mode 100644
index ffd2e012f4..0000000000
--- a/src/Microsoft.DotNet.Watcher.Tools/Internal/ProjectReaderUtils.cs
+++ /dev/null
@@ -1,88 +0,0 @@
-// Copyright (c) .NET Foundation. All rights reserved.
-// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
-
-using System;
-using System.Linq;
-using System.Text;
-
-namespace Microsoft.DotNet.Watcher.Internal
-{
-    public class ProjectReader
-    {
-        public static bool TryReadProject(string projectFile, out Project project, out string errors)
-        {
-            errors = null;
-            project = null;
-
-            ProjectModel.Project runtimeProject;
-            if (!TryGetProject(projectFile, out runtimeProject, out errors))
-            {
-                return false;
-            }
-
-            try
-            {
-                project = new Project(runtimeProject);
-            }
-            catch (Exception ex)
-            {
-                errors = CollectMessages(ex);
-                return false;
-            }
-
-            return true;
-        }
-
-        private static bool TryGetProject(string projectFile, out ProjectModel.Project project, out string errorMessage)
-        {
-            try
-            {
-                if (!ProjectModel.ProjectReader.TryGetProject(projectFile, out project))
-                {
-                    if (project?.Diagnostics != null && project.Diagnostics.Any())
-                    {
-                        errorMessage = string.Join(Environment.NewLine, project.Diagnostics.Select(e => e.ToString()));
-                    }
-                    else
-                    {
-                        errorMessage = "Failed to read project.json";
-                    }
-                }
-                else
-                {
-                    errorMessage = null;
-                    return true;
-                }
-            }
-            catch (Exception ex)
-            {
-                errorMessage = CollectMessages(ex);
-            }
-
-            project = null;
-            return false;
-        }
-
-        private static string CollectMessages(Exception exception)
-        {
-            var builder = new StringBuilder();
-            builder.AppendLine(exception.Message);
-
-            var aggregateException = exception as AggregateException;
-            if (aggregateException != null)
-            {
-                foreach (var message in aggregateException.Flatten().InnerExceptions.Select(CollectMessages))
-                {
-                    builder.AppendLine(message);
-                }
-            }
-
-            while (exception.InnerException != null)
-            {
-                builder.AppendLine(CollectMessages(exception.InnerException));
-                exception = exception.InnerException;
-            }
-            return builder.ToString();
-        }
-    }
-}
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Microsoft.DotNet.Watcher.Tools.nuspec b/src/Microsoft.DotNet.Watcher.Tools/Microsoft.DotNet.Watcher.Tools.nuspec
index 53b80837cd..259eaa5cfb 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/Microsoft.DotNet.Watcher.Tools.nuspec
+++ b/src/Microsoft.DotNet.Watcher.Tools/Microsoft.DotNet.Watcher.Tools.nuspec
@@ -24,6 +24,7 @@
   </metadata>
   <files>
     <file src="bin/$configuration$/netcoreapp1.0/dotnet-watch.dll" target="lib\netcoreapp1.0\" />
-    <file src="bin/$configuration$/netcoreapp1.0/dotnet-watch.runtimeconfig.json" target="lib/netcoreapp1.0\" />
+    <file src="bin/$configuration$/netcoreapp1.0/dotnet-watch.runtimeconfig.json" target="lib\netcoreapp1.0\" />
+    <file src="tools/*.targets" target="tools\" />
   </files>
 </package>
\ No newline at end of file
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Program.cs b/src/Microsoft.DotNet.Watcher.Tools/Program.cs
index 14a115c978..06cedfa8cf 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/Program.cs
+++ b/src/Microsoft.DotNet.Watcher.Tools/Program.cs
@@ -17,15 +17,18 @@ namespace Microsoft.DotNet.Watcher
         private readonly CancellationToken _cancellationToken;
         private readonly TextWriter _stdout;
         private readonly TextWriter _stderr;
+        private readonly string _workingDir;
 
-        public Program(TextWriter consoleOutput, TextWriter consoleError, CancellationToken cancellationToken)
+        public Program(TextWriter consoleOutput, TextWriter consoleError, string workingDir, CancellationToken cancellationToken)
         {
             Ensure.NotNull(consoleOutput, nameof(consoleOutput));
             Ensure.NotNull(consoleError, nameof(consoleError));
+            Ensure.NotNullOrEmpty(workingDir, nameof(workingDir));
 
             _cancellationToken = cancellationToken;
             _stdout = consoleOutput;
             _stderr = consoleError;
+            _workingDir = workingDir;
         }
 
         public static int Main(string[] args)
@@ -50,7 +53,7 @@ namespace Microsoft.DotNet.Watcher
 
                 try
                 {
-                    return new Program(Console.Out, Console.Error, ctrlCTokenSource.Token)
+                    return new Program(Console.Out, Console.Error, Directory.GetCurrentDirectory(), ctrlCTokenSource.Token)
                         .MainInternalAsync(args)
                         .GetAwaiter()
                         .GetResult();
@@ -92,8 +95,10 @@ namespace Microsoft.DotNet.Watcher
             loggerFactory.AddProvider(commandProvider);
             var logger = loggerFactory.CreateLogger(LoggerName);
 
-            var projectFile = Path.Combine(Directory.GetCurrentDirectory(), ProjectModel.Project.FileName);
-            var projectFileSetFactory = new ProjectJsonFileSetFactory(logger, projectFile);
+            // TODO multiple projects should be easy enough to add here
+            var projectFile = MsBuildProjectFinder.FindMsBuildProject(_workingDir, options.Project);
+            var fileSetFactory = new MsBuildFileSetFactory(logger, projectFile);
+
             var processInfo = new ProcessSpec
             {
                 Executable = new Muxer().MuxerPath,
@@ -102,7 +107,7 @@ namespace Microsoft.DotNet.Watcher
             };
 
             await new DotNetWatcher(logger)
-                    .WatchAsync(processInfo, projectFileSetFactory, _cancellationToken);
+                    .WatchAsync(processInfo, fileSetFactory, _cancellationToken);
 
             return 0;
         }
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Properties/Resources.Designer.cs b/src/Microsoft.DotNet.Watcher.Tools/Properties/Resources.Designer.cs
index 5cdf225bb8..30c1d18cb7 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/Properties/Resources.Designer.cs
+++ b/src/Microsoft.DotNet.Watcher.Tools/Properties/Resources.Designer.cs
@@ -10,6 +10,54 @@ namespace Microsoft.DotNet.Watcher.Tools
         private static readonly ResourceManager _resourceManager
             = new ResourceManager("Microsoft.DotNet.Watcher.Tools.Resources", typeof(Resources).GetTypeInfo().Assembly);
 
