diff --git a/src/bake/DevServer.zig b/src/bake/DevServer.zig
index c7cb78b426..71a10e9393 100644
--- a/src/bake/DevServer.zig
+++ b/src/bake/DevServer.zig
@@ -4353,7 +4353,7 @@ fn dumpStateDueToCrash(dev: *DevServer) !void {
     const filepath = std.fmt.bufPrintZ(&filepath_buf, "incremental-graph-crash-dump.{d}.html", .{std.time.timestamp()}) catch "incremental-graph-crash-dump.html";
     const file = std.fs.cwd().createFileZ(filepath, .{}) catch |err| {
         bun.handleErrorReturnTrace(err, @errorReturnTrace());
-        Output.warn("Could not open directory for dumping sources: {}", .{err});
+        Output.warn("Could not open file for dumping incremental graph: {}", .{err});
         return;
     };
     defer file.close();
diff --git a/src/bake/production.zig b/src/bake/production.zig
index 4e796c155b..58c53279f1 100644
--- a/src/bake/production.zig
+++ b/src/bake/production.zig
@@ -155,7 +155,7 @@ pub fn buildWithVm(ctx: bun.CLI.Command.Context, cwd: []const u8, vm: *VirtualMa
             break :config try bake.UserOptions.fromJS(app, vm.global);
         },
         .rejected => |err| {
-            return global.throwValue2(err.toError() orelse err);
+            return global.throwValue(err.toError() orelse err);
         },
     };
 
diff --git a/test/bake/dev-server-harness.ts b/test/bake/dev-server-harness.ts
index 947b37d132..49cf8f572e 100644
--- a/test/bake/dev-server-harness.ts
+++ b/test/bake/dev-server-harness.ts
@@ -27,7 +27,9 @@ export const minimalFramework: Bake.Framework = {
   },
 };
 
-export interface DevServerTest {
+export type DevServerTest = ({
+  /** Starting files */
+  files: FileObject;
   /**
    * Framework to use. Consider `minimalFramework` if possible.
    * Provide this object or `files['bun.app.ts']` for a dynamic one.
@@ -38,8 +40,13 @@ export interface DevServerTest {
    * combined with the `framework` option.
    */
   pluginFile?: string;
-  /** Starting files */
-  files: FileObject;
+} | {
+  /** 
+   * Copy all files from test/bake/fixtures/<name>
+   * This directory must contain `bun.app.ts` to allow hacking on fixtures manually via `bun run .`
+   */
+  fixture: string;
+}) & {
   test: (dev: Dev) => Promise<void>;
 }
 
@@ -327,31 +334,47 @@ export function devTest<T extends DevServerTest>(description: string, options: T
 
   jest.test(`DevServer > ${basename}.${count}: ${description}`, async () => {
     const root = path.join(tempDir, basename + count);
-    writeAll(root, options.files);
-    if (options.files["bun.app.ts"] == undefined) {
-      if (!options.framework) {
-        throw new Error("Must specify a options.framework or provide a bun.app.ts file");
+    if ('files' in options) {
+      writeAll(root, options.files);
+      if (options.files["bun.app.ts"] == undefined) {
+        if (!options.framework) {
+          throw new Error("Must specify a options.framework or provide a bun.app.ts file");
+        }
+        if (options.pluginFile) {
+          fs.writeFileSync(path.join(root, "pluginFile.ts"), dedent(options.pluginFile));
+        }
+        fs.writeFileSync(
+          path.join(root, "bun.app.ts"),
+          dedent`
+            ${options.pluginFile ? 
+              `import plugins from './pluginFile.ts';` : "let plugins = undefined;"
+            }
+            export default {
+              app: {
+                framework: ${JSON.stringify(options.framework)},
+                plugins,
+              },
+            };
+          `,
+        );
+      } else {
+        if (options.pluginFile) {
+          throw new Error("Cannot provide both bun.app.ts and pluginFile");
+        }
       }
-      if (options.pluginFile) {
-        fs.writeFileSync(path.join(root, "pluginFile.ts"), dedent(options.pluginFile));
-      }
-      fs.writeFileSync(
-        path.join(root, "bun.app.ts"),
-        dedent`
-          ${options.pluginFile ? 
