diff --git a/desktop/babel-transformer/package.json b/desktop/babel-transformer/package.json
index f63fe1395..02403066a 100644
--- a/desktop/babel-transformer/package.json
+++ b/desktop/babel-transformer/package.json
@@ -12,8 +12,6 @@
     "@babel/core": "^7.9.0",
     "@babel/generator": "^7.9.0",
     "@babel/parser": "^7.9.0",
-    "@babel/types": "^7.9.0",
-    "@babel/traverse": "^7.9.0",
     "@babel/plugin-proposal-class-properties": "^7.8.3",
     "@babel/plugin-proposal-nullish-coalescing-operator": "^7.8.3",
     "@babel/plugin-proposal-object-rest-spread": "^7.9.0",
@@ -23,6 +21,8 @@
     "@babel/plugin-transform-typescript": "^7.9.0",
     "@babel/preset-env": "^7.9.0",
     "@babel/preset-react": "^7.9.1",
+    "@babel/traverse": "^7.9.0",
+    "@babel/types": "^7.9.0",
     "@types/fs-extra": "^8.1.0",
     "@types/node": "^13.7.5",
     "fs-extra": "^8.1.0",
@@ -33,13 +33,14 @@
     "@types/jest": "25.1.4",
     "jest": "^25.1.0",
     "prettier": "^2.0.0",
+    "rimraf": "^3.0.2",
     "ts-jest": "^25.2.1",
     "ts-node": "^8",
     "typescript": "^3.7.2"
   },
   "scripts": {
     "build": "tsc -b",
-    "prepack": "rm -rf lib && tsc -b",
+    "prepack": "rimraf lib *.tsbuildinfo && tsc -b",
     "prepublishOnly": "yarn test",
     "test": "jest --config jestconfig.json"
   },
diff --git a/desktop/babel-transformer/src/fb-stubs.ts b/desktop/babel-transformer/src/fb-stubs.ts
index 8f7e33fc3..525e63116 100644
--- a/desktop/babel-transformer/src/fb-stubs.ts
+++ b/desktop/babel-transformer/src/fb-stubs.ts
@@ -18,7 +18,7 @@ const requireFromFolder = (folder: string, path: string) =>
   new RegExp(folder + '/[A-Za-z0-9.-_]+(.js)?$', 'g').test(path);
 
 module.exports = () => ({
-  name: 'replace-dynamic-requires',
+  name: 'replace-fb-stubs',
   visitor: {
     CallExpression(path: NodePath<CallExpression>, state: any) {
       if (
diff --git a/desktop/babel-transformer/src/flipper-env.ts b/desktop/babel-transformer/src/flipper-env.ts
new file mode 100644
index 000000000..df5d7046e
--- /dev/null
+++ b/desktop/babel-transformer/src/flipper-env.ts
@@ -0,0 +1,44 @@
+/**
+ * Copyright (c) Facebook, Inc. and its affiliates.
+ *
+ * This source code is licensed under the MIT license found in the
+ * LICENSE file in the root directory of this source tree.
+ *
+ * @format
+ */
+
+/**
+ * There are some env vars which affect transformations, so the Metro/Babel cache should be invalidated when at least one of them changed.
+ * They are used in get-cache-key.ts for cache key generation.
+ */
+type FlipperEnvVars = {
+  FLIPPER_HEADLESS?: string;
+  FLIPPER_FB?: string;
+  FLIPPER_TEST_RUNNER?: string;
+  FLIPPER_ELECTRON_VERSION?: string;
+  NODE_ENV?: string;
+};
+
+const flipperEnv = new Proxy(
+  {
+    FLIPPER_HEADLESS: undefined,
+    FLIPPER_FB: undefined,
+    FLIPPER_TEST_RUNNER: undefined,
+    FLIPPER_ELECTRON_VERSION: undefined,
+    NODE_ENV: undefined,
+  } as FlipperEnvVars,
+  {
+    get: function (obj, prop) {
+      if (typeof prop === 'string') {
+        return process.env[prop];
+      } else {
+        return (obj as any)[prop];
+      }
+    },
+    set: function () {
+      throw new Error('flipperEnv is read-only');
+    },
+  },
+);
+
+export default flipperEnv;
diff --git a/desktop/babel-transformer/src/get-cache-key.ts b/desktop/babel-transformer/src/get-cache-key.ts
index 656d26842..4f19551ce 100644
--- a/desktop/babel-transformer/src/get-cache-key.ts
+++ b/desktop/babel-transformer/src/get-cache-key.ts
@@ -7,9 +7,39 @@
  * @format
  */
 
