diff --git a/packages/schematics/angular/universal/files/__tsconfigFileName__.json b/packages/schematics/angular/universal/files/__tsconfigFileName__.json
index 552fe89351..c63eef6b08 100644
--- a/packages/schematics/angular/universal/files/__tsconfigFileName__.json
+++ b/packages/schematics/angular/universal/files/__tsconfigFileName__.json
@@ -1,15 +1,9 @@
 {
-  "extends": "../tsconfig.json",
+  "extends": "./<%= tsConfigExtends %>",
   "compilerOptions": {
     "outDir": "<%= outDir %>-server",
-    "baseUrl": "./",
-    "module": "commonjs",
-    "types": []
+    "module": "commonjs"
   },
-  "exclude": [
-    "test.ts",
-    "**/*.spec.ts"
-  ],
   "angularCompilerOptions": {
     "entryModule": "<%= appDir %>/<%= stripTsExtension(rootModuleFileName) %>#<%= rootModuleClassName %>"
   }
diff --git a/packages/schematics/angular/universal/index.ts b/packages/schematics/angular/universal/index.ts
index 1f2bd165c9..2129b6ca98 100644
--- a/packages/schematics/angular/universal/index.ts
+++ b/packages/schematics/angular/universal/index.ts
@@ -5,7 +5,14 @@
  * Use of this source code is governed by an MIT-style license that can be
  * found in the LICENSE file at https://angular.io/license
  */
-import { JsonObject, experimental, normalize, parseJson, strings } from '@angular-devkit/core';
+import {
+  JsonObject,
+  basename,
+  experimental,
+  normalize,
+  parseJson,
+  strings,
+} from '@angular-devkit/core';
 import {
   Rule,
   SchematicContext,
@@ -197,12 +204,14 @@ export default function (options: UniversalOptions): Rule {
     const clientProject = getClientProject(host, options);
     const clientArchitect = getClientArchitect(host, options);
     const outDir = getTsConfigOutDir(host, clientArchitect);
+    const tsConfigExtends = basename(clientArchitect.build.options.tsConfig);
     const templateSource = apply(url('./files'), [
       template({
         ...strings,
         ...options as object,
         stripTsExtension: (s: string) => { return s.replace(/\.ts$/, ''); },
         outDir,
+        tsConfigExtends,
       }),
       move(clientProject.root),
     ]);
diff --git a/packages/schematics/angular/universal/index_spec.ts b/packages/schematics/angular/universal/index_spec.ts
index c783384837..6dc3b92f02 100644
--- a/packages/schematics/angular/universal/index_spec.ts
+++ b/packages/schematics/angular/universal/index_spec.ts
@@ -62,7 +62,16 @@ describe('Universal Schematic', () => {
     const filePath = '/projects/bar/tsconfig.server.json';
     expect(tree.exists(filePath)).toEqual(true);
     const contents = tree.readContent(filePath);
-    expect(contents).toMatch('../../out-tsc/app-server');
+    expect(JSON.parse(contents)).toEqual({
+      extends: './tsconfig.app.json',
+      compilerOptions: {
+        outDir: '../../out-tsc/app-server',
+        module: 'commonjs',
+      },
+      angularCompilerOptions: {
+        entryModule: 'src/app/app.server.module#AppServerModule',
+      },
+    });
   });
 
   it('should add dependency: @angular/platform-server', () => {
diff --git a/packages/schematics/angular/universal/schema.json b/packages/schematics/angular/universal/schema.json
index e289ff3670..79027f7ddc 100644
--- a/packages/schematics/angular/universal/schema.json
+++ b/packages/schematics/angular/universal/schema.json
@@ -40,7 +40,7 @@
       "type": "string",
       "format": "path",
       "description": "The name of the application directory.",
-      "default": "app"
+      "default": "src/app"
     },
     "rootModuleFileName": {
       "type": "string",