diff --git a/README.md b/README.md
index a005f50..7174b23 100644
--- a/README.md
+++ b/README.md
@@ -16,7 +16,6 @@ watchpack high level API doesn't map directly to watchers. Instead a three level
 - The real watchers are created by the `DirectoryWatcher`.
 - Files are never watched directly. This should keep the watcher count low.
 - Watching can be started in the past. This way watching can start after file reading.
-- Symlinks are not followed, instead the symlink is watched.
 
 ## API
 
diff --git a/lib/DirectoryWatcher.js b/lib/DirectoryWatcher.js
index 034447d..efcc953 100644
--- a/lib/DirectoryWatcher.js
+++ b/lib/DirectoryWatcher.js
@@ -1,4 +1,4 @@
-/*
+/*
 	MIT License http://www.opensource.org/licenses/mit-license.php
 	Author Tobias Koppers @sokra
 */
@@ -61,6 +61,7 @@ class DirectoryWatcher extends EventEmitter {
 		this.watcherManager = watcherManager;
 		this.options = options;
 		this.path = directoryPath;
+		this.watchingSymlink = false;
 		// safeTime is the point in time after which reading is safe to be unchanged
 		// timestamp is a value that should be compared with another timestamp (mtime)
 		/** @type {Map<string, { safeTime: number, timestamp: number }} */
@@ -111,8 +112,8 @@ class DirectoryWatcher extends EventEmitter {
 					this.watchInParentDirectory();
 				}
 				this.watcher = watchEventSource.watch(this.path);
-				this.watcher.on("change", this.onWatchEvent.bind(this));
 				this.watcher.on("error", this.onWatcherError.bind(this));
+				this.watcher.on("change", this.onWatchEvent.bind(this));
 			}
 		} catch (err) {
 			this.onWatcherError(err);
@@ -393,6 +394,7 @@ class DirectoryWatcher extends EventEmitter {
 			const checkStats = () => {
 				if (this.closed) return;
 				this._activeEvents.set(filename, false);
+
 				fs.lstat(filePath, (err, stats) => {
 					if (this.closed) return;
 					if (this._activeEvents.get(filename) === true) {
@@ -549,11 +551,6 @@ class DirectoryWatcher extends EventEmitter {
 			fs.readdir(this.path, (err, items) => {
 				if (this.closed) return;
 				if (err) {
-					if (err.code === "ENOENT" || err.code === "EPERM") {
-						this.onDirectoryRemoved("scan readdir failed");
-					} else {
-						this.onScanError(err);
-					}
 					this.initialScan = false;
 					this.initialScanFinished = Date.now();
 					if (initial) {
@@ -626,22 +623,7 @@ class DirectoryWatcher extends EventEmitter {
 					}
 				});
 				for (const itemPath of itemPaths) {
-					fs.lstat(itemPath, (err2, stats) => {
-						if (this.closed) return;
-						if (err2) {
-							if (
-								err2.code === "ENOENT" ||
-								err2.code === "EPERM" ||
-								err2.code === "EACCES" ||
-								err2.code === "EBUSY"
-							) {
-								this.setMissing(itemPath, initial, "scan (" + err2.code + ")");
-							} else {
-								this.onScanError(err2);
-							}
-							itemFinished();
-							return;
-						}
+					const handleStats = (stats, symlinkStats) => {
 						if (stats.isFile() || stats.isSymbolicLink()) {
 							if (stats.mtime) {
 								ensureFsAccuracy(stats.mtime);
@@ -653,7 +635,11 @@ class DirectoryWatcher extends EventEmitter {
 								true,
 								"scan (file)"
 							);
-						} else if (stats.isDirectory()) {
+						}
+						if (
+							stats.isDirectory() ||
+							(symlinkStats && symlinkStats.isDirectory())
+						) {
 							if (!initial || !this.directories.has(itemPath))
 								this.setDirectory(
 									itemPath,
@@ -663,6 +649,42 @@ class DirectoryWatcher extends EventEmitter {
 								);
 						}
 						itemFinished();
+					};
+					fs.lstat(itemPath, (err2, stats) => {
+						if (this.closed) return;
+						if (err2) {
+							if (
+								err2.code === "ENOENT" ||
+								err2.code === "EPERM" ||
+								err2.code === "EACCES" ||
+								err2.code === "EBUSY"
+							) {
+								this.setMissing(itemPath, initial, "scan (" + err2.code + ")");
+							} else {
+								this.onScanError(err2);
+							}
+							itemFinished();
+							return;
+						}
+						if (
+							stats.isSymbolicLink() &&
+							this.watcherManager.options.followSymlinks
+						) {
+							fs.stat(itemPath, (err3, symlinkStats) => {
+								if (this.closed) return;
+								// something is wrong with the symlink, but not with the file itself
+								if (err3) {
+									handleStats(stats);
+									this.watchingSymlink = false;
+									return;
+								}
+								this.watchingSymlink = true;
+								handleStats(stats, symlinkStats);
+							});
+						} else {
+							this.watchingSymlink = false;
+							handleStats(stats);
+						}
 					});
 				}
 				itemFinished();
diff --git a/test/Watchpack.js b/test/Watchpack.js
index 4559c62..a1963ba 100644
--- a/test/Watchpack.js
+++ b/test/Watchpack.js
@@ -1237,6 +1237,8 @@ describe("Watchpack", function() {
 				testHelper.symlinkFile(path.join("a", "b", "link"), "c");
 				testHelper.symlinkFile(path.join("a", "b", "link2"), "link");
 				testHelper.symlinkFile("link2", "link/link/link2");
+				testHelper.dir("b");
+				testHelper.symlinkDir(path.join("b", "link"), path.join("..", "a", "b"));
 
 				testHelper.tick(1000, done);
 			});
@@ -1368,6 +1370,20 @@ describe("Watchpack", function() {
 					}
 				);
 			});
+
+			it("should detect a change to symlinked file outside watched directory", function(done) {
+				expectWatchEvent(
+					[],
+					path.join(fixtures, "b"),
+					changes => {
+						Array.from(changes).should.be.eql([path.join(fixtures, "b")]);
+						done();
+					},
+					() => {
+						testHelper.file(path.join("a", "b", "d"));
+					}
+				);
+			});
 		});
 	} else {
 		it("symlinks");