+        /// <summary>
+        /// The project file '{path}' does not exist.
+        /// </summary>
+        internal static string Error_ProjectPath_NotFound
+        {
+            get { return GetString("Error_ProjectPath_NotFound"); }
+        }
+
+        /// <summary>
+        /// The project file '{path}' does not exist.
+        /// </summary>
+        internal static string FormatError_ProjectPath_NotFound(object path)
+        {
+            return string.Format(CultureInfo.CurrentCulture, GetString("Error_ProjectPath_NotFound", "path"), path);
+        }
+
+        /// <summary>
+        /// Multiple MSBuild project files found in '{projectPath}'. Specify which to use with the --project option.
+        /// </summary>
+        internal static string Error_MultipleProjectsFound
+        {
+            get { return GetString("Error_MultipleProjectsFound"); }
+        }
+
+        /// <summary>
+        /// Multiple MSBuild project files found in '{projectPath}'. Specify which to use with the --project option.
+        /// </summary>
+        internal static string FormatError_MultipleProjectsFound(object projectPath)
+        {
+            return string.Format(CultureInfo.CurrentCulture, GetString("Error_MultipleProjectsFound", "projectPath"), projectPath);
+        }
+
+        /// <summary>
+        /// Could not find a MSBuild project file in '{projectPath}'. Specify which project to use with the --project option.
+        /// </summary>
+        internal static string Error_NoProjectsFound
+        {
+            get { return GetString("Error_NoProjectsFound"); }
+        }
+
+        /// <summary>
+        /// Could not find a MSBuild project file in '{projectPath}'. Specify which project to use with the --project option.
+        /// </summary>
+        internal static string FormatError_NoProjectsFound(object projectPath)
+        {
+            return string.Format(CultureInfo.CurrentCulture, GetString("Error_NoProjectsFound", "projectPath"), projectPath);
+        }
+
         /// <summary>
         /// Cannot specify both '--quiet' and '--verbose' options.
         /// </summary>
diff --git a/src/Microsoft.DotNet.Watcher.Tools/README.md b/src/Microsoft.DotNet.Watcher.Tools/README.md
index 7a21544e70..ec769af3e6 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/README.md
+++ b/src/Microsoft.DotNet.Watcher.Tools/README.md
@@ -45,3 +45,61 @@ Some configuration options can be passed to `dotnet watch` through environment v
 | Variable                                       | Effect                                                   |
 | ---------------------------------------------- | -------------------------------------------------------- |
 | DOTNET_USE_POLLING_FILE_WATCHER                | If set to "1" or "true", `dotnet watch` will use a polling file watcher instead of CoreFx's `FileSystemWatcher`. Used when watching files on network shares or Docker mounted volumes.                       |
+
+### MSBuild
+
+dotnet-watch can be configured from the MSBuild project file being watched.
+
+**Project References**
+
+By default, dotnet-watch will scan the entire graph of project references and watch all files within those projects.
+
+dotnet-watch will ignore project references with the `Watch="false"` attribute.
+
+```xml
+<ItemGroup>
+  <ProjectReference Include="..\ClassLibrary1\ClassLibrary1.csproj" Watch="false" />
+</ItemGroup>
+```
+
+**Watch items**
+
+dotnet-watch will watch all items in the "<kbd>Watch</kbd>" item group.
+By default, this group inclues all items in "<kbd>Compile</kbd>" and "<kbd>EmbeddedResource</kbd>".
+
+More items can be added to watch in a project file by adding items to 'Watch'.
+
+Example:
+
+```xml
+<ItemGroup>
+    <!-- extends watching group to include *.js files -->
+    <Watch Include="**\*.js" Exclude="node_modules\**\*.js;$(DefaultExcludes)" />
+</ItemGroup>
+```
+
+dotnet-watch will ignore Compile and EmbeddedResource items with the `Watch="false"` attribute.
+
+Example:
+
+```xml
+<ItemGroup>
+    <!-- exclude Generated.cs from dotnet-watch -->
+    <Compile Include="Generated.cs" Watch="false" />
+    <EmbeddedResource Include="Generated.cs" Watch="false" />
+</ItemGroup>
+```
+
+
+**Advanced configuration**
+
+dotnet-watch performs a design-time build to find items to watch.
+When this build is run, dotnet-watch will set the property `DotNetWatchBuild=true`.
+
+Example:
+
+```xml
+  <ItemGroup Condition="'$(DotNetWatchBuild)'=='true'">
+    <!-- design-time only items -->
+  </ItemGroup>
+```
\ No newline at end of file
diff --git a/src/Microsoft.DotNet.Watcher.Tools/Resources.resx b/src/Microsoft.DotNet.Watcher.Tools/Resources.resx
index 34336a97ba..125a4cfea3 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/Resources.resx
+++ b/src/Microsoft.DotNet.Watcher.Tools/Resources.resx
@@ -1,17 +1,17 @@
 <?xml version="1.0" encoding="utf-8"?>
 <root>
-  <!-- 
-    Microsoft ResX Schema 
-    
+  <!--
+    Microsoft ResX Schema
+
     Version 2.0
-    
-    The primary goals of this format is to allow a simple XML format 
-    that is mostly human readable. The generation and parsing of the 
-    various data types are done through the TypeConverter classes 
+
+    The primary goals of this format is to allow a simple XML format
+    that is mostly human readable. The generation and parsing of the
+    various data types are done through the TypeConverter classes
     associated with the data types.
-    
+
     Example:
-    
+
     ... ado.net/XML headers & schema ...
     <resheader name="resmimetype">text/microsoft-resx</resheader>
     <resheader name="version">2.0</resheader>
@@ -26,36 +26,36 @@
         <value>[base64 mime encoded string representing a byte array form of the .NET Framework object]</value>
         <comment>This is a comment</comment>
     </data>
-                
-    There are any number of "resheader" rows that contain simple 
+
+    There are any number of "resheader" rows that contain simple
     name/value pairs.
-    
-    Each data row contains a name, and value. The row also contains a 
-    type or mimetype. Type corresponds to a .NET class that support 
-    text/value conversion through the TypeConverter architecture. 
-    Classes that don't support this are serialized and stored with the 
+
+    Each data row contains a name, and value. The row also contains a
+    type or mimetype. Type corresponds to a .NET class that support
+    text/value conversion through the TypeConverter architecture.
+    Classes that don't support this are serialized and stored with the
     mimetype set.
-    
-    The mimetype is used for serialized objects, and tells the 
-    ResXResourceReader how to depersist the object. This is currently not 
+
+    The mimetype is used for serialized objects, and tells the
+    ResXResourceReader how to depersist the object. This is currently not
     extensible. For a given mimetype the value must be set accordingly:
-    
-    Note - application/x-microsoft.net.object.binary.base64 is the format 
-    that the ResXResourceWriter will generate, however the reader can 
+
+    Note - application/x-microsoft.net.object.binary.base64 is the format
+    that the ResXResourceWriter will generate, however the reader can
     read any of the formats listed below.
-    
+
     mimetype: application/x-microsoft.net.object.binary.base64
-    value   : The object must be serialized with 
+    value   : The object must be serialized with
             : System.Runtime.Serialization.Formatters.Binary.BinaryFormatter
             : and then encoded with base64 encoding.
-    
+
     mimetype: application/x-microsoft.net.object.soap.base64
-    value   : The object must be serialized with 
+    value   : The object must be serialized with
             : System.Runtime.Serialization.Formatters.Soap.SoapFormatter
             : and then encoded with base64 encoding.
 
