diff --git a/packages/cli/generators/example/index.js b/packages/cli/generators/example/index.js
index 4059053121f9..373dfe4fe66b 100644
--- a/packages/cli/generators/example/index.js
+++ b/packages/cli/generators/example/index.js
@@ -132,10 +132,22 @@ module.exports = class extends BaseGenerator {
     const absOutDir = await downloadAndExtractExample(this.exampleName, cwd);
     this.outDir = path.relative(cwd, absOutDir);
     const tsconfig = path.join(absOutDir, 'tsconfig.json');
+
+    // Support older versions of examples that are using `tsconfig.build.json`
     const tsBuildConfig = path.join(absOutDir, 'tsconfig.build.json');
     const exists = await fs.exists(tsconfig);
-    if (exists) return;
-    return fs.rename(tsBuildConfig, tsconfig);
+    if (!exists) {
+      return fs.rename(tsBuildConfig, tsconfig);
+    }
+
+    // Recent versions of examples are using project references inside monorepo,
+    // see https://github.com/strongloop/loopback-next/pull/5155
+    // we must switch to standalone mode (no project references) when the code
+    // was checked out outside of our monorepo.
+    const tsconfigContent = await fs.readJson(tsconfig);
+    delete tsconfigContent.references;
+    delete tsconfigContent.compilerOptions.composite;
+    await fs.writeJson(tsconfig, tsconfigContent);
   }
 
   install() {
diff --git a/packages/cli/test/integration/generators/example.integration.js b/packages/cli/test/integration/generators/example.integration.js
index de908c331aa9..e3ec413306b3 100644
--- a/packages/cli/test/integration/generators/example.integration.js
+++ b/packages/cli/test/integration/generators/example.integration.js
@@ -8,6 +8,7 @@
 const assert = require('yeoman-assert');
 const expect = require('@loopback/testlab').expect;
 const path = require('path');
+const {readJsonSync} = require('fs-extra');
 
 const generator = path.join(__dirname, '../../../generators/example');
 const baseTests = require('../lib/base-generator')(generator);
@@ -87,4 +88,28 @@ describe('lb4 example', function () {
         },
       );
   });
+
+  it('removes project references from tsconfig', () => {
+    return testUtils
+      .executeGenerator(generator)
+      .withPrompts({name: VALID_EXAMPLE})
+      .then(() => {
+        const tsconfigFile = 'tsconfig.json';
+        const expectedConfig = readJsonSync(
+          require.resolve(
+            `../../../../../examples/${VALID_EXAMPLE}/${tsconfigFile}`,
+          ),
+        );
+        delete expectedConfig.references;
+        delete expectedConfig.compilerOptions.composite;
+
+        assert.file(tsconfigFile);
+
+        // IMPORTANT! We cannot use `assert.jsonFileContent` here
+        // because the helper only checks if the file contains all expected
+        // properties, it does not verify there is no additional data.
+        const actualConfig = readJsonSync(tsconfigFile);
+        expect(actualConfig).to.deepEqual(expectedConfig);
+      });
+  });
 });