diff --git a/src/Orchard.Tests.Modules/Migrations/SchemaCommandGeneratorTests.cs b/src/Orchard.Tests.Modules/Migrations/SchemaCommandGeneratorTests.cs
index 6fa006694..928ce7f7a 100644
--- a/src/Orchard.Tests.Modules/Migrations/SchemaCommandGeneratorTests.cs
+++ b/src/Orchard.Tests.Modules/Migrations/SchemaCommandGeneratorTests.cs
@@ -191,7 +191,7 @@ Features:
                 throw new NotImplementedException();
             }
 
-            public IEnumerable<string> GetFileDependencies(DependencyDescriptor dependency, string virtualPath) {
+            public IEnumerable<string> GetDynamicModuleDependencies(DependencyDescriptor dependency, string virtualPath) {
                 throw new NotImplementedException();
             }
 
diff --git a/src/Orchard.Tests/Environment/Extensions/ExtensionLoaderCoordinatorTests.cs b/src/Orchard.Tests/Environment/Extensions/ExtensionLoaderCoordinatorTests.cs
index 4b32af63c..f2bbbf216 100644
--- a/src/Orchard.Tests/Environment/Extensions/ExtensionLoaderCoordinatorTests.cs
+++ b/src/Orchard.Tests/Environment/Extensions/ExtensionLoaderCoordinatorTests.cs
@@ -112,7 +112,7 @@ namespace Orchard.Tests.Environment.Extensions {
                 throw new NotImplementedException();
             }
 
-            public IEnumerable<string> GetFileDependencies(DependencyDescriptor dependency, string virtualPath) {
+            public IEnumerable<string> GetDynamicModuleDependencies(DependencyDescriptor dependency, string virtualPath) {
                 throw new NotImplementedException();
             }
 
diff --git a/src/Orchard.Tests/Environment/Extensions/ExtensionManagerTests.cs b/src/Orchard.Tests/Environment/Extensions/ExtensionManagerTests.cs
index 14381e75e..557a9e021 100644
--- a/src/Orchard.Tests/Environment/Extensions/ExtensionManagerTests.cs
+++ b/src/Orchard.Tests/Environment/Extensions/ExtensionManagerTests.cs
@@ -116,7 +116,7 @@ namespace Orchard.Tests.Environment.Extensions {
                 throw new NotImplementedException();
             }
 
-            public IEnumerable<string> GetFileDependencies(DependencyDescriptor dependency, string virtualPath) {
+            public IEnumerable<string> GetDynamicModuleDependencies(DependencyDescriptor dependency, string virtualPath) {
                 throw new NotImplementedException();
             }
 
diff --git a/src/Orchard/Environment/Extensions/Compilers/DefaultProjectFileParser.cs b/src/Orchard/Environment/Extensions/Compilers/DefaultProjectFileParser.cs
index 321ed56ce..b4048bfd5 100644
--- a/src/Orchard/Environment/Extensions/Compilers/DefaultProjectFileParser.cs
+++ b/src/Orchard/Environment/Extensions/Compilers/DefaultProjectFileParser.cs
@@ -39,15 +39,33 @@ namespace Orchard.Environment.Extensions.Compilers {
                 .Elements(ns("Project"))
                 .Elements(ns("ItemGroup"))
                 .Elements(ns("Reference"))
-                .Attributes("Include")
-                .Select(c => new ReferenceDescriptor { SimpleName = ExtractAssemblyName(c.Value), FullName = c.Value });
+                .Where(c => c.Attribute("Include") != null)
+                .Select(c => {
+                            string path = null;
+                            XElement attribute = c.Elements(ns("HintPath")).FirstOrDefault();
+                            if (attribute != null) {
+                                path = attribute.Value;
+                            }
+
+                            return new ReferenceDescriptor {
+                                SimpleName = ExtractAssemblyName(c.Attribute("Include").Value),
+                                FullName = c.Attribute("Include").Value,
+                                Path = path,
+                                ReferenceType = ReferenceType.Library
+                            };
+                        });
 
