diff --git a/packages/playwright-test/jsx-runtime.js b/packages/playwright-test/jsx-runtime.js
new file mode 100644
index 0000000000000..220f4578c2b4f
--- /dev/null
+++ b/packages/playwright-test/jsx-runtime.js
@@ -0,0 +1,17 @@
+/**
+ * Copyright (c) Microsoft Corporation.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+module.exports = require('playwright/jsx-runtime');
diff --git a/packages/playwright-test/jsx-runtime.mjs b/packages/playwright-test/jsx-runtime.mjs
new file mode 100644
index 0000000000000..ddd37fdd2a8b0
--- /dev/null
+++ b/packages/playwright-test/jsx-runtime.mjs
@@ -0,0 +1,17 @@
+/**
+ * Copyright (c) Microsoft Corporation.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+export * from 'playwright/jsx-runtime';
diff --git a/packages/playwright-test/package.json b/packages/playwright-test/package.json
index bca8706e1d1e8..98bf8209a6535 100644
--- a/packages/playwright-test/package.json
+++ b/packages/playwright-test/package.json
@@ -22,6 +22,11 @@
       "default": "./index.js"
     },
     "./cli": "./cli.js",
+    "./jsx-runtime": {
+      "import": "./jsx-runtime.mjs",
+      "require": "./jsx-runtime.js",
+      "default": "./jsx-runtime.js"
+    },
     "./package.json": "./package.json",
     "./reporter": "./reporter.js"
   },
diff --git a/packages/playwright/src/common/configLoader.ts b/packages/playwright/src/common/configLoader.ts
index 6e2fa63afb98d..fae219e96b3c0 100644
--- a/packages/playwright/src/common/configLoader.ts
+++ b/packages/playwright/src/common/configLoader.ts
@@ -117,8 +117,7 @@ export async function loadConfig(location: ConfigLocation, overrides?: ConfigCLI
 
   // 3. Load transform options from the playwright config.
   const external = userConfig.build?.external || [];
-  const jsxImportSource = path.dirname(require.resolve('playwright'));
-  await setTransformConfig({ external, jsxImportSource });
+  await setTransformConfig({ external, jsxImportSource: '@playwright/test' });
   if (!overrides?.tsconfig)
     await setSingleTSConfig(fullConfig?.singleTSConfigPath);
 
diff --git a/tests/playwright-test/cache.spec.ts b/tests/playwright-test/cache.spec.ts
index 132cf8ca6ee68..307ab16c9dc31 100644
--- a/tests/playwright-test/cache.spec.ts
+++ b/tests/playwright-test/cache.spec.ts
@@ -101,3 +101,40 @@ test('should automatically clean cached versions of a changed file', async ({ ru
   expect(finalPathHash).toBe(firstPathHash);
   expect(finalTestHash).not.toBe(firstTestHash);
 });
+
+test('should not reuse cached jsx transform after playwright moves', {
+  annotation: { type: 'issue', description: 'https://github.com/microsoft/playwright/issues/42934' },
+}, async ({ runInlineTest, writeFiles, childProcess }) => {
+  const cacheDir = test.info().outputPath('playwright-test-cache');
+  const files = {
+    'playwright.config.ts': `
+      import { defineConfig } from '@playwright/test';
+      export default defineConfig({});
+    `,
+    'a.spec.tsx': `
+      import { test, expect } from '@playwright/test';
+      const element = <div />;
+      test('jsx', () => { expect(element).toBeTruthy(); });
+    `,
+  };
+  const baseDir = await writeFiles(files);
+
+  // Resolve playwright through symlinks so that the cached transform references them.
+  const packagesDir = path.join(__dirname, '../../packages');
+  const nodeModules = path.join(baseDir, 'node_modules');
+  await fs.promises.mkdir(path.join(nodeModules, '@playwright'), { recursive: true });
+  await fs.promises.symlink(path.join(packagesDir, 'playwright'), path.join(nodeModules, 'playwright'), 'dir');
+  await fs.promises.symlink(path.join(packagesDir, 'playwright-test'), path.join(nodeModules, '@playwright', 'test'), 'dir');
+  const first = childProcess({
+    command: ['node', '--preserve-symlinks', '--preserve-symlinks-main', path.join(nodeModules, '@playwright', 'test', 'cli.js'), 'test', '--list'],
+    env: { PWTEST_CACHE_DIR: cacheDir, NODE_PRESERVE_SYMLINKS: '1' },
+    cwd: baseDir,
+  });
+  expect((await first.exited).exitCode).toBe(0);
+  expect(first.output).toContain('Total: 1 test in 1 file');
+
+  await fs.promises.rm(nodeModules, { recursive: true });
+  const result = await runInlineTest(files, undefined, { PWTEST_CACHE_DIR: cacheDir });
+  expect(result.exitCode).toBe(0);
+  expect(result.passed).toBe(1);
+});
diff --git a/tests/playwright-test/loader.spec.ts b/tests/playwright-test/loader.spec.ts
index cca5bbf037d20..f4c4cf5e05271 100644
--- a/tests/playwright-test/loader.spec.ts
+++ b/tests/playwright-test/loader.spec.ts
@@ -14,8 +14,9 @@
  * limitations under the License.
  */
 
-import { test, expect } from './playwright-test-fixtures';
+import { test, expect, cliEntrypoint } from './playwright-test-fixtures';
 import fs from 'fs';
+import os from 'os';
 import path from 'path';
 import url from 'url';
 
@@ -547,6 +548,35 @@ test('should load jsx with top-level component', async ({ runInlineTest }) => {
   expect(exitCode).toBe(0);
 });
 
+test('should load jsx when playwright is not resolvable from the project', async ({ childProcess }) => {
+  // Mimic pnpm isolated layout: only @playwright/test is linked into the project's node_modules.
+  // The project must live outside of the repo, so that the repo's node_modules is not visible.
+  const baseDir = await fs.promises.realpath(await fs.promises.mkdtemp(path.join(os.tmpdir(), 'playwright-test-jsx-')));
+  const symlinkType = process.platform === 'win32' ? 'junction' : 'dir';
+  await fs.promises.mkdir(path.join(baseDir, 'node_modules', '@playwright'), { recursive: true });
+  await fs.promises.symlink(path.join(__dirname, '../../packages/playwright-test'), path.join(baseDir, 'node_modules', '@playwright', 'test'), symlinkType);
+  await fs.promises.writeFile(path.join(baseDir, 'playwright.config.ts'), `export default {};`);
+  await fs.promises.writeFile(path.join(baseDir, 'a.spec.tsx'), `
+    import { test, expect } from '@playwright/test';
+    const component = <div />;
+    test('succeeds', () => {
+      expect(component).toEqual({ __pw_type: 'jsx', type: 'div', props: {} });
+    });
+  `);
+  try {
+    const testProcess = childProcess({
+      command: ['node', cliEntrypoint, 'test', '--reporter=line'],
+      env: { PWTEST_CACHE_DIR: path.join(baseDir, 'cache') },
+      cwd: baseDir,
+    });
+    const { exitCode } = await testProcess.exited;
+    expect(testProcess.output).toContain('1 passed');
+    expect(exitCode).toBe(0);
+  } finally {
+    await fs.promises.rm(baseDir, { recursive: true, force: true });
+  }
+});
+
 test('should load a jsx/tsx files with fragments', async ({ runInlineTest }) => {
   const { exitCode, passed } = await runInlineTest({
     'helper.tsx': `