tsconfig.json

{
  "compilerOptions": {
    /* Base Options */
    "esModuleInterop": true,
    "skipLibCheck": true,
    "target": "esnext",
    "allowJs": true,
    "resolveJsonModule": true,
    "moduleResolution": "node",
    "isolatedModules": true,
    "strict": true,

    /* React Native & JSX Specific */
    "module": "commonjs",
    "lib": ["es6"],
    "jsx": "react-native", // <-- THIS IS THE MOST CRITICAL FIX

    /* Pathing */
    "baseUrl": ".",
    "paths": {
      "*": ["src/*"]
    },

    /* Output */
    "declaration": true, // Creates .d.ts files
    "outDir": "lib"       // Where to output the compiled JS files
  },
  "include": [
    "src" // Only compile files in the src directory
  ],
  "exclude": [
    "node_modules",
    "babel.config.js",
    "metro.config.js",
    "example" // Exclude the example project from the library build
  ]
}