diff --git a/docusaurus/docs/proxying-api-requests-in-development.md b/docusaurus/docs/proxying-api-requests-in-development.md
index 66563e25e45..536f6587f01 100644
--- a/docusaurus/docs/proxying-api-requests-in-development.md
+++ b/docusaurus/docs/proxying-api-requests-in-development.md
@@ -110,6 +110,6 @@ module.exports = function(app) {
 
 > **Note:** You do not need to import this file anywhere. It is automatically registered when you start the development server.
 
-> **Note:** This file only supports Node's JavaScript syntax. Be sure to only use supported language features (i.e. no support for Flow, ES Modules, etc).
+> **Note:** This file does not support ES Modules. But, if you would like more than what Node's JavaScript syntax has to offer (e.g. TypeScript support), install `@babel/register` as a dependency or devDependency using npm or Yarn
 
 > **Note:** Passing the path to the proxy function allows you to use globbing and/or pattern matching on the path, which is more flexible than the express route matching.
diff --git a/packages/cra-template-typescript/template.json b/packages/cra-template-typescript/template.json
index 7e6f0fcc426..00ae2a16792 100644
--- a/packages/cra-template-typescript/template.json
+++ b/packages/cra-template-typescript/template.json
@@ -1,6 +1,7 @@
 {
   "package": {
     "dependencies": {
+      "@babel/register": "^7.9.0",
       "@testing-library/jest-dom": "^5.11.4",
       "@testing-library/react": "^11.1.0",
       "@testing-library/user-event": "^12.1.10",
diff --git a/packages/react-scripts/config/paths.js b/packages/react-scripts/config/paths.js
index f4470a02f63..2450a48f5a3 100644
--- a/packages/react-scripts/config/paths.js
+++ b/packages/react-scripts/config/paths.js
@@ -72,7 +72,7 @@ module.exports = {
   appJsConfig: resolveApp('jsconfig.json'),
   yarnLockFile: resolveApp('yarn.lock'),
   testsSetup: resolveModule(resolveApp, 'src/setupTests'),
-  proxySetup: resolveApp('src/setupProxy.js'),
+  proxySetup: resolveModule(resolveApp, 'src/setupProxy'),
   appNodeModules: resolveApp('node_modules'),
   appWebpackCache: resolveApp('node_modules/.cache'),
   appTsBuildInfoFile: resolveApp('node_modules/.cache/tsconfig.tsbuildinfo'),
@@ -97,7 +97,7 @@ module.exports = {
   appJsConfig: resolveApp('jsconfig.json'),
   yarnLockFile: resolveApp('yarn.lock'),
   testsSetup: resolveModule(resolveApp, 'src/setupTests'),
-  proxySetup: resolveApp('src/setupProxy.js'),
+  proxySetup: resolveModule(resolveApp, 'src/setupProxy'),
   appNodeModules: resolveApp('node_modules'),
   appWebpackCache: resolveApp('node_modules/.cache'),
   appTsBuildInfoFile: resolveApp('node_modules/.cache/tsconfig.tsbuildinfo'),
@@ -135,7 +135,7 @@ if (
     appJsConfig: resolveOwn(`${templatePath}/jsconfig.json`),
     yarnLockFile: resolveOwn(`${templatePath}/yarn.lock`),
     testsSetup: resolveModule(resolveOwn, `${templatePath}/src/setupTests`),
-    proxySetup: resolveOwn(`${templatePath}/src/setupProxy.js`),
+    proxySetup: resolveModule(resolveOwn, `${templatePath}/src/setupProxy`),
     appNodeModules: resolveOwn('node_modules'),
     appWebpackCache: resolveOwn('node_modules/.cache'),
     appTsBuildInfoFile: resolveOwn('node_modules/.cache/tsconfig.tsbuildinfo'),
diff --git a/packages/react-scripts/config/webpackDevServer.config.js b/packages/react-scripts/config/webpackDevServer.config.js
index 2202da20346..b9407bc6e2a 100644
--- a/packages/react-scripts/config/webpackDevServer.config.js
+++ b/packages/react-scripts/config/webpackDevServer.config.js
@@ -108,6 +108,17 @@ module.exports = function (proxy, allowedHost) {
       app.use(evalSourceMapMiddleware(server));
 
       if (fs.existsSync(paths.proxySetup)) {
+        // Importing the proxySetup may require typescript (or other) support.
+        // @babel/register can be used to add support at runtime, so if it's
+        // listed as a dependency, then import it before importing proxySetup
+        const packageJSON = fs.readFileSync(paths.appPackageJson).toString();
+        const { dependencies, devDependencies } = JSON.parse(packageJSON);
+        if (
+          '@babel/register' in (dependencies || {}) ||
+          '@babel/register' in (devDependencies || {})
+        ) {
+          require('@babel/register');
+        }
         // This registers user provided middleware for proxy reasons
         require(paths.proxySetup)(app);
       }