-            `import plugins from './pluginFile.ts';` : "let plugins = undefined;"
-          }
-          export default {
-            app: {
-              framework: ${JSON.stringify(options.framework)},
-              plugins,
-            },
-          };
-        `,
-      );
     } else {
-      if (options.pluginFile) {
-        throw new Error("Cannot provide both bun.app.ts and pluginFile");
+      if (!options.fixture) {
+        throw new Error("Must provide either `fixture` or `files`");
+      }
+      const fixture = path.join(devTestRoot, "../fixtures", options.fixture);
+      fs.cpSync(fixture, root, { recursive: true });
+
+      if(!fs.existsSync(path.join(root, "bun.app.ts"))) {
+        throw new Error(`Fixture ${fixture} must contain a bun.app.ts file.`); 
+      }
+      if (!fs.existsSync(path.join(root, "node_modules"))) {
+        // link the node_modules directory from test/node_modules to the temp directory
+        fs.symlinkSync(path.join(devTestRoot, "../../node_modules"), path.join(root, "node_modules"), "junction");
       }
     }
     fs.writeFileSync(
@@ -359,8 +382,8 @@ export function devTest<T extends DevServerTest>(description: string, options: T
       dedent`
         import appConfig from "./bun.app.ts";
         export default {
+          ...appConfig,
           port: 0,
-          ...appConfig
         };
       `,
     );
@@ -373,6 +396,7 @@ export function devTest<T extends DevServerTest>(description: string, options: T
         {
           FORCE_COLOR: "1",
           BUN_DEV_SERVER_TEST_RUNNER: "1",
+          BUN_DUMP_STATE_ON_CRASH: "1",
         },
       ]),
       stdio: ["pipe", "pipe", "pipe"],
diff --git a/test/bake/dev/ecosystem.test.ts b/test/bake/dev/ecosystem.test.ts
index 068795a875..5a3a6f6c78 100644
--- a/test/bake/dev/ecosystem.test.ts
+++ b/test/bake/dev/ecosystem.test.ts
@@ -2,10 +2,21 @@
 // should be preferred to write specific tests for the bugs that these libraries
 // discovered, but it easy and still a reasonable idea to just test the library
 // entirely.
+import { expect } from "bun:test";
 import { devTest } from "../dev-server-harness";
 
-// TODO: svelte server component example project
 // Bugs discovered thanks to Svelte:
-// - Valid circular import use.
-// - Re-export `.e_import_identifier`, including live bindings.
-// TODO: - something related to the wrong push function being called
\ No newline at end of file
+// - Circular import situations
+// - export { live_binding }
+// - export { x as y }
+devTest('svelte component islands example', {
+  fixture: 'svelte-component-islands',
+  async test(dev) {
+    const html = await dev.fetch('/').text()
+    expect(html).toContain('self.$islands={\"pages/_Counter.svelte\":[[0,\"default\",{initial:5}]]}');
+    expect(html).toContain(`<p>This is my svelte server component (non-interactive)</p> <p>Bun v${Bun.version}</p>`);
+    expect(html).toContain(`>This is a client component (interactive island)</p>`);
+    // TODO: puppeteer test for client-side interactivity, hmr.
+    // care must be taken to implement this in a way that is not flaky.