             var projectReferences = document
                 .Elements(ns("Project"))
                 .Elements(ns("ItemGroup"))
                 .Elements(ns("ProjectReference"))
                 .Attributes("Include")
-                .Select(c => new ReferenceDescriptor { SimpleName = Path.GetFileNameWithoutExtension(c.Value), FullName = Path.GetFileNameWithoutExtension(c.Value) });
+                .Select(c => new ReferenceDescriptor {
+                    SimpleName = Path.GetFileNameWithoutExtension(c.Value),
+                    FullName = Path.GetFileNameWithoutExtension(c.Value),
+                    Path = c.Value,
+                    ReferenceType = ReferenceType.Project
+                });
 
             return assemblyReferences.Union(projectReferences);
         }
diff --git a/src/Orchard/Environment/Extensions/Compilers/ProjectFileDescriptor.cs b/src/Orchard/Environment/Extensions/Compilers/ProjectFileDescriptor.cs
index a4387f117..7212935c6 100644
--- a/src/Orchard/Environment/Extensions/Compilers/ProjectFileDescriptor.cs
+++ b/src/Orchard/Environment/Extensions/Compilers/ProjectFileDescriptor.cs
@@ -1,6 +1,11 @@
 using System.Collections.Generic;
 
 namespace Orchard.Environment.Extensions.Compilers {
+    public enum ReferenceType {
+        Library,
+        Project
+    }
+
     public class ProjectFileDescriptor {
         public string AssemblyName { get; set; }
         public IEnumerable<string> SourceFilenames { get; set; }
@@ -9,5 +14,7 @@ namespace Orchard.Environment.Extensions.Compilers {
     public class ReferenceDescriptor {
         public string SimpleName { get; set; }
         public string FullName { get; set; }
+        public string Path { get; set; }
+        public ReferenceType ReferenceType { get; set; }
     }
 }
\ No newline at end of file
diff --git a/src/Orchard/Environment/Extensions/Loaders/DynamicExtensionLoader.cs b/src/Orchard/Environment/Extensions/Loaders/DynamicExtensionLoader.cs
index cd16d4f0c..eae0ea91f 100644
--- a/src/Orchard/Environment/Extensions/Loaders/DynamicExtensionLoader.cs
+++ b/src/Orchard/Environment/Extensions/Loaders/DynamicExtensionLoader.cs
@@ -54,13 +54,13 @@ namespace Orchard.Environment.Extensions.Loaders {
             return GetDependencies(dependency.VirtualPath);
         }
 
-        public override IEnumerable<string> GetFileDependencies(DependencyDescriptor dependency, string virtualPath){
+        public override IEnumerable<string> GetDynamicModuleDependencies(DependencyDescriptor dependency, string virtualPath) {
             virtualPath = _virtualPathProvider.ToAppRelative(virtualPath);
 
             if (StringComparer.OrdinalIgnoreCase.Equals(virtualPath, dependency.VirtualPath)) {
-                return GetSourceFiles(virtualPath);
+                return GetDependencies(virtualPath);
             }
-            return base.GetFileDependencies(dependency, virtualPath);
+            return base.GetDynamicModuleDependencies(dependency, virtualPath);
         }
 
         public override void Monitor(ExtensionDescriptor descriptor, Action<IVolatileToken> monitor) {
@@ -184,17 +184,31 @@ namespace Orchard.Environment.Extensions.Loaders {
         }
 
         private IEnumerable<string> GetDependencies(string projectPath) {
-            return new[] {projectPath}.Concat(GetSourceFiles(projectPath));
-        }
+            List<string> dependencies = new[] { projectPath }.ToList();
 
-        private IEnumerable<string> GetSourceFiles(string projectPath) {
             var basePath = _virtualPathProvider.GetDirectoryName(projectPath);
 
             using (var stream = _virtualPathProvider.OpenFile(projectPath)) {
                 var projectFile = _projectFileParser.Parse(stream);
 