     mimetype: application/x-microsoft.net.object.bytearray.base64
-    value   : The object must be serialized into a byte array 
+    value   : The object must be serialized into a byte array
             : using a System.ComponentModel.TypeConverter
             : and then encoded with base64 encoding.
     -->
@@ -117,6 +117,15 @@
   <resheader name="writer">
     <value>System.Resources.ResXResourceWriter, System.Windows.Forms, Version=4.0.0.0, Culture=neutral, PublicKeyToken=b77a5c561934e089</value>
   </resheader>
+  <data name="Error_ProjectPath_NotFound" xml:space="preserve">
+    <value>The project file '{path}' does not exist.</value>
+  </data>
+  <data name="Error_MultipleProjectsFound" xml:space="preserve">
+    <value>Multiple MSBuild project files found in '{projectPath}'. Specify which to use with the --project option.</value>
+  </data>
+  <data name="Error_NoProjectsFound" xml:space="preserve">
+    <value>Could not find a MSBuild project file in '{projectPath}'. Specify which project to use with the --project option.</value>
+  </data>
   <data name="Error_QuietAndVerboseSpecified" xml:space="preserve">
     <value>Cannot specify both '--quiet' and '--verbose' options.</value>
   </data>
diff --git a/src/Microsoft.DotNet.Watcher.Tools/dotnetwatch.targets b/src/Microsoft.DotNet.Watcher.Tools/dotnetwatch.targets
new file mode 100644
index 0000000000..d3e73557be
--- /dev/null
+++ b/src/Microsoft.DotNet.Watcher.Tools/dotnetwatch.targets
@@ -0,0 +1,18 @@
+<!-- This file is autogenerated by dotnet-watch. -->
+<Project xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+  <PropertyGroup>
+    <_DotNetWatchTargetsFile Condition="'$(_DotNetWatchTargetsFile)' == ''">$(MSBuildThisFileFullPath)</_DotNetWatchTargetsFile>
+  </PropertyGroup>
+
+  <Import Project="$(_DotNetWatchTargetsLocation)\DotNetWatchCommon.targets"
+          Condition="Exists('$(_DotNetWatchTargetsLocation)\DotNetWatchCommon.targets')" />
+
+  <ImportGroup Condition="'$(TargetFramework)'==''">
+    <Import Project="$(_DotNetWatchTargetsLocation)\DotNetWatchOuter.targets"
+            Condition="Exists('$(_DotNetWatchTargetsLocation)\DotNetWatchOuter.targets')" />
+  </ImportGroup>
+  <ImportGroup Condition="'$(TargetFramework)'!=''">
+    <Import Project="$(_DotNetWatchTargetsLocation)\DotNetWatchInner.targets"
+            Condition="Exists('$(_DotNetWatchTargetsLocation)\DotNetWatchInner.targets')" />
+  </ImportGroup>
+</Project>
\ No newline at end of file
diff --git a/src/Microsoft.DotNet.Watcher.Tools/project.json b/src/Microsoft.DotNet.Watcher.Tools/project.json
index e54d7b3774..21d7ce1d69 100644
--- a/src/Microsoft.DotNet.Watcher.Tools/project.json
+++ b/src/Microsoft.DotNet.Watcher.Tools/project.json
@@ -5,15 +5,29 @@
     "tags": [
       "dotnet",
       "watch"
-    ]
+    ],
+    "files": {
+      "include": "tools/*.targets"
+    }
   },
   "buildOptions": {
     "outputName": "dotnet-watch",
     "warningsAsErrors": true,
     "emitEntryPoint": true,
-    "keyFile": "../../tools/Key.snk"
+    "debugType": "portable",
+    "keyFile": "../../tools/Key.snk",
+    "copyToOutput": "tools/*.targets",
+    "embed": {
+      "mappings": {
+        "dotnetwatch.targets": "dotnetwatch.targets"
+      }
+    }
   },
   "dependencies": {
+    "Microsoft.DotNet.ProjectModel": {
+      "version": "1.0.0-*",
+      "exclude": "all"
+    },
     "Microsoft.DotNet.Cli.Utils": "1.0.0-*",
     "Microsoft.Extensions.CommandLineUtils": "1.1.0-*",
     "Microsoft.Extensions.Logging": "1.1.0-*",
diff --git a/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchCommon.targets b/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchCommon.targets
new file mode 100644
index 0000000000..c3477393fc
--- /dev/null
+++ b/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchCommon.targets
@@ -0,0 +1,28 @@
+<Project xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+
+  <Target Name="_WriteGeneratedWatchList" >
+    <WriteLinesToFile Overwrite="true"
+                      File="$(_DotNetWatchListFile)"
+                      Lines="@(Watch -> '%(FullPath)')" />
+  </Target>
+
+  <!--
+  =========================================================================
+  _CollectWatchItems
+
+  Invokes _CoreCollectWatchItems on each distinct project in _DotNetWatchProjects.
+
+  Returns: @(Watch)
+  =========================================================================
+  -->
+  <Target Name="_CollectWatchItems">
+    <RemoveDuplicates Inputs="@(_DotNetWatchProjects)">
+        <Output TaskParameter="Filtered" ItemName="_DotNetWatchProjectsFiltered" />
+    </RemoveDuplicates>
+    <MSBuild
+      Targets="_CoreCollectWatchItems"
+      Projects="%(_DotNetWatchProjectsFiltered.FullPath)">
+      <Output TaskParameter="TargetOutputs" ItemName="Watch"/>
+    </MSBuild>
+  </Target>
+</Project>
\ No newline at end of file
diff --git a/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchInner.targets b/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchInner.targets
new file mode 100644
index 0000000000..9bdd83dd6d
--- /dev/null
+++ b/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchInner.targets
@@ -0,0 +1,70 @@
+<Project xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+
+  <!--
+  =========================================================================
+  GenerateWatchList
+
+  Main target called by dotnet-watch. This is the single-tfm version.
+  For multi-tfm version, see the Outer.targets file for description of the
+  design of this target.
+  =========================================================================
+  -->
+  <Target Name="GenerateWatchList"
+          DependsOnTargets="_CollectWatchProjects;_CollectWatchItems;_WriteGeneratedWatchList" />
+
+  <!--
+  =========================================================================
+  _CoreCollectWatchItems
+
+  Creates item group with default set of files to watch.
+
+  Returns: @(Watch)
+  =========================================================================
+  -->
+  <Target Name="_CoreCollectWatchItems" Returns="@(Watch)">
+    <!-- message used to debug -->
+    <Message Importance="High" Text="Collecting watch items from '$(MSBuildProjectName)'" Condition="'$(_DotNetWatchTraceOutput)'=='true'" />
+    <ItemGroup>
+      <Watch Include="@(Compile->'%(FullPath)')" Condition="'%(Compile.Watch)' != 'false'" />
+      <Watch Include="@(EmbeddedResource->'%(FullPath)')" Condition="'%(EmbeddedResource.Watch)' != 'false'"/>
+      <Watch Include="$(MSBuildProjectFullPath)" />
+    </ItemGroup>
+  </Target>
+
+  <!--
+  =========================================================================
+  _CollectWatchProjects
+
+  Adds all ProjectReference items to _DotNetWatchProjects.
+  Copies the project file extension file to all project references.
+  Invokes '_CollectWatchProjects' on all referenced projects.
+
+  Returns: @(_DotNetWatchProjects)
+  =========================================================================
+  -->
+  <Target Name="_CollectWatchProjects"
+          Returns="@(_DotNetWatchProjects)">
+    <!-- message used to debug -->
+    <Message Importance="High" Text="Collecting referenced projects from '$(MSBuildProjectName)'" Condition="'$(_DotNetWatchTraceOutput)'=='true'" />
+    <ItemGroup>
+      <_DotNetWatchProjects Include="@(ProjectReference->'%(FullPath)')" Condition="'%(ProjectReference.Watch)' != 'false'" />
+      <_DotNetWatchImportsTargets Include="@(_DotNetWatchProjects->'%(RelativeDir)obj\%(FileName)%(Extension).dotnetwatch.targets')">
+        <TargetsFile>$(_DotNetWatchTargetsFile)</TargetsFile>
+      </_DotNetWatchImportsTargets>
+    </ItemGroup>
+
+     <Copy SourceFiles="@(_DotNetWatchImportsTargets->'%(TargetsFile)')"
+           DestinationFiles="@(_DotNetWatchImportsTargets)"
+           SkipUnchangedFiles="true" />
+
+    <MSBuild
+      Targets="_CollectWatchProjects"
+      Projects="%(_DotNetWatchProjects.FullPath)">
+      <Output TaskParameter="TargetOutputs" ItemName="_DotNetWatchProjects"/>
+    </MSBuild>
+
+    <ItemGroup>
+      <_DotNetWatchProjects Include="$(MSBuildProjectFullPath)"/>
+    </ItemGroup>
+  </Target>
+</Project>
\ No newline at end of file
diff --git a/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchOuter.targets b/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchOuter.targets
new file mode 100644
index 0000000000..f2dfb9e104
--- /dev/null
+++ b/src/Microsoft.DotNet.Watcher.Tools/tools/DotNetWatchOuter.targets
@@ -0,0 +1,69 @@
+<Project
+  xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+
+  <!--
+  =========================================================================
+  GenerateWatchList
+
+  Main target called by dotnet-watch. This is the cross-targetting version.
+  For single-tfm, the 'GenerateWatchList' in Inner.targets is the main target.
+
+  Phase 1: _CollectWatchProjects:
+           traverses the project-to-project graph to resolve all projects referenced.
+  Phase 2: _CollectWatchItems:
+           for each unique project file from phase 1, extracts all 'Watch' items and
+           collects into a single item group. All values should be a fullpath.
+  Phase 3: _WriteGeneratedWatchList:
+           write all files to a file that can be read by dotnet-watch
+
+  =========================================================================
+  -->
+  <Target Name="GenerateWatchList"
+          DependsOnTargets="_CollectWatchProjects;_CollectWatchItems;_WriteGeneratedWatchList"
+          />
+
+  <!--
+  =========================================================================
+  _CoreCollectWatchItems
+
+  Shim for cross-targetting builds to run _CoreCollectWatchItems for each target
+  framework.
+
+  Returns: @(Watch)
+  =========================================================================
+  -->
+  <Target Name="_CoreCollectWatchItems"
+          Returns="@(Watch)">
+    <ItemGroup>
+      <_TargetFramework Include="$(TargetFrameworks)" />
+    </ItemGroup>
+    <MSBuild Projects="$(MSBuildProjectFile)"
+             Condition="'$(TargetFrameworks)' != '' "
+             Targets="_CoreCollectWatchItems"
+             Properties="TargetFramework=%(_TargetFramework.Identity)">
+      <Output ItemName="Watch" TaskParameter="TargetOutputs" />
+    </MSBuild>
+  </Target>
+
+  <!--
+  =========================================================================
+  _CollectWatchProjects
+
+  Shim for cross-targetting builds to run _CollectWatchProjects for each target
+  framework.
+
+  Returns: @(_DotNetWatchProjects)
+  =========================================================================
+  -->
+  <Target Name="_CollectWatchProjects" Returns="@(_DotNetWatchProjects)">
+    <ItemGroup>
+      <_TargetFramework Include="$(TargetFrameworks)" />
+    </ItemGroup>
+    <MSBuild Projects="$(MSBuildProjectFile)"
+             Condition="'$(TargetFrameworks)' != '' "
+             Targets="_CollectWatchProjects"
+             Properties="TargetFramework=%(_TargetFramework.Identity)">
+      <Output ItemName="_DotNetWatchProjects" TaskParameter="TargetOutputs" />
+    </MSBuild>
+  </Target>
+</Project>
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/AppWithDepsTests.cs b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/AppWithDepsTests.cs
index d36674a223..6428f7f6fe 100644
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/AppWithDepsTests.cs
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/AppWithDepsTests.cs
@@ -4,6 +4,7 @@
 using System;
 using System.IO;
 using Xunit;
+using Xunit.Abstractions;
 
 namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 {
@@ -11,11 +12,18 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
     {
         private static readonly TimeSpan _defaultTimeout = TimeSpan.FromSeconds(30);
 
+        private readonly ITestOutputHelper _logger;
+
+        public AppWithDepsTests(ITestOutputHelper logger)
+        {
+            _logger = logger;
+        }
+
         // Change a file included in compilation
         [Fact]
         public void ChangeFileInDependency()
         {
-            using (var scenario = new AppWithDepsScenario())
+            using (var scenario = new AppWithDepsScenario(_logger))
             {
                 scenario.Start();
                 using (var wait = new WaitForFileToChange(scenario.StartedFile))
@@ -36,18 +44,19 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
             private const string AppWithDeps = "AppWithDeps";
             private const string Dependency = "Dependency";
 
-            public AppWithDepsScenario()
+            public AppWithDepsScenario(ITestOutputHelper logger)
+                : base(logger)
             {
-                StatusFile = Path.Combine(_scenario.TempFolder, "status");
+                StatusFile = Path.Combine(Scenario.TempFolder, "status");
                 StartedFile = StatusFile + ".started";
-                
-                _scenario.AddTestProjectFolder(AppWithDeps);
-                _scenario.AddTestProjectFolder(Dependency);
 
-                _scenario.Restore();
+                Scenario.AddTestProjectFolder(AppWithDeps);
+                Scenario.AddTestProjectFolder(Dependency);
 