-// Disable caching of babel transforms all together. We haven't found a good
-// way to cache our transforms, as they rely on side effects like env vars or
-// the existence of folders in the file system.
-export default function getCacheKey() {
-  return Math.random().toString(36);
+/**
+ * There are some env vars which affect transformations, so the Metro/Babel cache should be invalidated when at least one of them changed.
+ *
+ * If any issues found with such approach, we can fallback to the implementation which always invalidates caches, but also makes bundling significantly slower:
+ * export default function getCacheKey() { return Math.random().toString(36); }
+ */
+
+import {default as flipperEnv} from './flipper-env';
+import fs from 'fs-extra';
+import path from 'path';
+
+let baseHash = '';
+const tsbuildinfoPath = path.resolve(__dirname, '..', 'tsconfig.tsbuildinfo');
+const packageJsonPath = path.resolve(__dirname, '..', 'package.json');
+if (fs.pathExistsSync(tsbuildinfoPath)) {
+  /**
+   * tsconfig.tsbuildinfo is changed each time TS incremental build detects changes and rebuilds the package,
+   * so we can use its modification date as cache key to invalidate the cache each time when babel transformations changed.
+   */
+  baseHash = fs.lstatSync(tsbuildinfoPath).ctime.toUTCString();
+} else if (fs.pathExistsSync(packageJsonPath)) {
+  /**
+   * tsconfig.tsbuildinfo will not exist in case if the package is installed from npm rather than built locally.
+   * In such case we should use version of npm package as hash key to invalidate the cache after updates.
+   */
+  baseHash = fs.readJsonSync(packageJsonPath).version;
+}
+
+export default function getCacheKey() {
+  return [
+    baseHash,
+    ...Object.entries(flipperEnv)
+      .sort(([name1, _value1], [name2, _value2]) => name1.localeCompare(name2))
+      .map(([name, value]) => `${name}=${value}`),
+  ].join('|');
 }
diff --git a/desktop/babel-transformer/src/transform-app.ts b/desktop/babel-transformer/src/transform-app.ts
index ce38b341a..9eec2edcc 100644
--- a/desktop/babel-transformer/src/transform-app.ts
+++ b/desktop/babel-transformer/src/transform-app.ts
@@ -9,6 +9,7 @@
 
 import {default as doTransform} from './transform';
 import {default as getCacheKey} from './get-cache-key';
+import {default as flipperEnv} from './flipper-env';
 
 module.exports = {
   transform,
@@ -26,10 +27,10 @@ function transform({
 }) {
   const presets = [require('@babel/preset-react')];
   const plugins = [];
-  if (process.env.FLIPPER_FB) {
+  if (flipperEnv.FLIPPER_FB) {
     plugins.push(require('./fb-stubs'));
   }
-  if (process.env.BUILD_HEADLESS) {
+  if (flipperEnv.FLIPPER_HEADLESS) {
     plugins.push(require('./electron-stubs'));
   }
   plugins.push(require('./electron-requires'));
diff --git a/desktop/babel-transformer/src/transform-jest.ts b/desktop/babel-transformer/src/transform-jest.ts
index 827377c01..c71950608 100644
--- a/desktop/babel-transformer/src/transform-jest.ts
+++ b/desktop/babel-transformer/src/transform-jest.ts
@@ -9,6 +9,7 @@
 
 import {default as doTransform} from './transform';
 import {default as getCacheKey} from './get-cache-key';
+import {default as flipperEnv} from './flipper-env';
 
 module.exports = {
   transform,
@@ -26,10 +27,10 @@ function transform({
 }) {
   const presets = [require('@babel/preset-react')];
   const plugins = [];
-  if (process.env.FLIPPER_FB) {
+  if (flipperEnv.FLIPPER_FB) {
     plugins.push(require('./fb-stubs'));
   }
-  if (process.env.BUILD_HEADLESS) {
+  if (flipperEnv.FLIPPER_HEADLESS) {
     plugins.push(require('./electron-stubs'));
   }
   plugins.push(require('./import-react'));
diff --git a/desktop/babel-transformer/src/transform-main.ts b/desktop/babel-transformer/src/transform-main.ts
index 0787d290f..471084a73 100644
--- a/desktop/babel-transformer/src/transform-main.ts
+++ b/desktop/babel-transformer/src/transform-main.ts
@@ -9,6 +9,7 @@
 
