diff --git a/packages/compiler-cli/src/ngcc/src/analysis/decoration_analyzer.ts b/packages/compiler-cli/src/ngcc/src/analysis/decoration_analyzer.ts
index 75fb58bfc5..69ad987677 100644
--- a/packages/compiler-cli/src/ngcc/src/analysis/decoration_analyzer.ts
+++ b/packages/compiler-cli/src/ngcc/src/analysis/decoration_analyzer.ts
@@ -60,7 +60,7 @@ export class DecorationAnalyzer {
     new BaseDefDecoratorHandler(this.typeChecker, this.host),
     new ComponentDecoratorHandler(
         this.typeChecker, this.host, this.scopeRegistry, this.isCore, this.resourceLoader,
-        this.rootDirs),
+        this.rootDirs, /* defaultPreserveWhitespaces */ false),
     new DirectiveDecoratorHandler(this.typeChecker, this.host, this.scopeRegistry, this.isCore),
     new InjectableDecoratorHandler(this.host, this.isCore),
     new NgModuleDecoratorHandler(this.typeChecker, this.host, this.scopeRegistry, this.isCore),
diff --git a/packages/compiler-cli/src/ngtsc/annotations/src/component.ts b/packages/compiler-cli/src/ngtsc/annotations/src/component.ts
index b803b7a2bb..a3bbbf896d 100644
--- a/packages/compiler-cli/src/ngtsc/annotations/src/component.ts
+++ b/packages/compiler-cli/src/ngtsc/annotations/src/component.ts
@@ -38,7 +38,8 @@ export class ComponentDecoratorHandler implements
   constructor(
       private checker: ts.TypeChecker, private reflector: ReflectionHost,
       private scopeRegistry: SelectorScopeRegistry, private isCore: boolean,
-      private resourceLoader: ResourceLoader, private rootDirs: string[]) {}
+      private resourceLoader: ResourceLoader, private rootDirs: string[],
+      private defaultPreserveWhitespaces: boolean) {}
 
   private literalCache = new Map<Decorator, ts.ObjectLiteralExpression>();
   private elementSchemaRegistry = new DomElementSchemaRegistry();
@@ -111,7 +112,7 @@ export class ComponentDecoratorHandler implements
           ErrorCode.COMPONENT_MISSING_TEMPLATE, decorator.node, 'component is missing a template');
     }
 
-    let preserveWhitespaces: boolean = false;
+    let preserveWhitespaces: boolean = this.defaultPreserveWhitespaces;
     if (component.has('preserveWhitespaces')) {
       const expr = component.get('preserveWhitespaces') !;
       const value = staticallyResolve(expr, this.reflector, this.checker);
diff --git a/packages/compiler-cli/src/ngtsc/annotations/test/component_spec.ts b/packages/compiler-cli/src/ngtsc/annotations/test/component_spec.ts
index 4decbfdde9..ffa02def51 100644
--- a/packages/compiler-cli/src/ngtsc/annotations/test/component_spec.ts
+++ b/packages/compiler-cli/src/ngtsc/annotations/test/component_spec.ts
@@ -40,7 +40,7 @@ describe('ComponentDecoratorHandler', () => {
     const host = new TypeScriptReflectionHost(checker);
     const handler = new ComponentDecoratorHandler(
         checker, host, new SelectorScopeRegistry(checker, host), false, new NoopResourceLoader(),
-        ['']);
+        [''], false);
     const TestCmp = getDeclaration(program, 'entry.ts', 'TestCmp', ts.isClassDeclaration);
     const detected = handler.detect(TestCmp, host.getDecoratorsOfDeclaration(TestCmp));
     if (detected === undefined) {
diff --git a/packages/compiler-cli/src/ngtsc/program.ts b/packages/compiler-cli/src/ngtsc/program.ts
index c925718dca..9ea3ba656f 100644
--- a/packages/compiler-cli/src/ngtsc/program.ts
+++ b/packages/compiler-cli/src/ngtsc/program.ts
@@ -219,7 +219,8 @@ export class NgtscProgram implements api.Program {
     const handlers = [
       new BaseDefDecoratorHandler(checker, this.reflector),
       new ComponentDecoratorHandler(
-          checker, this.reflector, scopeRegistry, this.isCore, this.resourceLoader, this.rootDirs),
+          checker, this.reflector, scopeRegistry, this.isCore, this.resourceLoader, this.rootDirs,
+          this.options.preserveWhitespaces || false),
       new DirectiveDecoratorHandler(checker, this.reflector, scopeRegistry, this.isCore),
       new InjectableDecoratorHandler(this.reflector, this.isCore),
       new NgModuleDecoratorHandler(checker, this.reflector, scopeRegistry, this.isCore),
diff --git a/packages/compiler-cli/test/ngtsc/ngtsc_spec.ts b/packages/compiler-cli/test/ngtsc/ngtsc_spec.ts
index 8b159bb2c1..a7d1bd4c73 100644
--- a/packages/compiler-cli/test/ngtsc/ngtsc_spec.ts
+++ b/packages/compiler-cli/test/ngtsc/ngtsc_spec.ts
@@ -553,6 +553,46 @@ describe('ngtsc behavioral tests', () => {
     expect(trim(jsContents)).toContain(trim(hostBindingsFn));
   });
 
+  it('should take preserveWhitespaces config option into account', () => {
+    env.tsconfig({preserveWhitespaces: true});
+    env.write(`test.ts`, `
+      import {Component} from '@angular/core';
+       @Component({
+        selector: 'test',
+        template: \`
+          <div>
+            Template with whitespaces
+          </div>
+        \`
+      })
+      class FooCmp {}
+    `);
+    env.driveMain();
+    const jsContents = env.getContents('test.js');
+    expect(jsContents)
+        .toContain('text(2, "\\n            Template with whitespaces\\n          ");');
+  });
+
+  it('@Component\'s preserveWhitespaces should override the one defined in config', () => {
+    env.tsconfig({preserveWhitespaces: true});
+    env.write(`test.ts`, `
+      import {Component} from '@angular/core';
+       @Component({
+        selector: 'test',
+        preserveWhitespaces: false,
+        template: \`
+          <div>
+            Template with whitespaces
+          </div>
+        \`
+      })
+      class FooCmp {}
+    `);
+    env.driveMain();
+    const jsContents = env.getContents('test.js');
+    expect(jsContents).toContain('text(1, " Template with whitespaces ");');
+  });
+
   it('should correctly recognize local symbols', () => {
     env.tsconfig();
     env.write('module.ts', `