-                AppWithDepsFolder = Path.Combine(_scenario.WorkFolder, AppWithDeps);
-                DependencyFolder = Path.Combine(_scenario.WorkFolder, Dependency);
+                Scenario.Restore3(AppWithDeps); // restore3 should be transitive
+
+                AppWithDepsFolder = Path.Combine(Scenario.WorkFolder, AppWithDeps);
+                DependencyFolder = Path.Combine(Scenario.WorkFolder, Dependency);
             }
 
             public void Start()
@@ -55,7 +64,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
                 // Wait for the process to start
                 using (var wait = new WaitForFileToChange(StatusFile))
                 {
-                    RunDotNetWatch(new[] { "run", StatusFile }, Path.Combine(_scenario.WorkFolder, AppWithDeps));
+                    RunDotNetWatch(new[] { "run3", StatusFile }, Path.Combine(Scenario.WorkFolder, AppWithDeps));
 
                     wait.Wait(_defaultTimeout,
                         expectedToChange: true,
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/GlobbingAppTests.cs b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/GlobbingAppTests.cs
index 87ae1b6df3..31b0cb9167 100644
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/GlobbingAppTests.cs
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/GlobbingAppTests.cs
@@ -6,6 +6,7 @@ using System.Diagnostics;
 using System.IO;
 using System.Threading;
 using Xunit;
+using Xunit.Abstractions;
 
 namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 {
@@ -15,6 +16,13 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 
         private static readonly TimeSpan _negativeTestWaitTime = TimeSpan.FromSeconds(10);
 
+        private readonly ITestOutputHelper _logger;
+
+        public GlobbingAppTests(ITestOutputHelper logger)
+        {
+            _logger = logger;
+        }
+
         [Fact]
         public void ChangeCompiledFile_PollingWatcher()
         {
@@ -30,7 +38,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         // Change a file included in compilation
         private void ChangeCompiledFile(bool usePollingWatcher)
         {
-            using (var scenario = new GlobbingAppScenario())
+            using (var scenario = new GlobbingAppScenario(_logger))
             using (var wait = new WaitForFileToChange(scenario.StartedFile))
             {
                 scenario.UsePollingWatcher = usePollingWatcher;
@@ -53,7 +61,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         public void AddCompiledFile()
         {
             // Add a file in a folder that's included in compilation
-            using (var scenario = new GlobbingAppScenario())
+            using (var scenario = new GlobbingAppScenario(_logger))
             using (var wait = new WaitForFileToChange(scenario.StartedFile))
             {
                 scenario.Start();
@@ -71,7 +79,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         [Fact]
         public void DeleteCompiledFile()
         {
-            using (var scenario = new GlobbingAppScenario())
+            using (var scenario = new GlobbingAppScenario(_logger))
             using (var wait = new WaitForFileToChange(scenario.StartedFile))
             {
                 scenario.Start();
@@ -86,10 +94,10 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         }
 
         // Delete an entire folder
-        [Fact(Skip = "Blocking build")]
+        [Fact]
         public void DeleteSourceFolder()
         {
-            using (var scenario = new GlobbingAppScenario())
+            using (var scenario = new GlobbingAppScenario(_logger))
             using (var wait = new WaitForFileToChange(scenario.StartedFile))
             {
                 scenario.Start();
@@ -107,7 +115,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         [Fact]
         public void RenameCompiledFile()
         {
-            using (var scenario = new GlobbingAppScenario())
+            using (var scenario = new GlobbingAppScenario(_logger))
             using (var wait = new WaitForFileToChange(scenario.StatusFile))
             {
                 scenario.Start();
@@ -137,7 +145,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         // Add a file that's in a included folder but not matching the globbing pattern
         private void ChangeNonCompiledFile(bool usePollingWatcher)
         {
-            using (var scenario = new GlobbingAppScenario())
+            using (var scenario = new GlobbingAppScenario(_logger))
             {
                 scenario.UsePollingWatcher = usePollingWatcher;
 
@@ -162,7 +170,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         [Fact]
         public void ChangeExcludedFile()
         {
-            using (var scenario = new GlobbingAppScenario())
+            using (var scenario = new GlobbingAppScenario(_logger))
             {
                 scenario.Start();
 
@@ -185,15 +193,16 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         {
             private const string TestAppName = "GlobbingApp";
 
-            public GlobbingAppScenario()
+            public GlobbingAppScenario(ITestOutputHelper logger)
+                : base(logger)
             {
-                StatusFile = Path.Combine(_scenario.TempFolder, "status");
+                StatusFile = Path.Combine(Scenario.TempFolder, "status");
                 StartedFile = StatusFile + ".started";
 
-                _scenario.AddTestProjectFolder(TestAppName);
-                _scenario.Restore();
+                Scenario.AddTestProjectFolder(TestAppName);
+                Scenario.Restore3(TestAppName);
 
-                TestAppFolder = Path.Combine(_scenario.WorkFolder, TestAppName);
+                TestAppFolder = Path.Combine(Scenario.WorkFolder, TestAppName);
             }
 
             public void Start()
@@ -201,7 +210,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
                 // Wait for the process to start
                 using (var wait = new WaitForFileToChange(StartedFile))
                 {
-                    RunDotNetWatch(new[] { "run", StatusFile }, Path.Combine(_scenario.WorkFolder, TestAppName));
+                    RunDotNetWatch(new[] { "run3", StatusFile }, Path.Combine(Scenario.WorkFolder, TestAppName));
 
                     wait.Wait(_defaultTimeout,
                         expectedToChange: true,
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/NoDepsAppTests.cs b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/NoDepsAppTests.cs
index 023b57512f..7c385a6ed1 100644
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/NoDepsAppTests.cs
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/NoDepsAppTests.cs
@@ -7,22 +7,29 @@ using System.Diagnostics;
 using System.IO;
 using System.Threading;
 using Xunit;
+using Xunit.Abstractions;
 
 namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 {
     public class NoDepsAppTests
     {
         private static readonly TimeSpan _defaultTimeout = TimeSpan.FromSeconds(30);
+        private readonly ITestOutputHelper _logger;
+
+        public NoDepsAppTests(ITestOutputHelper logger)
+        {
+            _logger = logger;
+        }
 
         [Fact]
         public void RestartProcessOnFileChange()
         {
-            using (var scenario = new NoDepsAppScenario())
+            using (var scenario = new NoDepsAppScenario(_logger))
             {
                 // Wait for the process to start
                 using (var wait = new WaitForFileToChange(scenario.StartedFile))
                 {
-                    scenario.RunDotNetWatch(new[] { "run", scenario.StatusFile, "--no-exit" });
+                    scenario.RunDotNetWatch(new[] { "run3", "-f", "netcoreapp1.0", scenario.StatusFile, "--no-exit" });
 
                     wait.Wait(_defaultTimeout,
                         expectedToChange: true,
@@ -56,12 +63,12 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         [Fact]
         public void RestartProcessThatTerminatesAfterFileChange()
         {
-            using (var scenario = new NoDepsAppScenario())
+            using (var scenario = new NoDepsAppScenario(_logger))
             {
                 // Wait for the process to start
                 using (var wait = new WaitForFileToChange(scenario.StartedFile))
                 {
-                    scenario.RunDotNetWatch(new[] { "run", scenario.StatusFile });
+                    scenario.RunDotNetWatch(new[] { "run3", "-f", "netcoreapp1.0", scenario.StatusFile });
 
                     wait.Wait(_defaultTimeout,
                         expectedToChange: true,
@@ -101,15 +108,16 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         {
             private const string TestAppName = "NoDepsApp";
 
-            public NoDepsAppScenario()
+            public NoDepsAppScenario(ITestOutputHelper logger)
+                : base(logger)
             {
-                StatusFile = Path.Combine(_scenario.TempFolder, "status");
+                StatusFile = Path.Combine(Scenario.TempFolder, "status");
                 StartedFile = StatusFile + ".started";
 
-                _scenario.AddTestProjectFolder(TestAppName);
-                _scenario.Restore();
+                Scenario.AddTestProjectFolder(TestAppName);
+                Scenario.Restore3(TestAppName);
 
-                TestAppFolder = Path.Combine(_scenario.WorkFolder, TestAppName);
+                TestAppFolder = Path.Combine(Scenario.WorkFolder, TestAppName);
             }
 
             public string StatusFile { get; private set; }
@@ -118,7 +126,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 
             public void RunDotNetWatch(IEnumerable<string> args)
             {
-                RunDotNetWatch(args, Path.Combine(_scenario.WorkFolder, TestAppName));
+                RunDotNetWatch(args, Path.Combine(Scenario.WorkFolder, TestAppName));
             }
         }
     }
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/DotNetWatchScenario.cs b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/DotNetWatchScenario.cs
index bef42282fe..a49a0ed616 100644
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/DotNetWatchScenario.cs
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/DotNetWatchScenario.cs
@@ -6,16 +6,21 @@ using System.Collections.Generic;
 using System.Diagnostics;
 using System.IO;
 using Microsoft.Extensions.Internal;
+using Xunit.Abstractions;
 
 namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 {
     public class DotNetWatchScenario : IDisposable
     {
-        protected ProjectToolScenario _scenario;
-
+        protected ProjectToolScenario Scenario { get; }
         public DotNetWatchScenario()
+            : this(null)
         {
-            _scenario = new ProjectToolScenario();
+        }
+
+        public DotNetWatchScenario(ITestOutputHelper logger)
+        {
+            Scenario = new ProjectToolScenario(logger);
         }
 
         public Process WatcherProcess { get; private set; }
@@ -33,7 +38,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
                 };
             }
 