-                return projectFile.SourceFilenames.Select(f => _virtualPathProvider.Combine(basePath, f));
+                // Add source files
+                dependencies.AddRange(projectFile.SourceFilenames.Select(f => _virtualPathProvider.Combine(basePath, f)));
+
+                // Add Project and Library References
+                foreach (ReferenceDescriptor referenceDescriptor in projectFile.References.Where(reference => !string.IsNullOrEmpty(reference.Path))) {
+                    string path = _virtualPathProvider.Combine(basePath, referenceDescriptor.Path);
+
+                    if (_virtualPathProvider.FileExists(path)) {
+                        dependencies.Add(path);
+
+                        if (referenceDescriptor.ReferenceType == ReferenceType.Project) {
+                            dependencies.AddRange(GetDependencies(path));
+                        }
+                    }
+                }
             }
+
+            return dependencies;
         }
 
         private string GetProjectPath(ExtensionDescriptor descriptor) {
diff --git a/src/Orchard/Environment/Extensions/Loaders/ExtensionLoaderBase.cs b/src/Orchard/Environment/Extensions/Loaders/ExtensionLoaderBase.cs
index e246bfab9..be17465b2 100644
--- a/src/Orchard/Environment/Extensions/Loaders/ExtensionLoaderBase.cs
+++ b/src/Orchard/Environment/Extensions/Loaders/ExtensionLoaderBase.cs
@@ -58,7 +58,7 @@ namespace Orchard.Environment.Extensions.Loaders {
             return Enumerable.Empty<string>();
         }
 
-        public virtual IEnumerable<string> GetFileDependencies(DependencyDescriptor dependency, string virtualPath) {
+        public virtual IEnumerable<string> GetDynamicModuleDependencies(DependencyDescriptor dependency, string virtualPath) {
             return Enumerable.Empty<string>();
         }
     }
diff --git a/src/Orchard/Environment/Extensions/Loaders/IExtensionLoader.cs b/src/Orchard/Environment/Extensions/Loaders/IExtensionLoader.cs
index 2b22ebf29..9d681c83a 100644
--- a/src/Orchard/Environment/Extensions/Loaders/IExtensionLoader.cs
+++ b/src/Orchard/Environment/Extensions/Loaders/IExtensionLoader.cs
@@ -41,6 +41,6 @@ namespace Orchard.Environment.Extensions.Loaders {
 
         string GetWebFormAssemblyDirective(DependencyDescriptor dependency);
         IEnumerable<string> GetWebFormVirtualDependencies(DependencyDescriptor dependency);
-        IEnumerable<string> GetFileDependencies(DependencyDescriptor dependency, string virtualPath);
+        IEnumerable<string> GetDynamicModuleDependencies(DependencyDescriptor dependency, string virtualPath);
     }
 }
\ No newline at end of file
diff --git a/src/Orchard/FileSystems/Dependencies/DynamicModuleVirtualPathProvider.cs b/src/Orchard/FileSystems/Dependencies/DynamicModuleVirtualPathProvider.cs
index 55b1defd1..b0dda1f0e 100644
--- a/src/Orchard/FileSystems/Dependencies/DynamicModuleVirtualPathProvider.cs
+++ b/src/Orchard/FileSystems/Dependencies/DynamicModuleVirtualPathProvider.cs
@@ -47,7 +47,7 @@ namespace Orchard.FileSystems.Dependencies {
                 var loader = _loaders.Where(l => l.Name == desc.LoaderName).FirstOrDefault();
                 if (loader != null) {
 
-                    var otherDependencies = loader.GetFileDependencies(desc, virtualPath);
+                    var otherDependencies = loader.GetDynamicModuleDependencies(desc, virtualPath);
                     if (otherDependencies.Any()) {
 
                         var allDependencies = virtualPathDependencies.OfType<string>().Concat(otherDependencies);
diff --git a/src/Orchard/FileSystems/VirtualPath/DefaultVirtualPathProvider.cs b/src/Orchard/FileSystems/VirtualPath/DefaultVirtualPathProvider.cs
index 9cd99d6c9..cc5261710 100644
--- a/src/Orchard/FileSystems/VirtualPath/DefaultVirtualPathProvider.cs
+++ b/src/Orchard/FileSystems/VirtualPath/DefaultVirtualPathProvider.cs
@@ -58,7 +58,12 @@ namespace Orchard.FileSystems.VirtualPath {
         }
 
         public bool FileExists(string virtualPath) {
-            return HostingEnvironment.VirtualPathProvider.FileExists(virtualPath);
+            try {
+                return HostingEnvironment.VirtualPathProvider.FileExists(virtualPath);
+            } catch {
+                // Medium Trust or invalid mappings that fall outside the app folder
+                return false;
+            }
         }
 
         public bool DirectoryExists(string virtualPath) {