 import {default as doTransform} from './transform';
 import {default as getCacheKey} from './get-cache-key';
+import {default as flipperEnv} from './flipper-env';
 
 module.exports = {
   transform,
@@ -27,11 +28,11 @@ function transform({
   const presets = [
     [
       require('@babel/preset-env'),
-      {targets: {electron: process.env.FLIPPER_ELECTRON_VERSION}},
+      {targets: {electron: flipperEnv.FLIPPER_ELECTRON_VERSION}},
     ],
   ];
   const plugins = [];
-  if (process.env.FLIPPER_FB) {
+  if (flipperEnv.FLIPPER_FB) {
     plugins.push(require('./fb-stubs'));
   }
   plugins.push(require('./electron-requires-main'));
diff --git a/desktop/babel-transformer/src/transform-plugin.ts b/desktop/babel-transformer/src/transform-plugin.ts
index 425c34a63..ccebdfed7 100644
--- a/desktop/babel-transformer/src/transform-plugin.ts
+++ b/desktop/babel-transformer/src/transform-plugin.ts
@@ -8,6 +8,7 @@
  */
 
 import {default as doTransform} from './transform';
+import {default as flipperEnv} from './flipper-env';
 
 export default function transform({
   filename,
@@ -24,10 +25,10 @@ export default function transform({
 }) {
   presets = presets ?? [require('@babel/preset-react')];
   plugins = plugins ?? [];
-  if (process.env.FLIPPER_FB) {
+  if (flipperEnv.FLIPPER_FB) {
     plugins.push(require('./fb-stubs'));
   }
-  if (process.env.BUILD_HEADLESS) {
+  if (flipperEnv.FLIPPER_HEADLESS) {
     plugins.push(require('./electron-stubs'));
   }
   plugins.push(require('./electron-requires'));
diff --git a/desktop/babel-transformer/src/transform.ts b/desktop/babel-transformer/src/transform.ts
index 87fa33ea1..0e17c962c 100644
--- a/desktop/babel-transformer/src/transform.ts
+++ b/desktop/babel-transformer/src/transform.ts
@@ -10,6 +10,7 @@
 import {default as generate} from '@babel/generator';
 import {parse} from '@babel/parser';
 import {transformFromAstSync} from '@babel/core';
+import {default as flipperEnv} from './flipper-env';
 
 export default function transform({
   filename,
@@ -77,7 +78,7 @@ export default function transform({
     plugins,
     presets,
     sourceMaps: true,
-    retainLines: !!options.isTestRunner,
+    retainLines: !!flipperEnv.FLIPPER_TEST_RUNNER,
   });
   if (!transformed) {
     throw new Error('Failed to transform');
@@ -88,7 +89,7 @@ export default function transform({
       filename,
       sourceFileName: filename,
       sourceMaps: true,
-      retainLines: !!options.isTestRunner,
+      retainLines: !!flipperEnv.FLIPPER_TEST_RUNNER,
     },
     src,
   );
diff --git a/desktop/headless/index.tsx b/desktop/headless/index.tsx
index 37a7f6be6..b6dc307e2 100644
--- a/desktop/headless/index.tsx
+++ b/desktop/headless/index.tsx
@@ -30,6 +30,8 @@ import {getStringFromErrorLike} from '../app/src/utils/index';
 import AndroidDevice from '../app/src/devices/AndroidDevice';
 import {Store} from 'flipper';
 
+process.env.FLIPPER_HEADLESS = 'true';
+
 type Action = {exit: boolean; result?: string};
 
 type UserArguments = {
diff --git a/desktop/package.json b/desktop/package.json
index 8b595425a..7ebf33e9c 100644
--- a/desktop/package.json
+++ b/desktop/package.json
@@ -184,8 +184,11 @@
     "rm-modules": "rimraf **/node_modules node_modules",
     "rm-temp": "rimraf $TMPDIR/jest* $TMPDIR/react-native-packager*",
     "rm-bundle": "rimraf static/main.bundle.* **/lib **/*.tsbuildinfo",
-    "reset": "yarn rm-dist && yarn rm-temp && yarn cache clean && yarn rm-bundle && yarn rm-modules",
-    "dev-server": "yarn build:babel-transformer && cross-env NODE_ENV=development TS_NODE_FILES=true node --require ts-node/register scripts/start-dev-server.ts",
+    "rm-watches": "watchman watch-del-all",
+    "rm-metro-cache": "rimraf $TMPDIR/metro-cache*",
+    "reset": "yarn rm-dist && yarn rm-temp && yarn rm-metro-cache && yarn cache clean && yarn rm-bundle && yarn rm-watches && yarn rm-modules",
+    "predev-server": "yarn build:babel-transformer",
+    "dev-server": "cross-env NODE_ENV=development TS_NODE_FILES=true node --require ts-node/register scripts/start-dev-server.ts",
     "start": "yarn dev-server --inspect=9229",
     "start:break": "yarn dev-server --inspect-brk=9229",
     "start:no-embedded-plugins": "yarn start --no-embedded-plugins",
diff --git a/desktop/scripts/build-headless.ts b/desktop/scripts/build-headless.ts
index 6efa68811..ef3fe2a5d 100644
--- a/desktop/scripts/build-headless.ts
+++ b/desktop/scripts/build-headless.ts
@@ -98,7 +98,7 @@ async function createZip(buildDir: string, distDir: string, targets: string[]) {
   // developement iteration by not including any plugins.
   const skipPlugins = process.argv.indexOf('--no-plugins') > -1;
 