-            WatcherProcess = _scenario.ExecuteDotnetWatch(arguments, workingFolder, envVariables);
+            WatcherProcess = Scenario.ExecuteDotnetWatch(arguments, workingFolder, envVariables);
         }
 
         public virtual void Dispose()
@@ -46,7 +51,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
                 }
                 WatcherProcess.Dispose();
             }
-            _scenario.Dispose();
+            Scenario.Dispose();
         }
     }
 }
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/ProjectToolScenario.cs b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/ProjectToolScenario.cs
index c0c2ce0016..73eff54e4a 100644
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/ProjectToolScenario.cs
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/Scenario/ProjectToolScenario.cs
@@ -10,6 +10,7 @@ using System.Reflection;
 using System.Threading;
 using Microsoft.DotNet.Cli.Utils;
 using Microsoft.DotNet.ProjectModel;
+using Xunit.Abstractions;
 
 namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 {
@@ -17,13 +18,17 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
     {
         private const string NugetConfigFileName = "NuGet.config";
         private static readonly string TestProjectSourceRoot = Path.Combine(AppContext.BaseDirectory, "TestProjects");
-
-        private static readonly object _restoreLock = new object();
+        private readonly ITestOutputHelper _logger;
 
         public ProjectToolScenario()
+            : this(null)
         {
-            Console.WriteLine($"The temporary test folder is {TempFolder}");
+        }
 
+        public ProjectToolScenario(ITestOutputHelper logger)
+        {
+            _logger = logger;
+            _logger?.WriteLine($"The temporary test folder is {TempFolder}");
             WorkFolder = Path.Combine(TempFolder, "work");
 
             CreateTestDirectory();
@@ -37,7 +42,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
         {
             var srcFolder = Path.Combine(TestProjectSourceRoot, projectName);
             var destinationFolder = Path.Combine(WorkFolder, Path.GetFileName(projectName));
-            Console.WriteLine($"Copying project {srcFolder} to {destinationFolder}");
+            _logger?.WriteLine($"Copying project {srcFolder} to {destinationFolder}");
 
             Directory.CreateDirectory(destinationFolder);
 
@@ -63,19 +68,40 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
                 project = Path.Combine(WorkFolder, project);
             }
 
-            // Tests are run in parallel and they try to restore tools concurrently.
-            // This causes issues because the deps json file for a tool is being written from
-            // multiple threads - which results in either sharing violation or corrupted json.
-            lock (_restoreLock)
-            {
-                var restore = Command
-                    .CreateDotNet("restore", new[] { project })
-                    .Execute();
+            _logger?.WriteLine($"Restoring project in {project}");
 
-                if (restore.ExitCode != 0)
-                {
-                    throw new Exception($"Exit code {restore.ExitCode}");
-                }
+            var restore = Command
+                .CreateDotNet("restore", new[] { project })
+                .CaptureStdErr()
+                .CaptureStdOut()
+                .OnErrorLine(l => _logger?.WriteLine(l))
+                .OnOutputLine(l => _logger?.WriteLine(l))
+                .Execute();
+
+            if (restore.ExitCode != 0)
+            {
+                throw new Exception($"Exit code {restore.ExitCode}");
+            }
+        }
+
+        public void Restore3(string project)
+        {
+            project = Path.Combine(WorkFolder, project);
+
+            _logger?.WriteLine($"Restoring msbuild project in {project}");
+
+            var restore = Command
+                .CreateDotNet("restore3", new [] { "/v:m" })
+                .WorkingDirectory(project)
+                .CaptureStdErr()
+                .CaptureStdOut()
+                .OnErrorLine(l => _logger?.WriteLine(l))
+                .OnOutputLine(l => _logger?.WriteLine(l))
+                .Execute();
+
+            if (restore.ExitCode != 0)
+            {
+                throw new Exception($"Exit code {restore.ExitCode}");
             }
         }
 
@@ -92,7 +118,7 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 
         public Process ExecuteDotnetWatch(IEnumerable<string> arguments, string workDir, IDictionary<string, string> environmentVariables = null)
         {
-            // this launches a new .NET Core process using the runtime of the current test app 
+            // this launches a new .NET Core process using the runtime of the current test app
             // and the version of dotnet-watch that this test app is compiled against
             var thisAssembly = Path.GetFileNameWithoutExtension(GetType().GetTypeInfo().Assembly.Location);
             var args = new List<string>();
@@ -108,12 +134,12 @@ namespace Microsoft.DotNet.Watcher.Tools.FunctionalTests
 
             var argsStr = ArgumentEscaper.EscapeAndConcatenateArgArrayForProcessStart(args.Concat(arguments));
 
-            Console.WriteLine($"Running dotnet {argsStr} in {workDir}");
+            _logger?.WriteLine($"Running dotnet {argsStr} in {workDir}");
 
             var psi = new ProcessStartInfo(new Muxer().MuxerPath, argsStr)
             {
                 UseShellExecute = false,
-                WorkingDirectory = workDir,
+                WorkingDirectory = workDir
             };
 
