diff --git a/packages/schematics/angular/application/files/common-files/tsconfig.app.json.template b/packages/schematics/angular/application/files/common-files/tsconfig.app.json.template
index a65978e44714..c9064b22766b 100644
--- a/packages/schematics/angular/application/files/common-files/tsconfig.app.json.template
+++ b/packages/schematics/angular/application/files/common-files/tsconfig.app.json.template
@@ -3,13 +3,14 @@
 {
   "extends": "<%= relativePathToWorkspaceRoot %>/tsconfig.json",
   "compilerOptions": {
+    "composite": true,
     "outDir": "<%= relativePathToWorkspaceRoot %>/out-tsc/app",
     "types": []
   },
-  "files": [
-    "src/main.ts"
-  ],
   "include": [
-    "src/**/*.d.ts"
+    "src/**/*.ts"
+  ],
+  "exclude": [
+    "src/**/*.spec.ts"
   ]
 }
diff --git a/packages/schematics/angular/application/files/common-files/tsconfig.spec.json.template b/packages/schematics/angular/application/files/common-files/tsconfig.spec.json.template
index 3a0a2b43e8f1..40b32b8bc458 100644
--- a/packages/schematics/angular/application/files/common-files/tsconfig.spec.json.template
+++ b/packages/schematics/angular/application/files/common-files/tsconfig.spec.json.template
@@ -3,13 +3,13 @@
 {
   "extends": "<%= relativePathToWorkspaceRoot %>/tsconfig.json",
   "compilerOptions": {
+    "composite": true,
     "outDir": "<%= relativePathToWorkspaceRoot %>/out-tsc/spec",
     "types": [
       "jasmine"
     ]
   },
   "include": [
-    "src/**/*.spec.ts",
-    "src/**/*.d.ts"
+    "src/**/*.ts"
   ]
 }
diff --git a/packages/schematics/angular/application/index.ts b/packages/schematics/angular/application/index.ts
index 2273afc311b1..b85ad2b41d36 100644
--- a/packages/schematics/angular/application/index.ts
+++ b/packages/schematics/angular/application/index.ts
@@ -26,12 +26,28 @@ import {
 import { NodePackageInstallTask } from '@angular-devkit/schematics/tasks';
 import { Schema as ComponentOptions } from '../component/schema';
 import { NodeDependencyType, addPackageJsonDependency } from '../utility/dependencies';
+import { JSONFile } from '../utility/json-file';
 import { latestVersions } from '../utility/latest-versions';
 import { relativePathToWorkspaceRoot } from '../utility/paths';
 import { getWorkspace, updateWorkspace } from '../utility/workspace';
 import { Builders, ProjectType } from '../utility/workspace-models';
 import { Schema as ApplicationOptions, Style } from './schema';
 
+function addTsProjectReference(...paths: string[]) {
+  return (host: Tree) => {
+    if (!host.exists('tsconfig.json')) {
+      return host;
+    }
+
+    const newReferences = paths.map((path) => ({ path }));
+
+    const file = new JSONFile(host, 'tsconfig.json');
+    const jsonPath = ['references'];
+    const value = file.get(jsonPath);
+    file.modify(jsonPath, Array.isArray(value) ? [...value, ...newReferences] : newReferences);
+  };
+}
+
 export default function (options: ApplicationOptions): Rule {
   return async (host: Tree, context: SchematicContext) => {
     const { appDir, appRootSelector, componentOptions, folderName, sourceDir } =
@@ -39,6 +55,10 @@ export default function (options: ApplicationOptions): Rule {
 
     return chain([
       addAppToWorkspaceFile(options, appDir, folderName),
+      addTsProjectReference(join(normalize(appDir), 'tsconfig.app.json')),
+      options.skipTests
+        ? noop()
+        : addTsProjectReference(join(normalize(appDir), 'tsconfig.spec.json')),
       options.standalone
         ? noop()
         : schematic('module', {
diff --git a/packages/schematics/angular/application/index_spec.ts b/packages/schematics/angular/application/index_spec.ts
index 31c505a1548a..e9b84948db24 100644
--- a/packages/schematics/angular/application/index_spec.ts
+++ b/packages/schematics/angular/application/index_spec.ts
@@ -93,8 +93,13 @@ describe('Application Schematic', () => {
   it('should set the right paths in the tsconfig.app.json', async () => {
     const tree = await schematicRunner.runSchematic('application', defaultOptions, workspaceTree);
 
-    const { files, extends: _extends } = readJsonFile(tree, '/projects/foo/tsconfig.app.json');
-    expect(files).toEqual(['src/main.ts']);
+    const {
+      include,
+      exclude,
+      extends: _extends,
+    } = readJsonFile(tree, '/projects/foo/tsconfig.app.json');
+    expect(include).toEqual(['src/**/*.ts']);
+    expect(exclude).toEqual(['src/**/*.spec.ts']);
     expect(_extends).toBe('../../tsconfig.json');
   });
 
@@ -105,6 +110,34 @@ describe('Application Schematic', () => {
     expect(_extends).toBe('../../tsconfig.json');
   });
 
