diff --git a/packages/core/integration-tests/test/hmr.js b/packages/core/integration-tests/test/hmr.js
index c873992fabd..f95df6c1c56 100644
--- a/packages/core/integration-tests/test/hmr.js
+++ b/packages/core/integration-tests/test/hmr.js
@@ -529,4 +529,56 @@ describe.skip('hmr', function() {
 
     await buildEnd;
   });
+
+  it('should watch new dependencies that cause errors', async function() {
+    await ncp(
+      path.join(__dirname, '/integration/elm-dep-error'),
+      path.join(__dirname, '/input')
+    );
+
+    b = bundler(path.join(__dirname, '/input/index.js'), {
+      watch: true,
+      hmr: true
+    });
+    await b.bundle();
+
+    ws = new WebSocket('ws://localhost:' + b.options.hmrPort);
+
+    const buildEnd = nextEvent(b, 'buildEnd');
+
+    await sleep(100);
+    fs.writeFile(
+      path.join(__dirname, '/input/src/Main.elm'),
+      `
+module Main exposing (main)
+
+import BrokenDep
+import Html
+
+main =
+    Html.text "Hello, world!"
+    `
+    );
+
+    let msg = JSON.parse(await nextEvent(ws, 'message'));
+    assert.equal(msg.type, 'error');
+
+    await sleep(100);
+    fs.writeFile(
+      path.join(__dirname, '/input/src/BrokenDep.elm'),
+      `
+module BrokenDep exposing (anError)
+
+
+anError : String
+anError =
+    "fixed"
+      `
+    );
+
+    msg = JSON.parse(await nextEvent(ws, 'message'));
+    assert.equal(msg.type, 'error-resolved');
+
+    await buildEnd;
+  });
 });
diff --git a/packages/core/integration-tests/test/integration/elm-dep-error/elm.json b/packages/core/integration-tests/test/integration/elm-dep-error/elm.json
new file mode 100644
index 00000000000..dd41cae2a31
--- /dev/null
+++ b/packages/core/integration-tests/test/integration/elm-dep-error/elm.json
@@ -0,0 +1,24 @@
+{
+    "type": "application",
+    "source-directories": [
+        "src"
+    ],
+    "elm-version": "0.19.0",
+    "dependencies": {
+        "direct": {
+            "elm/browser": "1.0.0",
+            "elm/core": "1.0.0",
+            "elm/html": "1.0.0"
+        },
+        "indirect": {
+            "elm/json": "1.0.0",
+            "elm/time": "1.0.0",
+            "elm/url": "1.0.0",
+            "elm/virtual-dom": "1.0.0"
+        }
+    },
+    "test-dependencies": {
+        "direct": {},
+        "indirect": {}
+    }
+}
\ No newline at end of file
diff --git a/packages/core/integration-tests/test/integration/elm-dep-error/index.js b/packages/core/integration-tests/test/integration/elm-dep-error/index.js
new file mode 100644
index 00000000000..61906ed5a66
--- /dev/null
+++ b/packages/core/integration-tests/test/integration/elm-dep-error/index.js
@@ -0,0 +1,5 @@
+var local = require('./src/Main.elm');
+
+module.exports = function () {
+    return local;
+};
\ No newline at end of file
diff --git a/packages/core/integration-tests/test/integration/elm-dep-error/src/BrokenDep.elm b/packages/core/integration-tests/test/integration/elm-dep-error/src/BrokenDep.elm
new file mode 100644
index 00000000000..b52d49738bd
--- /dev/null
+++ b/packages/core/integration-tests/test/integration/elm-dep-error/src/BrokenDep.elm
@@ -0,0 +1,8 @@
+module BrokenDep exposing (anError)
+
+{- This module causes a compiler error -}
+
+
+anError : String
+anError =
+    2
diff --git a/packages/core/integration-tests/test/integration/elm-dep-error/src/Main.elm b/packages/core/integration-tests/test/integration/elm-dep-error/src/Main.elm
new file mode 100644
index 00000000000..67393aaa654
--- /dev/null
+++ b/packages/core/integration-tests/test/integration/elm-dep-error/src/Main.elm
@@ -0,0 +1,7 @@
+module Main exposing (main)
+
+import Html
+
+
+main =
+    Html.text "Hello, world!"
diff --git a/packages/core/parcel-bundler/src/Bundler.js b/packages/core/parcel-bundler/src/Bundler.js
index f8f135cb3bb..d791cb1f287 100644
--- a/packages/core/parcel-bundler/src/Bundler.js
+++ b/packages/core/parcel-bundler/src/Bundler.js
@@ -594,6 +594,13 @@ class Bundler extends EventEmitter {
       })
     );
 