-  process.env.BUILD_HEADLESS = 'true';
+  process.env.FLIPPER_HEADLESS = 'true';
   const buildDir = await buildFolder();
   // eslint-disable-next-line no-console
   console.log('Created build directory', buildDir);
diff --git a/desktop/scripts/build-release.ts b/desktop/scripts/build-release.ts
index 9ffebfb5a..1bd330850 100755
--- a/desktop/scripts/build-release.ts
+++ b/desktop/scripts/build-release.ts
@@ -179,7 +179,7 @@ function downloadIcons(buildFolder: string) {
   // eslint-disable-next-line no-console
   console.log('Created build directory', dir);
 
-  await compileMain({dev: false});
+  await compileMain();
   await copyStaticFolder(dir);
   await downloadIcons(dir);
   if (!process.argv.includes('--no-embedded-plugins')) {
diff --git a/desktop/scripts/build-utils.ts b/desktop/scripts/build-utils.ts
index e373c7290..db6c9dcf3 100644
--- a/desktop/scripts/build-utils.ts
+++ b/desktop/scripts/build-utils.ts
@@ -24,6 +24,8 @@ import {
   babelTransformationsDir,
 } from './paths';
 
+const dev = process.env.NODE_ENV !== 'production';
+
 async function mostRecentlyChanged(
   dir: string,
   ignores: string[],
@@ -89,9 +91,9 @@ async function compile(
       },
     },
     {
-      dev: false,
+      dev,
       minify: false,
-      resetCache: true,
+      resetCache: !dev,
       sourceMap: true,
       entry,
       out: path.join(buildFolder, 'bundle.js'),
@@ -145,7 +147,7 @@ export async function compileRenderer(buildFolder: string) {
   }
 }
 
-export async function compileMain({dev}: {dev: boolean}) {
+export async function compileMain() {
   const out = path.join(staticDir, 'main.bundle.js');
   process.env.FLIPPER_ELECTRON_VERSION = require('electron/package.json').version;
   // check if main needs to be compiled
@@ -182,7 +184,7 @@ export async function compileMain({dev}: {dev: boolean}) {
       dev,
       minify: false,
       sourceMap: true,
-      resetCache: true,
+      resetCache: !dev,
     });
     console.log('✅  Compiled main bundle.');
   } catch (err) {
diff --git a/desktop/scripts/jest-transform.js b/desktop/scripts/jest-transform.js
index 4d038d5ab..d1b94b8b4 100644
--- a/desktop/scripts/jest-transform.js
+++ b/desktop/scripts/jest-transform.js
@@ -15,6 +15,8 @@ if (isFB && process.env.FLIPPER_FB === undefined) {
   process.env.FLIPPER_FB = 'true';
 }
 
+process.env.FLIPPER_TEST_RUNNER = 'true';
+
 module.exports = {
   process(src, filename, config, options) {
     return transform({
diff --git a/desktop/scripts/start-dev-server.ts b/desktop/scripts/start-dev-server.ts
index cca63bfd3..74c8856a6 100644
--- a/desktop/scripts/start-dev-server.ts
+++ b/desktop/scripts/start-dev-server.ts
@@ -263,7 +263,7 @@ function outputScreen(socket?: socketIo.Server) {
   const socket = await addWebsocket(server);
   await startMetroServer(app);
   outputScreen(socket);
-  await compileMain({dev: true});
+  await compileMain();
   shutdownElectron = launchElectron({
     devServerURL: `http://localhost:${port}`,
     bundleURL: `http://localhost:${port}/src/init.bundle`,
diff --git a/desktop/static/compilePlugins.ts b/desktop/static/compilePlugins.ts
index e17fd66a9..16ed90c05 100644
--- a/desktop/static/compilePlugins.ts
+++ b/desktop/static/compilePlugins.ts
@@ -33,8 +33,6 @@ export type CompileOptions = {
   recompileOnChanges: boolean;
 };
 