+  },
+});
diff --git a/test/bake/fixtures/svelte-component-islands/bun.app.ts b/test/bake/fixtures/svelte-component-islands/bun.app.ts
new file mode 100644
index 0000000000..9813768a22
--- /dev/null
+++ b/test/bake/fixtures/svelte-component-islands/bun.app.ts
@@ -0,0 +1,8 @@
+import svelte from "./framework";
+
+export default {
+  port: 3000,
+  app: {
+    framework: svelte(),
+  },
+};
diff --git a/test/bake/fixtures/svelte-component-islands/framework/client.ts b/test/bake/fixtures/svelte-component-islands/framework/client.ts
new file mode 100644
index 0000000000..aca37275e0
--- /dev/null
+++ b/test/bake/fixtures/svelte-component-islands/framework/client.ts
@@ -0,0 +1,14 @@
+import type { IslandMap } from "./server";
+import { hydrate } from 'svelte';
+
+declare var $islands: IslandMap;
+Object.entries($islands).forEach(async([moduleId, islands]) => {
+    const mod = await import(moduleId);
+    for(const [islandId, exportId, props] of islands) {
+        const elem = document.getElementById(`I:${islandId}`)!;
+        hydrate(mod[exportId], {
+            target: elem,
+            props,
+        });
+    }
+});
diff --git a/test/bake/fixtures/svelte-component-islands/framework/index.ts b/test/bake/fixtures/svelte-component-islands/framework/index.ts
new file mode 100644
index 0000000000..7cecf75358
--- /dev/null
+++ b/test/bake/fixtures/svelte-component-islands/framework/index.ts
@@ -0,0 +1,68 @@
+import type { Bake } from "bun";
+import * as path from "node:path";
+import * as fs from "node:fs/promises";
+import * as svelte from "svelte/compiler";
+
+export default function (): Bake.Framework {
+  return {
+    serverComponents: {
+      separateSSRGraph: false,
+      serverRuntimeImportSource: "./framework/server.ts",
+    },
+    fileSystemRouterTypes: [
+      {
+        root: "pages",
+        serverEntryPoint: "./framework/server.ts",
+        clientEntryPoint: "./framework/client.ts",
+        style: "nextjs-pages", // later, this will be fully programmable
+        extensions: [".svelte"],
+      },
+    ],
+    plugins: [
+      {
+        // This is missing a lot of code that a plugin like `esbuild-svelte`
+        // handles, but this is only an examplea of how such a plugin could
+        // have server-components at a minimal level.
+        name: "svelte-server-components",
+        setup(b) {
+          const cssMap = new Map<string, string>();
+          b.onLoad({ filter: /.svelte$/ }, async (args) => {
+            const contents = await fs.readFile(args.path, "utf-8");
+            const result = svelte.compile(contents, {
+              filename: args.path,
+              css: "external",
+              cssOutputFilename: path.basename(args.path, ".svelte") + ".css",
+              hmr: true,
+              dev: true,
+              generate: args.side,
+            });
+            // If CSS is specified, add a CSS import
+            let jsCode = result.js.code;
+            if (result.css) {
+              cssMap.set(args.path, result.css.code);
+              jsCode = `import ${JSON.stringify("svelte-css:" + args.path)};` + jsCode;
+            }
+            // Extract a "use client" directive from the file.
+            const header = contents.match(/^\s*<script.*?>\s*("[^"\n]*"|'[^'\n]*')/)?.[1];
+            if (header) {
+              jsCode = header + ';' + jsCode;
+            }
+            return {
+              contents: jsCode,
+              loader: "js",
+              watchFiles: [args.path],
+            };
+          });
+
+          // Resolve CSS files
+          b.onResolve({ filter: /^svelte-css:/ }, async (args) => {
+            return { path: args.path.replace(/^svelte-css:/, ""), namespace: "svelte-css" };
+          });
+          b.onLoad({ filter: /./, namespace: "svelte-css" }, async (args) => {
+            return { contents: cssMap.get(args.path) ?? "", loader: "css" };
+          });
+        },
+      },
+    ],
+  };
+}
diff --git a/test/bake/fixtures/svelte-component-islands/framework/server.ts b/test/bake/fixtures/svelte-component-islands/framework/server.ts
new file mode 100644
index 0000000000..29253245f8
--- /dev/null
+++ b/test/bake/fixtures/svelte-component-islands/framework/server.ts
@@ -0,0 +1,71 @@
+/// <reference path="../../../../../src/bake/bake.d.ts" />
+import type { Bake } from "bun";
+import * as svelte from "svelte/server";
+import { uneval } from "devalue";
+
+export function render(req: Request, meta: Bake.RouteMetadata) {
+  isInsideIsland = false;
+  islands = {};
+  const { body, head } = svelte.render(meta.pageModule.default, {
+    props: {
+      params: meta.params,
+    },
+  });
+
+  // Add stylesheets and preloaded modules to the head
+  const extraHead = meta.styles.map((style) => `<link rel="stylesheet" href="${style}">`).join("")
+    + meta.modulepreload.map((style) => `<link rel="modulepreload" href="${style}">`).join("");
+  // Script tags
+  const scripts = nextIslandId > 0
+    ? `<script>self.$islands=${uneval(islands)}</script>` +
+      meta.modules.map((module) => `<script type="module" src="${module}"></script>`).join("")
+    : ""; // If no islands, no JavaScript
+
+  return new Response(
+    "<!DOCTYPE html><html><head>" + head + extraHead + "</head><body>"
+      + body + "</body>" + scripts + "</html>",
+    { headers: { "content-type": "text/html" } },
+  );
+}
+
+// To allow static site generation, frameworks can specify a prerender function
+export function prerender(meta: Bake.RouteMetadata) {
+  return {
+    files: {
+      '/index.html': render(null!, meta),
+    },
+  };
+}
+
+let isInsideIsland = false;
+let nextIslandId = 0;
+let islands: IslandMap;
+export type IslandMap = Record<string, Island[]>;
+export type Island = [islandId: number, exportId: string, props: any];
+
+/**
+ * @param component The original export value, as is.
