diff --git a/packages/rstack/src/fmt/discoverPaths.ts b/packages/rstack/src/fmt/discoverPaths.ts
index d236bc6b..7ed432ae 100644
--- a/packages/rstack/src/fmt/discoverPaths.ts
+++ b/packages/rstack/src/fmt/discoverPaths.ts
@@ -18,8 +18,8 @@ interface DiscoverFmtPathsOptions {
   patterns?: string[];
   /** Whether files inside node_modules may be discovered. */
   withNodeModules?: boolean;
-  /** Returns whether a scanned directory can be pruned before traversal. */
-  isDirectoryIgnored?: (directoryPath: string) => boolean;
+  /** Returns whether a scanned path can be excluded during traversal. */
+  isIgnored?: (filePath: string, isDirectory: boolean) => boolean;
 }
 
 const isErrnoException = (error: unknown): error is NodeJS.ErrnoException =>
@@ -209,7 +209,7 @@ const createTraversalOptions = (
   gitIgnore: GitIgnoreMatcher,
   ignoredDirNames: ReadonlySet<string>,
   isIncluded?: (filePath: string) => boolean,
-  isDirectoryIgnored?: (directoryPath: string) => boolean,
+  isIgnored?: (filePath: string, isDirectory: boolean) => boolean,
 ) => {
   return {
     followSymlinks: false,
@@ -221,12 +221,16 @@ const createTraversalOptions = (
       }
 
       if (dirent.isDirectory()) {
-        return gitIgnore.isIgnored(targetPath, true) || isDirectoryIgnored?.(targetPath) === true;
+        return gitIgnore.isIgnored(targetPath, true) || isIgnored?.(targetPath, true) === true;
+      }
+
+      if (isIncluded !== undefined && !isIncluded(targetPath)) {
+        return true;
       }
 
       return (
+        isIgnored?.(targetPath, false) === true ||
         isBinaryPath(targetPath) ||
-        (isIncluded !== undefined && !isIncluded(targetPath)) ||
         gitIgnore.isIgnored(targetPath, false)
       );
     },
@@ -352,7 +356,7 @@ const discoverFmtPaths = async ({
   cwd,
   patterns: inputPatterns,
   withNodeModules = false,
-  isDirectoryIgnored,
+  isIgnored,
 }: DiscoverFmtPathsOptions): Promise<string[]> => {
   const patterns = inputPatterns?.length ? inputPatterns : ['.'];
   const resolveRelativePath = createRelativePathResolver(cwd);
@@ -385,7 +389,7 @@ const discoverFmtPaths = async ({
         }
 
         await gitIgnore.loadThrough(rootPath);
-        if (gitIgnore.isIgnored(rootPath, true) || isDirectoryIgnored?.(rootPath) === true) {
+        if (gitIgnore.isIgnored(rootPath, true) || isIgnored?.(rootPath, true) === true) {
           return [];
         }
 
@@ -406,7 +410,7 @@ const discoverFmtPaths = async ({
         return (
           await readdir(
             rootPath,
-            createTraversalOptions(gitIgnore, ignoredDirNames, isIncluded, isDirectoryIgnored),
+            createTraversalOptions(gitIgnore, ignoredDirNames, isIncluded, isIgnored),
           )
         ).files;
       }),
diff --git a/packages/rstack/src/fmt/discovery.ts b/packages/rstack/src/fmt/discovery.ts
index bacd7553..d4e012e8 100644
--- a/packages/rstack/src/fmt/discovery.ts
+++ b/packages/rstack/src/fmt/discovery.ts
@@ -24,7 +24,7 @@ const discoverFmtFiles = async ({
     cwd,
     patterns,
     withNodeModules,
-    isDirectoryIgnored: (directoryPath) => isIgnored(directoryPath, true),
+    isIgnored,
   });
   if (candidates.length === 0) {
     return [];
diff --git a/packages/rstack/tests/fmt/discoverPaths.test.ts b/packages/rstack/tests/fmt/discoverPaths.test.ts
index 02bfbd2d..5ad4aa0b 100644
--- a/packages/rstack/tests/fmt/discoverPaths.test.ts
+++ b/packages/rstack/tests/fmt/discoverPaths.test.ts
@@ -139,28 +139,39 @@ test('lets explicit files bypass gitignore', async () => {
   });
 });
 
-test('prunes directories with an external ignore matcher', async () => {
+test('applies an external ignore matcher during traversal', async () => {
   await withTempProject(async (rootPath) => {
     writeProjectFile(rootPath, 'generated/nested/output.ts');
+    const ignoredFilePath = writeProjectFile(rootPath, 'src/ignored.ts');
     writeProjectFile(rootPath, 'src/index.ts');
-    const checkedDirectories: string[] = [];
+    const checkedPaths: { path: string; isDirectory: boolean }[] = [];
     const generatedPath = path.join(rootPath, 'generated');
-    const isDirectoryIgnored = (directoryPath: string): boolean => {
-      checkedDirectories.push(path.relative(rootPath, directoryPath));
-      return directoryPath === generatedPath;
+    const isIgnored = (filePath: string, isDirectory: boolean): boolean => {
+      checkedPaths.push({
+        path: path.relative(rootPath, filePath),
+        isDirectory,
+      });
+      return isDirectory ? filePath === generatedPath : filePath === ignoredFilePath;
     };
 
-    const files = await discoverFmtPaths({ cwd: rootPath, isDirectoryIgnored });
+    const files = await discoverFmtPaths({ cwd: rootPath, isIgnored });
     const ignoredRoot = await discoverFmtPaths({
       cwd: rootPath,
       patterns: ['generated'],
-      isDirectoryIgnored,
+      isIgnored,
     });
 
     expect(relativePaths(rootPath, files)).toEqual([path.join('src', 'index.ts')]);
     expect(ignoredRoot).toEqual([]);
-    expect(checkedDirectories).toContain('generated');
-    expect(checkedDirectories).not.toContain(path.join('generated', 'nested'));
+    expect(checkedPaths).toContainEqual({ path: 'generated', isDirectory: true });
+    expect(checkedPaths).toContainEqual({
+      path: path.join('src', 'ignored.ts'),
+      isDirectory: false,
+    });
+    expect(checkedPaths).not.toContainEqual({
+      path: path.join('generated', 'nested'),
+      isDirectory: true,
+    });
   });
 });