             if (environmentVariables != null)
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/AppWithDeps/AppWithDeps.csproj b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/AppWithDeps/AppWithDeps.csproj
new file mode 100644
index 0000000000..f06027243d
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/AppWithDeps/AppWithDeps.csproj
@@ -0,0 +1,16 @@
+<?xml version="1.0" encoding="utf-8"?>
+<Project ToolsVersion="15.0" xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+  <Import Project="$(MSBuildExtensionsPath)\$(MSBuildToolsVersion)\Microsoft.Common.props" />
+  <PropertyGroup>
+    <TargetFramework>netcoreapp1.0</TargetFramework>
+    <OutputType>Exe</OutputType>
+  </PropertyGroup>
+  <ItemGroup>
+    <Compile Include="**\*.cs" />
+    <EmbeddedResource Include="**\*.resx" />
+    <ProjectReference Include="..\Dependency\Dependency.csproj" />
+    <PackageReference Include="Microsoft.NET.Sdk" Version="1.0.0-*" PrivateAssets="All" />
+    <PackageReference Include="Microsoft.NETCore.App" Version="1.1.0-*" />
+  </ItemGroup>
+  <Import Project="$(MSBuildToolsPath)\Microsoft.CSharp.targets" />
+</Project>
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/AppWithDeps/project.json b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/AppWithDeps/project.json
deleted file mode 100644
index 8b1c2f6bab..0000000000
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/AppWithDeps/project.json
+++ /dev/null
@@ -1,20 +0,0 @@
-{
-  "buildOptions": {
-    "emitEntryPoint": true
-  },
-  "dependencies": {
-    "Dependency": {
-      "target": "project"
-    }
-  },
-  "frameworks": {
-    "netcoreapp1.0": {
-      "dependencies": {
-        "Microsoft.NETCore.App": {
-          "type": "platform",
-          "version": "1.1.0-*"
-        }
-      }
-    }
-  }
-}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/Dependency/Dependency.csproj b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/Dependency/Dependency.csproj
new file mode 100644
index 0000000000..243360cf92
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/Dependency/Dependency.csproj
@@ -0,0 +1,15 @@
+<?xml version="1.0" encoding="utf-8"?>
+<Project ToolsVersion="15.0" xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+  <Import Project="$(MSBuildExtensionsPath)\$(MSBuildToolsVersion)\Microsoft.Common.props" />
+  <PropertyGroup>
+    <TargetFramework>netstandard1.5</TargetFramework>
+    <OutputType>Library</OutputType>
+  </PropertyGroup>
+  <ItemGroup>
+    <Compile Include="**\*.cs" />
+    <EmbeddedResource Include="**\*.resx" />
+    <PackageReference Include="NETStandard.Library" Version="1.6.1-*" />
+    <PackageReference Include="Microsoft.NET.Sdk" Version="1.0.0-*" PrivateAssets="All" />
+  </ItemGroup>
+  <Import Project="$(MSBuildToolsPath)\Microsoft.CSharp.targets" />
+</Project>
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/Dependency/project.json b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/Dependency/project.json
deleted file mode 100644
index f697b65d49..0000000000
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/Dependency/project.json
+++ /dev/null
@@ -1,8 +0,0 @@
-{
-  "dependencies": {
-    "NETStandard.Library": "1.6.1-*"
-  },
-  "frameworks": {
-    "netstandard1.5": {}
-  }
-}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/GlobbingApp/GlobbingApp.csproj b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/GlobbingApp/GlobbingApp.csproj
new file mode 100644
index 0000000000..cb088af5e3
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/GlobbingApp/GlobbingApp.csproj
@@ -0,0 +1,15 @@
+<?xml version="1.0" encoding="utf-8"?>
+<Project ToolsVersion="15.0" xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+  <Import Project="$(MSBuildExtensionsPath)\$(MSBuildToolsVersion)\Microsoft.Common.props" />
+  <PropertyGroup>
+    <TargetFramework>netcoreapp1.0</TargetFramework>
+    <OutputType>Exe</OutputType>
+  </PropertyGroup>
+  <ItemGroup>
+    <Compile Include="Program.cs;include\*.cs" Exclude="exclude\*" />
+    <EmbeddedResource Include="**\*.resx"  />
+    <PackageReference Include="Microsoft.NET.Sdk" Version="1.0.0-*" PrivateAssets="All" />
+    <PackageReference Include="Microsoft.NETCore.App" Version="1.1.0-*" />
+  </ItemGroup>
+  <Import Project="$(MSBuildToolsPath)\Microsoft.CSharp.targets" />
+</Project>
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/GlobbingApp/project.json b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/GlobbingApp/project.json
deleted file mode 100644
index 6418c6d199..0000000000
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/GlobbingApp/project.json
+++ /dev/null
@@ -1,24 +0,0 @@
-{
-  "buildOptions": {
-    "emitEntryPoint": true,
-    "compile": {
-      "include": [
-        "Program.cs",
-        "include/*.cs"
-      ],
-      "exclude": [
-        "exclude/*"
-      ]
-    }
-  },
-  "frameworks": {
-    "netcoreapp1.0": {
-      "dependencies": {
-        "Microsoft.NETCore.App": {
-          "type": "platform",
-          "version": "1.1.0-*"
-        }
-      }
-    }
-  }
-}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/NoDepsApp/NoDepsApp.csproj b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/NoDepsApp/NoDepsApp.csproj
new file mode 100644
index 0000000000..67edbf1349
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/NoDepsApp/NoDepsApp.csproj
@@ -0,0 +1,15 @@
+<?xml version="1.0" encoding="utf-8"?>
+<Project ToolsVersion="15.0" xmlns="http://schemas.microsoft.com/developer/msbuild/2003">
+  <Import Project="$(MSBuildExtensionsPath)\$(MSBuildToolsVersion)\Microsoft.Common.props" />
+  <PropertyGroup>
+    <TargetFramework>netcoreapp1.0</TargetFramework>
+    <OutputType>Exe</OutputType>
+  </PropertyGroup>
+  <ItemGroup>
+    <Compile Include="**\*.cs" />
+    <EmbeddedResource Include="**\*.resx" />
+    <PackageReference Include="Microsoft.NET.Sdk" Version="1.0.0-*" PrivateAssets="All" />
+    <PackageReference Include="Microsoft.NETCore.App" Version="1.1.0-*" />
+  </ItemGroup>
+  <Import Project="$(MSBuildToolsPath)\Microsoft.CSharp.targets" />
+</Project>
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/NoDepsApp/project.json b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/NoDepsApp/project.json
deleted file mode 100644
index 4972d51a39..0000000000
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/TestProjects/NoDepsApp/project.json
+++ /dev/null
@@ -1,15 +0,0 @@
-{
-  "buildOptions": {
-    "emitEntryPoint": true
-  },
-  "frameworks": {
-    "netcoreapp1.0": {
-      "dependencies": {
-        "Microsoft.NETCore.App": {
-          "type": "platform",
-          "version": "1.1.0-*"
-        }
-      }
-    }
-  }
-}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.cmd b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.cmd
index 63104d55c6..2d1d41f1a8 100644
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.cmd
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.cmd
@@ -3,4 +3,9 @@
 if not "%1" == "" (
     echo "Deleting %1\TestProjects"
     rmdir /s /q %1\TestProjects
-)
\ No newline at end of file
+    echo "Deleting %1\tools"
+    rmdir /s /q %1\tools
+)
+
+mkdir %1\tools
+copy ..\..\src\Microsoft.DotNet.Watcher.Tools\tools\*.targets %1\tools
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.sh b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.sh
index 1a5e80fb71..5b096cd399 100755
--- a/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.sh
+++ b/test/Microsoft.DotNet.Watcher.Tools.FunctionalTests/clean-assets.sh
@@ -3,6 +3,12 @@
 if [ -z $1 ]; then
     echo "Deleting $1/TestProjects"
     rm -rf $1/TestProjects
+
+    echo "Deleting $1/tools"
+    rm -rf $1/tools
 fi
 
