diff --git a/packages/next/client/app-index.tsx b/packages/next/client/app-index.tsx
index bb5f49a1304a..dd11f6a8d4b0 100644
--- a/packages/next/client/app-index.tsx
+++ b/packages/next/client/app-index.tsx
@@ -212,19 +212,6 @@ function ServerRoot({ cacheKey }: { cacheKey: string }) {
   return root
 }
 
-function ErrorOverlay({
-  children,
-}: React.PropsWithChildren<{}>): React.ReactElement {
-  if (process.env.NODE_ENV === 'production') {
-    return <>{children}</>
-  } else {
-    const {
-      ReactDevOverlay,
-    } = require('next/dist/compiled/@next/react-dev-overlay/dist/client')
-    return <ReactDevOverlay globalOverlay>{children}</ReactDevOverlay>
-  }
-}
-
 function Root({ children }: React.PropsWithChildren<{}>): React.ReactElement {
   if (process.env.__NEXT_TEST_MODE) {
     // eslint-disable-next-line react-hooks/rules-of-hooks
@@ -247,12 +234,10 @@ function RSCComponent() {
 
 export function hydrate() {
   renderReactElement(appElement!, () => (
-    <ErrorOverlay>
-      <React.StrictMode>
-        <Root>
-          <RSCComponent />
-        </Root>
-      </React.StrictMode>
-    </ErrorOverlay>
+    <React.StrictMode>
+      <Root>
+        <RSCComponent />
+      </Root>
+    </React.StrictMode>
   ))
 }
diff --git a/packages/next/client/components/app-router.client.tsx b/packages/next/client/components/app-router.client.tsx
index 913bbfde7bee..7dc6e8bffd93 100644
--- a/packages/next/client/components/app-router.client.tsx
+++ b/packages/next/client/components/app-router.client.tsx
@@ -36,6 +36,19 @@ export function fetchServerResponse(
   return createFromFetch(fetchFlight(url, flightRouterStateData))
 }
 
+function ErrorOverlay({
+  children,
+}: React.PropsWithChildren<{}>): React.ReactElement {
+  if (process.env.NODE_ENV === 'production') {
+    return <>{children}</>
+  } else {
+    const {
+      ReactDevOverlay,
+    } = require('next/dist/compiled/@next/react-dev-overlay/dist/client')
+    return <ReactDevOverlay globalOverlay>{children}</ReactDevOverlay>
+  }
+}
+
 // TODO: move this back into AppRouter
 let initialParallelRoutes: CacheNode['parallelRoutes'] =
   typeof window === 'undefined' ? null! : new Map()
@@ -248,7 +261,7 @@ export default function AppRouter({
                 url: canonicalUrl,
               }}
             >
-              {cache.subTreeData}
+              <ErrorOverlay>{cache.subTreeData}</ErrorOverlay>
               {hotReloader}
             </AppTreeContext.Provider>
           </AppRouterContext.Provider>
diff --git a/packages/next/client/components/hot-reloader.client.tsx b/packages/next/client/components/hot-reloader.client.tsx
index 30cc653b12c7..a431c723d598 100644
--- a/packages/next/client/components/hot-reloader.client.tsx
+++ b/packages/next/client/components/hot-reloader.client.tsx
@@ -1,7 +1,15 @@
-import { useCallback, useContext, useEffect, useRef } from 'react'
+import {
+  useCallback,
+  useContext,
+  useEffect,
+  useRef,
+  // @ts-expect-error TODO: startTransition exists
+  startTransition,
+} from 'react'
 import { FullAppTreeContext } from '../../shared/lib/app-router-context'
 import {
   register,
+  unregister,
   onBuildError,
   onBuildOk,
   onRefresh,
@@ -305,7 +313,15 @@ function processMessage(
           clientId: __nextDevClientId,
         })
       )
-      return router.reload()
+      if (hadRuntimeError) {
+        return window.location.reload()
+      }
+      startTransition(() => {
+        router.reload()
+        onRefresh()
+      })
+
+      return
     }
     case 'reloadPage': {
       sendMessage(
@@ -393,6 +409,16 @@ export default function HotReload({ assetPrefix }: { assetPrefix: string }) {
 
   useEffect(() => {
     register()
+    const onError = () => {
+      hadRuntimeError = true
+    }
+    window.addEventListener('error', onError)
+    window.addEventListener('unhandledrejection', onError)
+    return () => {
+      unregister()
+      window.removeEventListener('error', onError)
+      window.removeEventListener('unhandledrejection', onError)
+    }
   }, [])
 
