diff --git a/packages/angular/build/src/builders/unit-test/builder.ts b/packages/angular/build/src/builders/unit-test/builder.ts
index 9eb1a552bdd6..f103b6ddc8af 100644
--- a/packages/angular/build/src/builders/unit-test/builder.ts
+++ b/packages/angular/build/src/builders/unit-test/builder.ts
@@ -12,6 +12,7 @@ import { randomUUID } from 'node:crypto';
 import { createRequire } from 'node:module';
 import path from 'node:path';
 import { createVirtualModulePlugin } from '../../tools/esbuild/virtual-module-plugin';
+import { assertIsError } from '../../utils/error';
 import { loadEsmModule } from '../../utils/load-esm';
 import { buildApplicationInternal } from '../application';
 import type {
@@ -31,6 +32,7 @@ export type { UnitTestOptions };
 /**
  * @experimental Direct usage of this function is considered experimental.
  */
+// eslint-disable-next-line max-lines-per-function
 export async function* execute(
   options: UnitTestOptions,
   context: BuilderContext,
@@ -84,7 +86,22 @@ export async function* execute(
   const entryPoints = getTestEntrypoints(testFiles, { projectSourceRoot, workspaceRoot });
   entryPoints.set('init-testbed', 'angular:test-bed-init');
 
-  const { startVitest } = await loadEsmModule<typeof import('vitest/node')>('vitest/node');
+  let vitestNodeModule;
+  try {
+    vitestNodeModule = await loadEsmModule<typeof import('vitest/node')>('vitest/node');
+  } catch (error: unknown) {
+    assertIsError(error);
+    if (error.code !== 'ERR_MODULE_NOT_FOUND') {
+      throw error;
+    }
+
+    context.logger.error(
+      'The `vitest` package was not found. Please install the package and rerun the test command.',
+    );
+
+    return;
+  }
+  const { startVitest } = vitestNodeModule;
 
   // Setup test file build options based on application build target options
   const buildTargetOptions = (await context.validateOptions(
@@ -100,6 +117,7 @@ export async function* execute(
   const buildOptions: ApplicationBuilderInternalOptions = {
     ...buildTargetOptions,
     watch: normalizedOptions.watch,
+    incrementalResults: normalizedOptions.watch,
     outputPath,
     index: false,
     browser: undefined,
@@ -171,44 +189,52 @@ export async function* execute(
     };
   }
 
-  for await (const result of buildApplicationInternal(buildOptions, context, extensions)) {
-    if (result.kind === ResultKind.Failure) {
-      continue;
-    } else if (result.kind !== ResultKind.Full) {
-      assert.fail('A full build result is required from the application builder.');
-    }
-
-    assert(result.files, 'Builder did not provide result files.');
-
-    await writeTestFiles(result.files, outputPath);
-
-    const setupFiles = ['init-testbed.js'];
-    if (buildTargetOptions?.polyfills?.length) {
-      setupFiles.push('polyfills.js');
-    }
+  const setupFiles = ['init-testbed.js'];
+  if (buildTargetOptions?.polyfills?.length) {
+    setupFiles.push('polyfills.js');
+  }
 
-    instance ??= await startVitest('test', undefined /* cliFilters */, undefined /* options */, {
-      test: {
-        root: outputPath,
-        setupFiles,
-        // Use `jsdom` if no browsers are explicitly configured.
-        // `node` is effectively no "environment" and the default.
-        environment: browser ? 'node' : 'jsdom',
-        watch: normalizedOptions.watch,
-        browser,
-        reporters: normalizedOptions.reporters ?? ['default'],
-        coverage: {
-          enabled: normalizedOptions.codeCoverage,
-          exclude: normalizedOptions.codeCoverageExclude,
-          excludeAfterRemap: true,
+  try {
+    for await (const result of buildApplicationInternal(buildOptions, context, extensions)) {
+      if (result.kind === ResultKind.Failure) {
+        continue;
+      } else if (result.kind !== ResultKind.Full && result.kind !== ResultKind.Incremental) {
+        assert.fail(
+          'A full and/or incremental build result is required from the application builder.',
+        );
+      }
+      assert(result.files, 'Builder did not provide result files.');
+
+      await writeTestFiles(result.files, outputPath);
+
+      instance ??= await startVitest('test', undefined /* cliFilters */, undefined /* options */, {
+        test: {
+          root: outputPath,
+          setupFiles,
+          // Use `jsdom` if no browsers are explicitly configured.
+          // `node` is effectively no "environment" and the default.
+          environment: browser ? 'node' : 'jsdom',
+          watch: normalizedOptions.watch,
+          browser,
+          reporters: normalizedOptions.reporters ?? ['default'],
+          coverage: {
+            enabled: normalizedOptions.codeCoverage,
+            exclude: normalizedOptions.codeCoverageExclude,
+            excludeAfterRemap: true,
+          },
         },
-      },
-    });
+      });
 
-    // Check if all the tests pass to calculate the result
-    const testModules = instance.state.getTestModules();
+      // Check if all the tests pass to calculate the result
+      const testModules = instance.state.getTestModules();
 
-    yield { success: testModules.every((testModule) => testModule.ok()) };
+      yield { success: testModules.every((testModule) => testModule.ok()) };
+    }
+  } finally {
+    if (normalizedOptions.watch) {
+      // Vitest will automatically close if not using watch mode
+      await instance?.close();
+    }
   }
 }
 
diff --git a/packages/angular/build/src/builders/unit-test/options.ts b/packages/angular/build/src/builders/unit-test/options.ts
index 2cd09a3b03e9..6bfe7361eebb 100644
--- a/packages/angular/build/src/builders/unit-test/options.ts
+++ b/packages/angular/build/src/builders/unit-test/options.ts
@@ -32,7 +32,8 @@ export async function normalizeOptions(
   const buildTargetSpecifier = options.buildTarget ?? `::development`;
   const buildTarget = targetFromTargetString(buildTargetSpecifier, projectName, 'build');
 
-  const { codeCoverage, codeCoverageExclude, tsConfig, runner, reporters, browsers } = options;
+  const { codeCoverage, codeCoverageExclude, tsConfig, runner, reporters, browsers, watch } =
+    options;
 
   return {
     // Project/workspace information
@@ -50,8 +51,7 @@ export async function normalizeOptions(
     tsConfig,
     reporters,
     browsers,
-    // TODO: Implement watch support
-    watch: false,
+    watch,
   };
 }