+ * @param clientModuleId A string that the browser will pass to `import()`.
+ * @param clientExportId The export ID from the imported module.
+ * @returns A wrapped value for the export.
+ */
+export function registerClientReference(
+  component: Function,
+  clientModuleId: string,
+  clientExportId: string,
+) {
+  return function Island(...args: any[]) {
+    if (isInsideIsland) {
+      return component(...args);
+    }
+    isInsideIsland = true;
+    const [payload, props] = args;
+    const islandId = nextIslandId++;
+    payload.out += `<bake-island id="I:${islandId}">`;
+    const file = (islands[clientModuleId] ??= []);
+    file.push([islandId, clientExportId, props]);
+    component(...args);
+    payload.out += `</bake-island>`;
+    isInsideIsland = false;
+  };
+}
diff --git a/test/bake/fixtures/svelte-component-islands/pages/_Counter.svelte b/test/bake/fixtures/svelte-component-islands/pages/_Counter.svelte
new file mode 100644
index 0000000000..7c4a618edb
--- /dev/null
+++ b/test/bake/fixtures/svelte-component-islands/pages/_Counter.svelte
@@ -0,0 +1,24 @@
+<script>
+    "use client";
+    let { initial } = $props();
+    let count = $state(initial);
+    function increment() {
+        count += 1;
+    }
+</script>
+
+<div>
+    <p>This is a client component (interactive island)</p>
+    <button onclick={increment}>
+        Clicked {count} {count === 1 ? 'time' : 'times'}
+    </button>
+</div>
+<style>
+    div {
+        border: 1px solid red;
+        padding: 1rem;
+        p {
+            color: red;
+        }
+    }
+</style>
diff --git a/test/bake/fixtures/svelte-component-islands/pages/index.svelte b/test/bake/fixtures/svelte-component-islands/pages/index.svelte
new file mode 100644
index 0000000000..f5b8c0728c
--- /dev/null
+++ b/test/bake/fixtures/svelte-component-islands/pages/index.svelte
@@ -0,0 +1,18 @@
+<script>
+    import Counter from "./_Counter.svelte";
+</script>
+<main>
+    <h1>hello</h1>
+    <p>This is my svelte server component (non-interactive)</p>
+    <p>Bun v{Bun.version}</p>
+    <Counter initial={5} />
+</main>
+<style>
+    main {
+        border: 1px solid blue;
+        padding: 1rem;
+        h1 {
+            color: blue;
+        }
+    }
+</style>
\ No newline at end of file
diff --git a/test/bun.lockb b/test/bun.lockb
index 6a1061e911..699279fcb2 100755
Binary files a/test/bun.lockb and b/test/bun.lockb differ
diff --git a/test/package.json b/test/package.json
index 03a8717ce3..f643ef682d 100644
--- a/test/package.json
+++ b/test/package.json
@@ -21,6 +21,7 @@
     "axios": "1.6.8",
     "body-parser": "1.20.2",
     "comlink": "4.4.1",
+    "devalue": "5.1.1",
     "es-module-lexer": "1.3.0",
     "esbuild": "0.18.6",
     "express": "4.18.2",
@@ -59,7 +60,7 @@
     "string-width": "7.0.0",
     "stripe": "15.4.0",
     "supertest": "6.3.3",
-    "svelte": "3.55.1",
+    "svelte": "5.4.0",
     "typescript": "5.0.2",
     "undici": "5.20.0",
     "verdaccio": "6.0.0",