diff --git a/.babelrc b/.babelrc
deleted file mode 100644
index a29ac9986..000000000
--- a/.babelrc
+++ /dev/null
@@ -1,5 +0,0 @@
-{
-  "presets": [
-    "@babel/preset-env"
-  ]
-}
diff --git a/babel.config.js b/babel.config.js
new file mode 100644
index 000000000..941bbdda7
--- /dev/null
+++ b/babel.config.js
@@ -0,0 +1,5 @@
+module.exports = {
+  'presets': [
+    '@babel/preset-env'
+  ]
+}
diff --git a/package.json b/package.json
index 77dfaae21..8e2d81d8a 100644
--- a/package.json
+++ b/package.json
@@ -75,6 +75,12 @@
     "src"
   ],
   "jest": {
+    "transform": {
+      "^.+\\.jsx?$": "./transformer.js"
+    },
+    "transformIgnorePatterns": [
+      "/node_modules/(?!dagre-d3-renderer/lib).*\\.js"
+    ],
     "moduleNameMapper": {
       "\\.(css|scss)$": "identity-obj-proxy"
     }
diff --git a/src/mermaidAPI.js b/src/mermaidAPI.js
index 89ce96949..ed4773287 100644
--- a/src/mermaidAPI.js
+++ b/src/mermaidAPI.js
@@ -50,7 +50,7 @@ for (const themeName of ['default', 'forest', 'dark', 'neutral']) {
  */
 const config = {
 
-/** theme , the CSS style sheet
+  /** theme , the CSS style sheet
   *
   * **theme** - Choose one of the built-in themes: default, forest, dark or neutral. To disable any pre-defined mermaid theme, use "null".
   * **themeCSS** - Use your own CSS. This overrides **theme**.
diff --git a/transformer.js b/transformer.js
new file mode 100644
index 000000000..83a6eae1b
--- /dev/null
+++ b/transformer.js
@@ -0,0 +1,3 @@
+module.exports = require('babel-jest').createTransformer({
+  rootMode: 'upward'
+})
diff --git a/webpack.config.base.js b/webpack.config.base.js
index 727880fd6..d40eaafa2 100644
--- a/webpack.config.base.js
+++ b/webpack.config.base.js
@@ -8,7 +8,10 @@ const amdRule = {
 
 const jsRule = {
   test: /\.js$/,
-  exclude: /node_modules/,
+  include: [
+    path.resolve(__dirname, './src'),
+    path.resolve(__dirname, './node_modules/dagre-d3-renderer/lib')
+  ],
   use: {
     loader: 'babel-loader'
   }