   useEffect(() => {
diff --git a/packages/next/client/dev/error-overlay/hot-dev-client.js b/packages/next/client/dev/error-overlay/hot-dev-client.js
index d6b0918952bc..6153a6f848c1 100644
--- a/packages/next/client/dev/error-overlay/hot-dev-client.js
+++ b/packages/next/client/dev/error-overlay/hot-dev-client.js
@@ -260,6 +260,16 @@ function processMessage(e) {
       )
       return handleSuccess()
     }
+
+    case 'serverComponentChanges': {
+      sendMessage(
+        JSON.stringify({
+          event: 'server-component-reload-page',
+          clientId: window.__nextDevClientId,
+        })
+      )
+      return window.location.reload()
+    }
     default: {
       if (customHmrEventHandler) {
         customHmrEventHandler(obj)
diff --git a/packages/next/taskfile.js b/packages/next/taskfile.js
index fa8f54b68e71..785ef9efcf37 100644
--- a/packages/next/taskfile.js
+++ b/packages/next/taskfile.js
@@ -1982,6 +1982,11 @@ export default async function (task) {
     opts
   )
   await task.watch('server/**/*.+(wasm)', 'server_wasm', opts)
+  await task.watch(
+    '../react-dev-overlay/dist/**/*.js',
+    'ncc_next__react_dev_overlay',
+    opts
+  )
 }
 
 export async function shared(task, opts) {
diff --git a/packages/react-dev-overlay/src/internal/ErrorBoundary.tsx b/packages/react-dev-overlay/src/internal/ErrorBoundary.tsx
index 4c2267237dee..b2a1a6f0a984 100644
--- a/packages/react-dev-overlay/src/internal/ErrorBoundary.tsx
+++ b/packages/react-dev-overlay/src/internal/ErrorBoundary.tsx
@@ -2,6 +2,8 @@ import React from 'react'
 
 type ErrorBoundaryProps = {
   onError: (error: Error, componentStack: string | null) => void
+  globalOverlay?: boolean
+  isMounted?: boolean
 }
 type ErrorBoundaryState = { error: Error | null }
 
@@ -10,7 +12,6 @@ class ErrorBoundary extends React.PureComponent<
   ErrorBoundaryState
 > {
   state = { error: null }
-
   componentDidCatch(
     error: Error,
     // Loosely typed because it depends on the React version and was
@@ -18,14 +19,26 @@ class ErrorBoundary extends React.PureComponent<
     errorInfo?: { componentStack?: string | null }
   ) {
     this.props.onError(error, errorInfo?.componentStack || null)
-    this.setState({ error })
+    if (!this.props.globalOverlay) {
+      this.setState({ error })
+    }
   }
 
   render() {
-    return this.state.error
-      ? // The component has to be unmounted or else it would continue to error
-        null
-      : this.props.children
+    // The component has to be unmounted or else it would continue to error
+    return this.state.error ||
+      (this.props.globalOverlay && this.props.isMounted) ? (
+      // When the overlay is global for the application and it wraps a component rendering `<html>`
+      // we have to render the html shell otherwise the shadow root will not be able to attach
+      this.props.globalOverlay ? (
+        <html>
+          <head></head>
+          <body></body>
+        </html>
+      ) : null
+    ) : (
+      this.props.children
+    )
   }
 }
 
diff --git a/packages/react-dev-overlay/src/internal/ReactDevOverlay.tsx b/packages/react-dev-overlay/src/internal/ReactDevOverlay.tsx
index fe2fe056ca2c..d125ccc93bf1 100644
--- a/packages/react-dev-overlay/src/internal/ReactDevOverlay.tsx
+++ b/packages/react-dev-overlay/src/internal/ReactDevOverlay.tsx
@@ -31,7 +31,13 @@ function reducer(state: OverlayState, ev: Bus.BusEvent): OverlayState {
       return {
         ...state,
         nextId: state.nextId + 1,
-        errors: [...state.errors, { id: state.nextId, event: ev }],
+        errors: [
+          ...state.errors.filter((err) => {
+            // Filter out duplicate errors
+            return err.event.reason !== ev.reason
+          }),
+          { id: state.nextId, event: ev },
+        ],
       }
     }
     default: {
@@ -82,7 +88,11 @@ const ReactDevOverlay: React.FunctionComponent = function ReactDevOverlay({
 
   return (
     <React.Fragment>
-      <ErrorBoundary onError={onComponentError}>
+      <ErrorBoundary
+        globalOverlay={globalOverlay}
+        isMounted={isMounted}
+        onError={onComponentError}
+      >
         {children ?? null}
       </ErrorBoundary>
       {isMounted ? (