+mkdir -p $1/tools
+cp ../../src/Microsoft.DotNet.Watcher.Tools/tools/*.targets $1/tools
+
 exit 0
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/AssertEx.cs b/test/Microsoft.DotNet.Watcher.Tools.Tests/AssertEx.cs
new file mode 100644
index 0000000000..48975a9175
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/AssertEx.cs
@@ -0,0 +1,27 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.IO;
+using System.Linq;
+using Xunit;
+
+namespace Microsoft.DotNetWatcher.Tools.Tests
+{
+    public static class AssertEx
+    {
+        public static void EqualFileList(string root, IEnumerable<string> expectedFiles, IEnumerable<string> actualFiles)
+        {
+            var expected = expectedFiles.Select(p => Path.Combine(root, p));
+            EqualFileList(expected, actualFiles);
+        }
+
+        public static void EqualFileList(IEnumerable<string> expectedFiles, IEnumerable<string> actualFiles)
+        {
+            Func<string, string> normalize = p => p.Replace('\\', '/');
+            var expected = new HashSet<string>(expectedFiles.Select(normalize));
+            Assert.True(expected.SetEquals(actualFiles.Select(normalize)), "File sets should be equal");
+        }
+    }
+}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/MsBuildFileSetFactoryTest.cs b/test/Microsoft.DotNet.Watcher.Tools.Tests/MsBuildFileSetFactoryTest.cs
new file mode 100644
index 0000000000..555be13c70
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/MsBuildFileSetFactoryTest.cs
@@ -0,0 +1,315 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.Linq;
+using System.Text.RegularExpressions;
+using System.Threading;
+using System.Threading.Tasks;
+using Microsoft.DotNet.Watcher;
+using Microsoft.DotNet.Watcher.Internal;
+using Microsoft.Extensions.Logging;
+using Xunit;
+using Xunit.Abstractions;
+
+namespace Microsoft.DotNetWatcher.Tools.Tests
+{
+    using ItemSpec = TemporaryCSharpProject.ItemSpec;
+
+    public class MsBuildFileSetFactoryTest : IDisposable
+    {
+        private ILogger _logger;
+        private readonly TemporaryDirectory _tempDir;
+        public MsBuildFileSetFactoryTest(ITestOutputHelper output)
+        {
+            _logger = new XunitLogger(output);
+            _tempDir = new TemporaryDirectory();
+        }
+
+        [Fact]
+        public async Task FindsCustomWatchItems()
+        {
+            TemporaryCSharpProject target;
+            _tempDir
+                .WithCSharpProject("Project1", out target)
+                    .WithTargetFrameworks("netcoreapp1.0")
+                    .WithDefaultGlobs()
+                    .WithItem(new ItemSpec { Name = "Watch", Include = "*.js", Exclude = "gulpfile.js" })
+                    .Dir()
+                    .WithFile("Program.cs")
+                    .WithFile("app.js")
+                    .WithFile("gulpfile.js");
+
+            var fileset = await GetFileSet(target);
+
+            AssertEx.EqualFileList(
+                _tempDir.Root,
+                new[]
+                {
+                    "Project1.csproj",
+                    "Program.cs",
+                    "app.js"
+                },
+                fileset
+            );
+        }
+
+        [Fact]
+        public async Task ExcludesDefaultItemsWithWatchFalseMetadata()
+        {
+            TemporaryCSharpProject target;
+            _tempDir
+                .WithCSharpProject("Project1", out target)
+                    .WithTargetFrameworks("net40")
+                    .WithItem(new ItemSpec { Name = "Compile", Include = "*.cs" })
+                    .WithItem(new ItemSpec { Name = "EmbeddedResource", Include = "*.resx", Watch = false })
+                    .Dir()
+                    .WithFile("Program.cs")
+                    .WithFile("Strings.resx");
+
+            var fileset = await GetFileSet(target);
+
+            AssertEx.EqualFileList(
+                _tempDir.Root,
+                new[]
+                {
+                    "Project1.csproj",
+                    "Program.cs",
+                },
+                fileset
+            );
+        }
+
+        [Fact]
+        public async Task SingleTfm()
+        {
+            TemporaryCSharpProject target;
+
+            _tempDir
+                .SubDir("src")
+                    .SubDir("Project1")
+                        .WithCSharpProject("Project1", out target)
+                        .WithTargetFrameworks("netcoreapp1.0")
+                        .WithDefaultGlobs()
+                        .Dir()
+                        .WithFile("Program.cs")
+                        .WithFile("Class1.cs")
+                        .SubDir("obj").WithFile("ignored.cs").Up()
+                        .SubDir("Properties").WithFile("Strings.resx").Up()
+                    .Up()
+                .Up()
+                .Create();
+
+            var fileset = await GetFileSet(target);
+
+            AssertEx.EqualFileList(
+                _tempDir.Root,
+                new[]
+                {
+                    "src/Project1/Project1.csproj",
+                    "src/Project1/Program.cs",
+                    "src/Project1/Class1.cs",
+                    "src/Project1/Properties/Strings.resx",
+                },
+                fileset
+            );
+        }
+
+        [Fact]
+        public async Task MultiTfm()
+        {
+            TemporaryCSharpProject target;
+            _tempDir
+                .SubDir("src")
+                    .SubDir("Project1")
+                        .WithCSharpProject("Project1", out target)
+                        .WithTargetFrameworks("netcoreapp1.0", "net451")
+                        .WithItem("Compile", "Class1.netcore.cs", "'$(TargetFramework)'=='netcoreapp1.0'")
+                        .WithItem("Compile", "Class1.desktop.cs", "'$(TargetFramework)'=='net451'")
+                        .Dir()
+                        .WithFile("Class1.netcore.cs")
+                        .WithFile("Class1.desktop.cs")
+                        .WithFile("Class1.notincluded.cs");
+
+            var fileset = await GetFileSet(target);
+
+            AssertEx.EqualFileList(
+                _tempDir.Root,
+                new[]
+                {
+                    "src/Project1/Project1.csproj",
+                    "src/Project1/Class1.netcore.cs",
+                    "src/Project1/Class1.desktop.cs",
+                },
+                fileset
+            );
+        }
+
+        [Fact]
+        public async Task ProjectReferences_OneLevel()
+        {
+            TemporaryCSharpProject target;
+            TemporaryCSharpProject proj2;
+            _tempDir
+                .SubDir("src")
+                    .SubDir("Project2")
+                        .WithCSharpProject("Project2", out proj2)
+                        .WithTargetFrameworks("netstandard1.1")
+                        .WithDefaultGlobs()
+                        .Dir()
+                        .WithFile("Class2.cs")
+                    .Up()
+                    .SubDir("Project1")
+                        .WithCSharpProject("Project1", out target)
+                        .WithTargetFrameworks("netcoreapp1.0", "net451")
+                        .WithProjectReference(proj2)
+                        .WithDefaultGlobs()
+                        .Dir()
+                        .WithFile("Class1.cs");
+
+            var fileset = await GetFileSet(target);
+
+            AssertEx.EqualFileList(
+                _tempDir.Root,
+                new[]
+                {
+                    "src/Project2/Project2.csproj",
+                    "src/Project2/Class2.cs",
+                    "src/Project1/Project1.csproj",
+                    "src/Project1/Class1.cs",
+                },
+                fileset
+            );
+        }
+
+        [Fact]
+        public async Task TransitiveProjectReferences_TwoLevels()
+        {
+            TemporaryCSharpProject target;
+            TemporaryCSharpProject proj2;
+            TemporaryCSharpProject proj3;
+            _tempDir
+                .SubDir("src")
+                    .SubDir("Project3")
+                        .WithCSharpProject("Project3", out proj3)
+                        .WithTargetFrameworks("netstandard1.0")
+                        .WithDefaultGlobs()
+                        .Dir()
+                        .WithFile("Class3.cs")
+                    .Up()
+                    .SubDir("Project2")
+                        .WithCSharpProject("Project2", out proj2)
+                        .WithTargetFrameworks("netstandard1.1")
+                        .WithProjectReference(proj3)
+                        .WithDefaultGlobs()
+                        .Dir()
+                        .WithFile("Class2.cs")
+                    .Up()
+                    .SubDir("Project1")
+                        .WithCSharpProject("Project1", out target)
+                        .WithTargetFrameworks("netcoreapp1.0", "net451")
+                        .WithProjectReference(proj2)
+                        .WithDefaultGlobs()
+                        .Dir()
+                        .WithFile("Class1.cs");
+
+            var fileset = await GetFileSet(target);
+
+            AssertEx.EqualFileList(
+                _tempDir.Root,
+                new[]
+                {
+                    "src/Project3/Project3.csproj",
+                    "src/Project3/Class3.cs",
+                    "src/Project2/Project2.csproj",
+                    "src/Project2/Class2.cs",
+                    "src/Project1/Project1.csproj",
+                    "src/Project1/Class1.cs",
+                },
+                fileset
+            );
+        }
+
+        [Fact]
+        public async Task ProjectReferences_Graph()
+        {
+            var graph = new TestProjectGraph(_tempDir);
+            graph.OnCreate(p => p.WithTargetFrameworks("net45").WithDefaultGlobs());
+            var matches = Regex.Matches(@"
+            A->B B->C C->D D->E
+                 B->E
+            A->F F->G G->E
+                 F->E
+            W->U
+            Y->Z
+            Y->B
+            Y->F",
+            @"(\w)->(\w)");
+
+            Assert.Equal(13, matches.Count);
+            foreach (Match m in matches)
+            {
+                var target = graph.GetOrCreate(m.Groups[2].Value);
+                graph.GetOrCreate(m.Groups[1].Value).WithProjectReference(target);
+            }
+
+            graph.Find("A").WithProjectReference(graph.Find("W"), watch: false);
+
+            var output = new OutputSink();
+            var filesetFactory = new MsBuildFileSetFactory(_logger, graph.GetOrCreate("A").Path, output)
+            {
+                // enables capturing markers to know which projects have been visited
+                BuildFlags = { "/p:_DotNetWatchTraceOutput=true" }
+            };
+
+            var fileset = await GetFileSet(filesetFactory);
+
+            _logger.LogInformation(output.Current.GetAllLines("Sink output: "));
+
+            var includedProjects = new[] { "A", "B", "C", "D", "E", "F", "G" };
+            AssertEx.EqualFileList(
+                _tempDir.Root,
+                includedProjects
+                    .Select(p => $"{p}/{p}.csproj"),
+                fileset
+            );
+
+            // ensure unreachable projects exist but where not included
+            Assert.NotNull(graph.Find("W"));
+            Assert.NotNull(graph.Find("U"));
+            Assert.NotNull(graph.Find("Y"));
+            Assert.NotNull(graph.Find("Z"));
+
+            // ensure each project is only visited once for collecting watch items
+            Assert.All(includedProjects,
+                projectName =>
+                    Assert.Single(output.Current.Lines,
+                        line => line.Contains($"Collecting watch items from '{projectName}'"))
+            );
+
+            // ensure each project is only visited once to collect project references
+            Assert.All(includedProjects,
+                projectName =>
+                    Assert.Single(output.Current.Lines,
+                    line => line.Contains($"Collecting referenced projects from '{projectName}'"))
+            );
+        }
+
+        private Task<IFileSet> GetFileSet(TemporaryCSharpProject target)
+            => GetFileSet(new MsBuildFileSetFactory(_logger, target.Path));
+        private async Task<IFileSet> GetFileSet(MsBuildFileSetFactory filesetFactory)
+        {
+            _tempDir.Create();
