diff --git a/build/lib/compilation.js b/build/lib/compilation.js
index ae0726f273d..60fd1f7ddfb 100644
--- a/build/lib/compilation.js
+++ b/build/lib/compilation.js
@@ -4,23 +4,31 @@
  *--------------------------------------------------------------------------------------------*/
 'use strict';
 Object.defineProperty(exports, "__esModule", { value: true });
-var gulp = require("gulp");
-var tsb = require("gulp-tsb");
 var es = require("event-stream");
-var watch = require('./watch');
-var nls = require("./nls");
-var util = require("./util");
-var reporter_1 = require("./reporter");
-var path = require("path");
+var fs = require("fs");
+var gulp = require("gulp");
 var bom = require("gulp-bom");
 var sourcemaps = require("gulp-sourcemaps");
+var tsb = require("gulp-tsb");
+var path = require("path");
 var _ = require("underscore");
 var monacodts = require("../monaco/api");
-var fs = require("fs");
+var nls = require("./nls");
+var reporter_1 = require("./reporter");
+var util = require("./util");
+var watch = require('./watch');
+var assign = require("object-assign");
 var reporter = reporter_1.createReporter();
 function getTypeScriptCompilerOptions(src) {
     var rootDir = path.join(__dirname, "../../" + src);
-    var options = require("../../" + src + "/tsconfig.json").compilerOptions;
+    var tsconfig = require("../../" + src + "/tsconfig.json");
+    var options;
+    if (tsconfig.extends) {
+        options = assign({}, require(path.join(rootDir, tsconfig.extends)).compilerOptions, tsconfig.compilerOptions);
+    }
+    else {
+        options = tsconfig.compilerOptions;
+    }
     options.verbose = false;
     options.sourceMap = true;
     if (process.env['VSCODE_NO_SOURCEMAP']) { // To be used by developers in a hurry
diff --git a/build/lib/compilation.ts b/build/lib/compilation.ts
index e945859bc56..21fbb6a7731 100644
--- a/build/lib/compilation.ts
+++ b/build/lib/compilation.ts
@@ -5,25 +5,32 @@
 
 'use strict';
 
-import * as gulp from 'gulp';
-import * as tsb from 'gulp-tsb';
 import * as es from 'event-stream';
-const watch = require('./watch');
-import * as nls from './nls';
-import * as util from './util';
-import { createReporter } from './reporter';
-import * as path from 'path';
+import * as fs from 'fs';
+import * as gulp from 'gulp';
 import * as bom from 'gulp-bom';
 import * as sourcemaps from 'gulp-sourcemaps';
+import * as tsb from 'gulp-tsb';
+import * as path from 'path';
 import * as _ from 'underscore';
 import * as monacodts from '../monaco/api';
-import * as fs from 'fs';
+import * as nls from './nls';
+import { createReporter } from './reporter';
+import * as util from './util';
+const watch = require('./watch');
+import assign = require('object-assign');
 
 const reporter = createReporter();
 