-type DynamicCompileOptions = CompileOptions & {force: boolean};
-
 export type PluginManifest = {
   version: string;
   name: string;
@@ -69,10 +67,7 @@ export default async function (
   const compilations = pMap(
     Object.values(plugins),
     (plugin) => {
-      const dynamicOptions: DynamicCompileOptions = Object.assign(options, {
-        force: false,
-      });
-      return compilePlugin(plugin, pluginCache, dynamicOptions);
+      return compilePlugin(plugin, pluginCache, options);
     },
     {concurrency: 4},
   );
@@ -244,11 +239,12 @@ async function mostRecentlyChanged(dir: string) {
 async function compilePlugin(
   pluginInfo: PluginInfo,
   pluginCache: string,
-  options: DynamicCompileOptions,
+  {force, failSilently}: CompileOptions,
 ): Promise<CompiledPluginInfo | null> {
   const {rootDir, manifest, entry, name} = pluginInfo;
   const bundleMain = manifest.bundleMain ?? path.join('dist', 'index.js');
   const bundlePath = path.join(rootDir, bundleMain);
+  const dev = process.env.NODE_ENV !== 'production';
   if (await fs.pathExists(bundlePath)) {
     // eslint-disable-next-line no-console
     const out = path.join(rootDir, bundleMain);
@@ -262,7 +258,7 @@ async function compilePlugin(
     const result = Object.assign({}, pluginInfo.manifest, {out});
     const rootDirCtime = await mostRecentlyChanged(rootDir);
     if (
-      !options.force &&
+      !force &&
       (await fs.pathExists(out)) &&
       rootDirCtime < (await fs.lstat(out)).ctime
     ) {
@@ -296,13 +292,14 @@ async function compilePlugin(
           {
             entry: entry.replace(rootDir, '.'),
             out,
-            dev: false,
+            dev,
             sourceMap: true,
             minify: false,
+            resetCache: !dev,
           },
         );
       } catch (e) {
-        if (options.failSilently) {
+        if (failSilently) {
           console.error(
             `❌  Plugin ${name} is ignored, because it could not be compiled.`,
           );
diff --git a/desktop/yarn.lock b/desktop/yarn.lock
index 60856fc0b..6a5b96b12 100644
--- a/desktop/yarn.lock
+++ b/desktop/yarn.lock
@@ -9918,11 +9918,6 @@ rimraf@^3.0.0, rimraf@^3.0.2:
   dependencies:
     glob "^7.1.3"
 
-rimraf@~2.2.6:
-  version "2.2.8"
-  resolved "https://registry.yarnpkg.com/rimraf/-/rimraf-2.2.8.tgz#e439be2aaee327321952730f99a8929e4fc50582"
-  integrity sha1-5Dm+Kq7jJzIZUnMPmaiSnk/FBYI=
-
 rn-host-detect@^1.1.5:
   version "1.2.0"
   resolved "https://registry.yarnpkg.com/rn-host-detect/-/rn-host-detect-1.2.0.tgz#8b0396fc05631ec60c1cb8789e5070cdb04d0da0"
@@ -10865,12 +10860,11 @@ temp@0.8.3, temp@0.9.0:
     rimraf "~2.6.2"
 
 temp@^0.8.1:
-  version "0.8.3"
-  resolved "https://registry.yarnpkg.com/temp/-/temp-0.8.3.tgz#e0c6bc4d26b903124410e4fed81103014dfc1f59"
-  integrity sha1-4Ma8TSa5AxJEEOT+2BEDAU38H1k=
+  version "0.8.4"
+  resolved "https://registry.yarnpkg.com/temp/-/temp-0.8.4.tgz#8c97a33a4770072e0a05f919396c7665a7dd59f2"
+  integrity sha512-s0ZZzd0BzYv5tLSptZooSjK8oj6C+c19p7Vqta9+6NPOf7r+fxq0cJe6/oN4LTC79sy5NY8ucOJNgwsKCSbfqg==
   dependencies:
-    os-tmpdir "^1.0.0"
-    rimraf "~2.2.6"
+    rimraf "~2.6.2"
 
 term-size@^2.1.0:
   version "2.2.0"