+            var createTask = filesetFactory.CreateAsync(CancellationToken.None);
+            var finished = await Task.WhenAny(createTask, Task.Delay(TimeSpan.FromSeconds(10)));
+
+            Assert.Same(createTask, finished);
+            return createTask.Result;
+        }
+
+        public void Dispose()
+        {
+            _tempDir.Dispose();
+        }
+    }
+}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TemporaryCSharpProject.cs b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TemporaryCSharpProject.cs
new file mode 100644
index 0000000000..bad0e0a949
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TemporaryCSharpProject.cs
@@ -0,0 +1,106 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.Text;
+
+namespace Microsoft.DotNetWatcher.Tools.Tests
+{
+    public class TemporaryCSharpProject
+    {
+        private const string Template =
+ @"<Project ToolsVersion=""15.0"" xmlns=""http://schemas.microsoft.com/developer/msbuild/2003"">
+  <Import Project=""$(MSBuildExtensionsPath)/$(MSBuildToolsVersion)/Microsoft.Common.props"" />
+  <PropertyGroup>
+    {0}
+    <OutputType>Exe</OutputType>
+  </PropertyGroup>
+  <ItemGroup>
+    {1}
+  </ItemGroup>
+  <Import Project=""$(MSBuildToolsPath)/Microsoft.CSharp.targets"" />
+</Project>";
+
+        private const string DefaultGlobs =
+@"<Compile Include=""**/*.cs"" Exclude=""obj/**/*;bin/**/*"" />
+<EmbeddedResource Include=""**/*.resx"" Exclude=""obj/**/*;bin/**/*"" />";
+
+        private readonly string _filename;
+        private readonly TemporaryDirectory _directory;
+        private string[] _tfms;
+        private List<string> _items = new List<string>();
+
+        public TemporaryCSharpProject(string name, TemporaryDirectory directory)
+        {
+            Name = name;
+            _filename = name + ".csproj";
+            _directory = directory;
+        }
+
+        public string Name { get; }
+        public string Path => System.IO.Path.Combine(_directory.Root, _filename);
+
+        public TemporaryCSharpProject WithTargetFrameworks(params string[] tfms)
+        {
+            _tfms = tfms;
+            return this;
+        }
+
+        public TemporaryCSharpProject WithItem(string itemName, string include, string condition = null)
+            => WithItem(new ItemSpec { Name = itemName, Include = include, Condition = condition });
+
+        public TemporaryCSharpProject WithItem(ItemSpec item)
+        {
+            var sb = new StringBuilder("<");
+            sb.Append(item.Name).Append(" ");
+            if (item.Include != null) sb.Append(" Include=\"").Append(item.Include).Append('"');
+            if (item.Remove != null) sb.Append(" Remove=\"").Append(item.Remove).Append('"');
+            if (item.Exclude != null) sb.Append(" Exclude=\"").Append(item.Exclude).Append('"');
+            if (item.Condition != null) sb.Append(" Exclude=\"").Append(item.Condition).Append('"');
+            if (!item.Watch) sb.Append(" Watch=\"false\" ");
+            sb.Append(" />");
+            _items.Add(sb.ToString());
+            return this;
+        }
+
+        public TemporaryCSharpProject WithProjectReference(TemporaryCSharpProject reference, bool watch = true)
+        {
+            if (ReferenceEquals(this, reference))
+            {
+                throw new InvalidOperationException("Can add project reference to self");
+            }
+
+            return WithItem(new ItemSpec { Name = "ProjectReference", Include = reference.Path, Watch = watch });
+        }
+
+        public TemporaryCSharpProject WithDefaultGlobs()
+        {
+            _items.Add(DefaultGlobs);
+            return this;
+        }
+
+        public TemporaryDirectory Dir() => _directory;
+
+        public void Create()
+        {
+            var tfm = _tfms == null || _tfms.Length == 0
+                ? string.Empty
+                : _tfms.Length == 1
+                    ? $"<TargetFramework>{_tfms[0]}</TargetFramework>"
+                    : $"<TargetFrameworks>{string.Join(";", _tfms)}</TargetFrameworks>";
+
+            _directory.CreateFile(_filename, string.Format(Template, tfm, string.Join("\r\n", _items)));
+        }
+
+        public class ItemSpec
+        {
+            public string Name { get; set; }
+            public string Include { get; set; }
+            public string Exclude { get; set; }
+            public string Remove { get; set; }
+            public bool Watch { get; set; } = true;
+            public string Condition { get; set; }
+        }
+    }
+}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TemporaryDirectory.cs b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TemporaryDirectory.cs
new file mode 100644
index 0000000000..ee90092e22
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TemporaryDirectory.cs
@@ -0,0 +1,107 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+using System.IO;
+
+namespace Microsoft.DotNetWatcher.Tools.Tests
+{
+    public class TemporaryDirectory : IDisposable
+    {
+        private List<TemporaryCSharpProject> _projects = new List<TemporaryCSharpProject>();
+        private List<TemporaryDirectory> _subdirs = new List<TemporaryDirectory>();
+        private List<string> _files = new List<string>();
+        private TemporaryDirectory _parent;
+
+        public TemporaryDirectory()
+        {
+            Root = Path.Combine(Path.GetTempPath(), "dotnet-watch-tests", Guid.NewGuid().ToString("N"));
+        }
+
+        private TemporaryDirectory(string path, TemporaryDirectory parent)
+        {
+            _parent = parent;
+            Root = path;
+        }
+
+        public TemporaryDirectory SubDir(string name)
+        {
+            var subdir = new TemporaryDirectory(Path.Combine(Root, name), this);
+            _subdirs.Add(subdir);
+            return subdir;
+        }
+
+        public string Root { get; }
+
+        public TemporaryCSharpProject WithCSharpProject(string name)
+        {
+            var project = new TemporaryCSharpProject(name, this);
+            _projects.Add(project);
+            return project;
+        }
+
+        public TemporaryCSharpProject WithCSharpProject(string name, out TemporaryCSharpProject project)
+        {
+            project = WithCSharpProject(name);
+            return project;
+        }
+
+        public TemporaryDirectory WithFile(string name)
+        {
+            _files.Add(name);
+            return this;
+        }
+
+        public TemporaryDirectory Up()
+        {
+            if (_parent == null)
+            {
+                throw new InvalidOperationException("This is the root directory");
+            }
+            return _parent;
+        }
+
+        public void Create()
+        {
+            Directory.CreateDirectory(Root);
+
+            foreach (var dir in _subdirs)
+            {
+                dir.Create();
+            }
+
+            foreach (var project in _projects)
+            {
+                project.Create();
+            }
+
+            foreach (var file in _files)
+            {
+                CreateFile(file, string.Empty);
+            }
+        }
+
+        public void CreateFile(string filename, string contents)
+        {
+            File.WriteAllText(Path.Combine(Root, filename), contents);
+        }
+
+        public void Dispose()
+        {
+            if (Root == null || !Directory.Exists(Root) || _parent != null)
+            {
+                return;
+            }
+
+            try
+            {
+                Directory.Delete(Root, recursive: true);
+            }
+            catch
+            {
+                Console.Error.WriteLine($"Test cleanup failed to delete '{Root}'");
+            }
+        }
+    }
+}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TestProjectGraph.cs b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TestProjectGraph.cs
new file mode 100644
index 0000000000..730f82f0db
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/TestProjectGraph.cs
@@ -0,0 +1,41 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using System.Collections.Generic;
+
+namespace Microsoft.DotNetWatcher.Tools.Tests
+{
+    public class TestProjectGraph
+    {
+        private readonly TemporaryDirectory _directory;
+        private Action<TemporaryCSharpProject> _onCreate;
+        private Dictionary<string, TemporaryCSharpProject> _projects = new Dictionary<string, TemporaryCSharpProject>();
+        public TestProjectGraph(TemporaryDirectory directory)
+        {
+            _directory = directory;
+        }
+
+        public void OnCreate(Action<TemporaryCSharpProject> onCreate)
+        {
+            _onCreate = onCreate;
+        }
+
+        public TemporaryCSharpProject Find(string projectName)
+            => _projects.ContainsKey(projectName)
+                ? _projects[projectName]
+                : null;
+
+        public TemporaryCSharpProject GetOrCreate(string projectName)
+        {
+            TemporaryCSharpProject sourceProj;
+            if (!_projects.TryGetValue(projectName, out sourceProj))
+            {
+                sourceProj = _directory.SubDir(projectName).WithCSharpProject(projectName);
+                _onCreate?.Invoke(sourceProj);
+                _projects.Add(projectName, sourceProj);
+            }
+            return sourceProj;
+        }
+    }
+}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/XunitLogger.cs b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/XunitLogger.cs
new file mode 100644
index 0000000000..640a4a0664
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/Utilities/XunitLogger.cs
@@ -0,0 +1,35 @@
+// Copyright (c) .NET Foundation. All rights reserved.
+// Licensed under the Apache License, Version 2.0. See License.txt in the project root for license information.
+
+using System;
+using Microsoft.Extensions.Logging;
+using Xunit.Abstractions;
+
+namespace Microsoft.DotNetWatcher.Tools.Tests
+{
+    internal class XunitLogger : ILogger
+    {
+        private readonly ITestOutputHelper _output;
+        public XunitLogger(ITestOutputHelper output)
+        {
+            _output = output;
+        }
+
+        public IDisposable BeginScope<TState>(TState state)
+            => NullScope.Instance;
+
+        public bool IsEnabled(LogLevel logLevel) => true;
+
+        public void Log<TState>(LogLevel logLevel, EventId eventId, TState state, Exception exception, Func<TState, Exception, string> formatter)
+        {
+            _output.WriteLine($"{logLevel}: {formatter(state, exception)}");
+        }
+
+        private class NullScope : IDisposable
+        {
+            private NullScope() { }
+            public static NullScope Instance = new NullScope();
+            public void Dispose() { }
+        }
+    }
+}
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/copyfiles.cmd b/test/Microsoft.DotNet.Watcher.Tools.Tests/copyfiles.cmd
new file mode 100644
index 0000000000..812690859e
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/copyfiles.cmd
@@ -0,0 +1,9 @@
+@ECHO OFF
+:again
+if not "%1" == "" (
+    echo "Deleting %1\tools"
+    rmdir /s /q %1\tools
+)
+
+mkdir %1\tools
+copy ..\..\src\Microsoft.DotNet.Watcher.Tools\tools\*.targets %1\tools
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/copyfiles.sh b/test/Microsoft.DotNet.Watcher.Tools.Tests/copyfiles.sh
new file mode 100755
index 0000000000..8c12918ae7
--- /dev/null
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/copyfiles.sh
@@ -0,0 +1,12 @@
+#!/usr/bin/env bash
+
+if [ -z $1 ]; then
+    echo "Deleting $1/tools"
+    rm -rf $1/tools
+fi
+
+mkdir -p $1/tools
+echo "Copying ./../src/Microsoft.DotNet.Watcher.Tools/tools/*.targets"
+cp ../../src/Microsoft.DotNet.Watcher.Tools/tools/*.targets $1/tools
+
+exit 0
\ No newline at end of file
diff --git a/test/Microsoft.DotNet.Watcher.Tools.Tests/project.json b/test/Microsoft.DotNet.Watcher.Tools.Tests/project.json
index a084f633f2..f938c008bf 100644
--- a/test/Microsoft.DotNet.Watcher.Tools.Tests/project.json
+++ b/test/Microsoft.DotNet.Watcher.Tools.Tests/project.json
@@ -1,7 +1,8 @@
 {
   "buildOptions": {
     "warningsAsErrors": true,
-    "keyFile": "../../tools/Key.snk"
+    "keyFile": "../../tools/Key.snk",
+    "debugType": "portable"
   },
   "dependencies": {
     "dotnet-test-xunit": "2.2.0-*",
@@ -18,5 +19,8 @@
       }
     }
   },
+  "scripts": {
+    "precompile": "copyfiles %compile:OutputDir%"
+  },
   "testRunner": "xunit"
 }
\ No newline at end of file