diff --git a/CHANGELOG.md b/CHANGELOG.md
index 8422906c8b7..87d2d52c8c0 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -419,3 +419,8 @@
 - Fixed a bug where renaming a local variable which is used in combination with
   label shorthand syntax would produce invalid code.
   ([Surya Rose](https://github.com/GearsDatapacks))
+
+- Fixed a bug where enabling `typescript_declarations = true` wouldn't generate
+  TypeScript declarations unless the build directory was manually deleted. The
+  compiler now automatically rebuilds the project when this configuration changes.
+  ([daniellionel01](https://github.com/daniellionel01))
diff --git a/compiler-core/src/build/project_compiler.rs b/compiler-core/src/build/project_compiler.rs
index fcd3fdc8642..726ac25e7a5 100644
--- a/compiler-core/src/build/project_compiler.rs
+++ b/compiler-core/src/build/project_compiler.rs
@@ -188,6 +188,10 @@ where
         // verify that this version is appropriate.
         self.check_gleam_version()?;
 
+        // Checks if JavaScript configuration has changed since the last build (particularly TypeScript declarations)
+        // and rebuilds the project if necessary to ensure consistent compilation with current settings
+        self.rebuild_if_javascript_config_changed()?;
+
         // The JavaScript target requires a prelude module to be written.
         self.write_prelude()?;
 
@@ -261,6 +265,48 @@ where
             })
     }
 
+    /// Checks if JavaScript configuration has changed since the last build.
+    /// If it has changed (e.g., TypeScript declarations setting), we clear the build directory
+    /// to ensure a clean rebuild with the new settings.
+    pub fn rebuild_if_javascript_config_changed(&self) -> Result<(), Error> {
+        if !self.target().is_javascript() || !self.options.codegen.should_codegen(true) {
+            return Ok(());
+        }
+
+        let build_path = self
+            .paths
+            .build_directory_for_target(self.mode(), self.target());
+
+        let ts_indicator_path = build_path.join("typescript-declarations.lock");
+        let ts_enabled = self.config.javascript.typescript_declarations;
+
+        let needs_rebuild = if ts_enabled {
+            !self.io.is_file(&ts_indicator_path)
+        } else {
+            self.io.is_file(&ts_indicator_path)
+        };
+
+        if needs_rebuild {
+            tracing::info!("removing_build_state_due_to_javascript_config_change");
+            self.io.delete_directory(&build_path)?;
+
+            self.io.mkdir(&build_path)?;
+
+            if ts_enabled {
+                self.io
+                    .write(&ts_indicator_path, "")
+                    .map_err(|e| Error::FileIo {
+                        action: FileIoAction::WriteTo,
+                        kind: FileKind::File,
+                        path: ts_indicator_path,
+                        err: Some(e.to_string()),
+                    })?;
+            }
+        }
+
+        Ok(())
+    }
+
     pub fn compile_dependencies(&mut self) -> Result<Vec<Module>, Error> {
         assert!(
             self.stale_modules.is_empty(),