+  it('should add project references in the root tsconfig.json', async () => {
+    const tree = await schematicRunner.runSchematic('application', defaultOptions, workspaceTree);
+
+    const { references } = readJsonFile(tree, '/tsconfig.json');
+    expect(references).toContain(
+      jasmine.objectContaining({ path: 'projects/foo/tsconfig.app.json' }),
+    );
+    expect(references).toContain(
+      jasmine.objectContaining({ path: 'projects/foo/tsconfig.spec.json' }),
+    );
+  });
+
+  it('should not add spec project reference in the root tsconfig.json with "skipTests" enabled', async () => {
+    const tree = await schematicRunner.runSchematic(
+      'application',
+      { ...defaultOptions, skipTests: true },
+      workspaceTree,
+    );
+
+    const { references } = readJsonFile(tree, '/tsconfig.json');
+    expect(references).toContain(
+      jasmine.objectContaining({ path: 'projects/foo/tsconfig.app.json' }),
+    );
+    expect(references).not.toContain(
+      jasmine.objectContaining({ path: 'projects/foo/tsconfig.spec.json' }),
+    );
+  });
+
   it('should install npm dependencies when `skipInstall` is false', async () => {
     await schematicRunner.runSchematic(
       'application',
diff --git a/packages/schematics/angular/server/index.ts b/packages/schematics/angular/server/index.ts
index a8baccf0d503..50f624e078cd 100644
--- a/packages/schematics/angular/server/index.ts
+++ b/packages/schematics/angular/server/index.ts
@@ -119,10 +119,6 @@ function updateConfigFileApplicationBuilder(options: ServerOptions): Rule {
 function updateTsConfigFile(tsConfigPath: string): Rule {
   return (host: Tree) => {
     const json = new JSONFile(host, tsConfigPath);
-    const filesPath = ['files'];
-    const files = new Set((json.get(filesPath) as string[] | undefined) ?? []);
-    files.add('src/' + serverMainEntryName);
-    json.modify(filesPath, [...files]);
 
     const typePath = ['compilerOptions', 'types'];
     const types = new Set((json.get(typePath) as string[] | undefined) ?? []);
diff --git a/packages/schematics/angular/server/index_spec.ts b/packages/schematics/angular/server/index_spec.ts
index 09dfbc73d2a1..f3e5e277d8ef 100644
--- a/packages/schematics/angular/server/index_spec.ts
+++ b/packages/schematics/angular/server/index_spec.ts
@@ -167,7 +167,6 @@ describe('Server Schematic', () => {
       const filePath = '/projects/bar/tsconfig.app.json';
       const contents = parseJson(tree.readContent(filePath).toString());
       expect(contents.compilerOptions.types).toEqual(['node']);
-      expect(contents.files).toEqual(['src/main.ts', 'src/main.server.ts']);
     });
 
     it(`should add 'provideClientHydration' to the providers list`, async () => {
diff --git a/packages/schematics/angular/ssr/index.ts b/packages/schematics/angular/ssr/index.ts
index b81188340f0b..e589395dac73 100644
--- a/packages/schematics/angular/ssr/index.ts
+++ b/packages/schematics/angular/ssr/index.ts
@@ -154,6 +154,13 @@ function updateApplicationBuilderTsConfigRule(options: SSROptions): Rule {
     }
 
     const json = new JSONFile(host, tsConfigPath);
+
+    // Skip adding the files entry if the server entry would already be included
+    const include = json.get(['include']);
+    if (Array.isArray(include) && include.includes('src/**/*.ts')) {
+      return;
+    }
+
     const filesPath = ['files'];
     const files = new Set((json.get(filesPath) as string[] | undefined) ?? []);
     files.add('src/server.ts');
diff --git a/packages/schematics/angular/ssr/index_spec.ts b/packages/schematics/angular/ssr/index_spec.ts
index a9f4eff7ac5e..97b534aba8e1 100644
--- a/packages/schematics/angular/ssr/index_spec.ts
+++ b/packages/schematics/angular/ssr/index_spec.ts
@@ -70,13 +70,28 @@ describe('SSR Schematic', () => {
       expect((schematicRunner.tasks[0].options as { command: string }).command).toBe('install');
     });
 
-    it(`should update 'tsconfig.app.json' files with Express main file`, async () => {
+    it(`should not update 'tsconfig.app.json' files with Express main file already included`, async () => {
       const tree = await schematicRunner.runSchematic('ssr', defaultOptions, appTree);
       const { files } = tree.readJson('/projects/test-app/tsconfig.app.json') as {
         files: string[];
       };
 
-      expect(files).toEqual(['src/main.ts', 'src/main.server.ts', 'src/server.ts']);
+      expect(files).toBeUndefined();
+    });
+
+    it(`should update 'tsconfig.app.json' files with Express main file if not included`, async () => {
+      const appTsConfigContent = appTree.readJson('/projects/test-app/tsconfig.app.json') as {
+        include?: string[];
+      };
+      appTsConfigContent.include = [];
+      appTree.overwrite('/projects/test-app/tsconfig.app.json', JSON.stringify(appTsConfigContent));
+
+      const tree = await schematicRunner.runSchematic('ssr', defaultOptions, appTree);
+      const { files } = tree.readJson('/projects/test-app/tsconfig.app.json') as {
+        files: string[];
+      };
+
+      expect(files).toContain('src/server.ts');
     });
   });
 
diff --git a/packages/schematics/angular/workspace/files/tsconfig.json.template b/packages/schematics/angular/workspace/files/tsconfig.json.template
index 92d84123aeee..798ec8305a16 100644
--- a/packages/schematics/angular/workspace/files/tsconfig.json.template
+++ b/packages/schematics/angular/workspace/files/tsconfig.json.template
@@ -2,8 +2,7 @@
 /* To learn more about Angular compiler options: https://angular.dev/reference/configs/angular-compiler-options. */
 {
   "compileOnSave": false,
-  "compilerOptions": {
-    "outDir": "./dist/out-tsc",<% if (strict) { %>
+  "compilerOptions": {<% if (strict) { %>
     "strict": true,
     "noImplicitOverride": true,
     "noPropertyAccessFromIndexSignature": true,
@@ -22,5 +21,6 @@
     "strictInputAccessModifiers": true,
     "typeCheckHostBindings": true,
     "strictTemplates": true<% } %>
-  }
+  },
+  "files": []
 }