 function getTypeScriptCompilerOptions(src: string) {
 	const rootDir = path.join(__dirname, `../../${src}`);
-	const options = require(`../../${src}/tsconfig.json`).compilerOptions;
+	const tsconfig = require(`../../${src}/tsconfig.json`);
+	let options: { [key: string]: any };
+	if (tsconfig.extends) {
+		options = assign({}, require(path.join(rootDir, tsconfig.extends)).compilerOptions, tsconfig.compilerOptions);
+	} else {
+		options = tsconfig.compilerOptions;
+	}
 	options.verbose = false;
 	options.sourceMap = true;
 	if (process.env['VSCODE_NO_SOURCEMAP']) { // To be used by developers in a hurry
diff --git a/src/tsconfig.base.json b/src/tsconfig.base.json
new file mode 100644
index 00000000000..623095b7226
--- /dev/null
+++ b/src/tsconfig.base.json
@@ -0,0 +1,34 @@
+{
+	"compilerOptions": {
+		"module": "amd",
+		"moduleResolution": "node",
+		"noImplicitAny": false,
+		"target": "es5",
+		"experimentalDecorators": true,
+		"noImplicitReturns": true,
+		"noUnusedLocals": true,
+		"noImplicitThis": true,
+		"alwaysStrict": true,
+		"baseUrl": ".",
+		"paths": {
+			"vs/*": [
+				"./vs/*"
+			]
+		},
+		"types": [
+			"keytar",
+			"minimist",
+			"mocha",
+			"semver",
+			"sinon",
+			"winreg"
+		]
+	},
+	"include": [
+		"./typings",
+		"./vs"
+	],
+	"exclude": [
+		"./typings/require-monaco.d.ts"
+	]
+}
\ No newline at end of file
diff --git a/src/tsconfig.json b/src/tsconfig.json
index c5a31a458f8..6f552e5ca05 100644
--- a/src/tsconfig.json
+++ b/src/tsconfig.json
@@ -1,33 +1,11 @@
 {
+	"extends": "./tsconfig.base.json",
 	"compilerOptions": {
-		"module": "amd",
-		"moduleResolution": "node",
-		"noImplicitAny": false,
 		"removeComments": false,
 		"preserveConstEnums": true,
-		"target": "es5",
 		"sourceMap": false,
-		"experimentalDecorators": true,
 		"declaration": true,
-		"noImplicitReturns": true,
-		"noUnusedLocals": true,
-		"noImplicitThis": true,
-		"alwaysStrict": true,
-		"baseUrl": ".",
-		"outDir": "../out",
-		"paths": {
-			"vs/*": [
-				"./vs/*"
-			]
-		},
-		"types": [
-			"keytar",
-			"minimist",
-			"mocha",
-			"semver",
-			"sinon",
-			"winreg"
-		]
+		"outDir": "../out"
 	},
 	"include": [
 		"./typings",
diff --git a/src/tsconfig.strictNullChecks.json b/src/tsconfig.strictNullChecks.json
new file mode 100644
index 00000000000..59f6328c061
--- /dev/null
+++ b/src/tsconfig.strictNullChecks.json
@@ -0,0 +1,14 @@
+{
+	"extends": "./tsconfig.base.json",
+	"compilerOptions": {
+		"noEmit": true,
+		"strictNullChecks": true
+	},
+	"include": [
+		"./typings",
+		"./vs/base/common/iterator.ts"
+	],
+	"exclude": [
+		"./typings/require-monaco.d.ts"
+	]
+}
\ No newline at end of file
diff --git a/src/vs/base/common/iterator.ts b/src/vs/base/common/iterator.ts
index 78f2117a656..eb3f9450f07 100644
--- a/src/vs/base/common/iterator.ts
+++ b/src/vs/base/common/iterator.ts
@@ -49,7 +49,7 @@ export module Iterator {
 		return {
 			next() {
 				const { done, value } = iterator.next();
-				return { done, value: done ? undefined : fn(value) };
+				return { done, value: done ? undefined : fn(value!) };
 			}
 		};
 	}
@@ -64,7 +64,7 @@ export module Iterator {
 						return { done, value: undefined };
 					}
 
-					if (fn(value)) {
+					if (fn(value!)) {
 						return { done, value };
 					}
 				}
@@ -74,7 +74,7 @@ export module Iterator {
 
 	export function forEach<T>(iterator: Iterator<T>, fn: (t: T) => void): void {
 		for (let next = iterator.next(); !next.done; next = iterator.next()) {
-			fn(next.value);
+			fn(next.value!);
 		}
 	}
 
@@ -96,7 +96,7 @@ export function getSequenceIterator<T>(arg: Iterator<T> | T[]): Iterator<T> {
 }
 
 export interface INextIterator<T> {
-	next(): T;
+	next(): T | null;
 }
 
 export class ArrayIterator<T> implements INextIterator<T> {
@@ -113,17 +113,17 @@ export class ArrayIterator<T> implements INextIterator<T> {
 		this.index = index;
 	}
 
-	public first(): T {
+	public first(): T | null {
 		this.index = this.start;
 		return this.current();
 	}
 
-	public next(): T {
+	public next(): T | null {
 		this.index = Math.min(this.index + 1, this.end);
 		return this.current();
 	}
 
-	protected current(): T {
+	protected current(): T | null {
 		if (this.index === this.start - 1 || this.index === this.end) {
 			return null;
 		}
@@ -138,34 +138,33 @@ export class ArrayNavigator<T> extends ArrayIterator<T> implements INavigator<T>
 		super(items, start, end, index);
 	}
 
-	public current(): T {
+	public current(): T | null {
 		return super.current();
 	}
 
-	public previous(): T {
+	public previous(): T | null {
 		this.index = Math.max(this.index - 1, this.start - 1);
 		return this.current();
 	}
 
-	public first(): T {
+	public first(): T | null {
 		this.index = this.start;
 		return this.current();
 	}
 
-	public last(): T {
+	public last(): T | null {
 		this.index = this.end - 1;
 		return this.current();
 	}
 
-	public parent(): T {
+	public parent(): T | null {
 		return null;
 	}
-
 }
 
 export class MappedIterator<T, R> implements INextIterator<R> {
 
-	constructor(protected iterator: INextIterator<T>, protected fn: (item: T) => R) {
+	constructor(protected iterator: INextIterator<T>, protected fn: (item: T | null) => R) {
 		// noop
 	}
 
@@ -173,12 +172,12 @@ export class MappedIterator<T, R> implements INextIterator<R> {
 }
 
 export interface INavigator<T> extends INextIterator<T> {
-	current(): T;
-	previous(): T;
-	parent(): T;
-	first(): T;
-	last(): T;
-	next(): T;
+	current(): T | null;
+	previous(): T | null;
+	parent(): T | null;
+	first(): T | null;
+	last(): T | null;
+	next(): T | null;
 }
 
 export class MappedNavigator<T, R> extends MappedIterator<T, R> implements INavigator<R> {