+    // If there was a processing error, re-throw now that we've set up
+    // depdenency watchers. This keeps reloading working if there is an
+    // error in a dependency not directly handled by Parcel.
+    if (processed.error !== null) {
+      throw processed.error;
+    }
+
     // Store resolved assets in their original order
     dependencies.forEach((dep, i) => {
       asset.dependencies.set(dep.name, dep);
diff --git a/packages/core/parcel-bundler/src/Pipeline.js b/packages/core/parcel-bundler/src/Pipeline.js
index b13edd8e4dc..0b016006fbc 100644
--- a/packages/core/parcel-bundler/src/Pipeline.js
+++ b/packages/core/parcel-bundler/src/Pipeline.js
@@ -1,5 +1,6 @@
 const Parser = require('./Parser');
 const path = require('path');
+const {errorUtils} = require('@parcel/utils');
 
 /**
  * A Pipeline composes multiple Asset types together.
@@ -17,10 +18,16 @@ class Pipeline {
     }
 
     let asset = this.parser.getAsset(path, options);
-    let generated = await this.processAsset(asset);
+    let error = null;
     let generatedMap = {};
-    for (let rendition of generated) {
-      generatedMap[rendition.type] = rendition.value;
+    try {
+      let generated = await this.processAsset(asset);
+      for (let rendition of generated) {
+        generatedMap[rendition.type] = rendition.value;
+      }
+    } catch (err) {
+      error = errorUtils.errorToJson(err);
+      error.fileName = path;
     }
 
     return {
diff --git a/packages/core/parcel-bundler/src/assets/ElmAsset.js b/packages/core/parcel-bundler/src/assets/ElmAsset.js
index 7a2309b3a5f..5f81ebc1260 100644
--- a/packages/core/parcel-bundler/src/assets/ElmAsset.js
+++ b/packages/core/parcel-bundler/src/assets/ElmAsset.js
@@ -44,12 +44,7 @@ class ElmAsset extends Asset {
       options.optimize = true;
     }
 
-    let compiled = await this.elm.compileToString(this.name, options);
-    this.contents = compiled.toString();
-    if (this.options.hmr) {
-      let {inject} = await localRequire('elm-hot', this.name);
-      this.contents = inject(this.contents);
-    }
+    this.elmOpts = options;
   }
 
   async collectDependencies() {
@@ -76,6 +71,13 @@ class ElmAsset extends Asset {
   }
 
   async generate() {
+    let compiled = await this.elm.compileToString(this.name, this.elmOpts);
+    this.contents = compiled.toString();
+    if (this.options.hmr) {
+      let {inject} = await localRequire('elm-hot', this.name);
+      this.contents = inject(this.contents);
+    }
+
     let output = this.contents;
 
     if (this.options.minify) {
@@ -129,6 +131,13 @@ class ElmAsset extends Asset {
       return result.code;
     }
   }
+
+  generateErrorMessage(err) {
+    // The generated stack is not useful, but other code may
+    // expect it and try to print it, so make it an empty string.
+    err.stack = '';
+    return err;
+  }
 }
 
 module.exports = ElmAsset;