diff --git a/README.md b/README.md
index 44a80a31..dd5ee040 100644
--- a/README.md
+++ b/README.md
@@ -145,9 +145,12 @@ This should create an additional `styles.css.map` file.
 
 ### Hot Reload
 
-Hot reloading is turned off by default, you can turn it on using the `hotReload` option as shown below:
+This loader supports component-level HMR via the community supported [svelte-hmr](https://github.com/rixo/svelte-hmr) package. This package serves as a testbed and early access for Svelte HMR, while we figure out how to best include HMR support in the compiler itself (which is tricky to do without unfairly favoring any particular dev tooling). Feedback, suggestion, or help to move HMR forward is welcomed at [svelte-hmr](https://github.com/rixo/svelte-hmr/issues) (for now).
+
+Configure inside your `webpack.config.js`:
 
 ```javascript
+module.exports = {
   ...
   module: {
     rules: [
@@ -158,68 +161,74 @@ Hot reloading is turned off by default, you can turn it on using the `hotReload`
         use: {
           loader: 'svelte-loader',
           options: {
-            hotReload: true
+            // NOTE Svelte's dev mode MUST be enabled for HMR to work
+            // -- in a real config, you'd probably set it to false for prod build,
+            //    based on a env variable or so
+            dev: true,
+
+            // NOTE emitCss: true is currently not supported with HMR
+            // Enable it for production to output separate css file
+            emitCss: false,
+            // Enable HMR only for dev mode
+            hotReload: true, // Default: false
+            // Extra HMR options
+            hotOptions: {
+              // Prevent preserving local component state
+              noPreserveState: false,
+
+              // If this string appears anywhere in your component's code, then local
+              // state won't be preserved, even when noPreserveState is false
+              noPreserveStateKey: '@!hmr',
+
+              // Prevent doing a full reload on next HMR update after fatal error
+              noReload: false,
+
+              // Try to recover after runtime errors in component init
+              optimistic: false,
+
+              // --- Advanced ---
+
+              // Prevent adding an HMR accept handler to components with
+              // accessors option to true, or to components with named exports
+              // (from <script context="module">). This have the effect of
+              // recreating the consumer of those components, instead of the
+              // component themselves, on HMR updates. This might be needed to
+              // reflect changes to accessors / named exports in the parents,
+              // depending on how you use them.
+              acceptAccessors: true,
+              acceptNamedExports: true,
+            }
           }
         }
       }
       ...
     ]
-  }
-  ...
+  },
+  plugins: [
+    new webpack.HotModuleReplacementPlugin(),
+    ...
+  ]
+}
 ```
 
-#### Hot reload rules and caveats:
-
- - `_rerender` and `_register` are reserved method names, please don't use them in `methods:{...}`
- - Turning `dev` mode on (`dev:true`) is **not** necessary.
- - Modifying the HTML (template) part of your component will replace and re-render the changes in place. Current local state of the component will also be preserved (this can be turned off per component see [Stop preserving state](#stop-preserving-state)).
- - When modifying the `<script>` part of your component, instances will be replaced and re-rendered in place too.
-  However if your component has lifecycle methods that produce global side-effects, you might need to reload the whole page.
- - If you are using `svelte/store`, a full reload is required if you modify `store` properties
-
+You also need to add the [HotModuleReplacementPlugin](https://webpack.js.org/plugins/hot-module-replacement-plugin/). There are multiple ways to achieve this.
 
-Components will **not** be hot reloaded in the following situations:
- 1. `process.env.NODE_ENV === 'production'`
- 2. Webpack is minifying code
- 3. Webpack's `target` is `node` (i.e SSR components)
- 4. `generate` option has a value of `ssr`
+If you're using webpack-dev-server, you can just pass it the [`hot` option](https://webpack.js.org/configuration/dev-server/#devserverhot) to add the plugin automatically.
 
-#### Stop preserving state
+Otherwise, you can add it to your webpack config directly:
 
-Sometimes it might be necessary for some components to avoid state preservation on hot reload.
-
-This can be configured on a per-component basis by adding a property `noPreserveState = true` to the component's constructor using the `setup()` method. For example:
 ```js
-export default {
-  setup(comp){
-    comp.noPreserveState = true;
-  },
-  data(){return {...}},
-  oncreate(){...}
-}
-```
+const webpack = require('webpack');
 
-Or, on a global basis by adding `{noPreserveState: true}` to `hotOptions`. For example:
-```js
-{
-    test: /\.(html|svelte)$/,
-    exclude: /node_modules/,
-    use: [
-      {
-        loader: 'svelte-loader',
-        options: {
-          hotReload: true,
-          hotOptions: {
-            noPreserveState: true
-          }
-        }
-      }
-    ]
-  }
+module.exports = {
+  ...
+  plugins: [
+    new webpack.HotModuleReplacementPlugin(),
+    ...
+  ]
+}
 ```
 
-**Please Note:** If you are using `svelte/store`, `noPreserveState` has no effect on `store` properties. Neither locally, nor globally.
-
 #### External Dependencies
 
 If you rely on any external dependencies (files required in a preprocessor for example) you might want to watch these files for changes and re-run svelte compile.
diff --git a/index.js b/index.js
index 83cac61c..08baac8e 100644
--- a/index.js
+++ b/index.js
@@ -1,12 +1,9 @@
 const { relative } = require('path');
 const { getOptions } = require('loader-utils');
-
-const hotApi = require.resolve('./lib/hot-api.js');
-
+const { makeHot } = require('./lib/make-hot.js');
 const { compile, preprocess } = require('svelte/compiler');
 
 const pluginOptions = {
-	externalDependencies: true,
 	hotReload: true,
 	hotOptions: true,
 	preprocess: true,
@@ -14,36 +11,11 @@ const pluginOptions = {
 
 	// legacy
 	onwarn: true,
-	shared: true,
 	style: true,
 	script: true,
 	markup: true
 };
 
-function makeHot(id, code, hotOptions) {
-	const options = JSON.stringify(hotOptions);
-	const replacement = `
-if (module.hot) {
-	const { configure, register, reload } = require('${posixify(hotApi)}');
-
-	module.hot.accept();
-
-	if (!module.hot.data) {
-		// initial load
-		configure(${options});
-		$2 = register(${id}, $2);
-	} else {
-		// hot update
-		$2 = reload(${id}, $2);
-	}
-}
-
-export default $2;
-`;
-
-	return code.replace(/(export default ([^;]*));/, () => replacement);
-}
-
 function posixify(file) {
 	return file.replace(/[/\\]/g, '/');
 }
@@ -120,7 +92,8 @@ module.exports = function(source, map) {
 			}
 		}
 
-		let { js, css, warnings } = normalize(compile(processed.toString(), compileOptions));
+		const compiled = compile(processed.toString(), compileOptions);
+		let { js, css, warnings } = normalize(compiled);
 
 		warnings.forEach(
 			options.onwarn
@@ -131,7 +104,7 @@ module.exports = function(source, map) {
 		if (options.hotReload && !isProduction && !isServer) {
 			const hotOptions = Object.assign({}, options.hotOptions);
 			const id = JSON.stringify(relative(process.cwd(), compileOptions.filename));
-			js.code = makeHot(id, js.code, hotOptions);
+			js.code = makeHot(id, js.code, hotOptions, compiled, source, compileOptions);
 		}
 
 		if (options.emitCss && css.code) {
diff --git a/lib/hot-api.js b/lib/hot-api.js
index 73567782..e98a8862 100644
--- a/lib/hot-api.js
+++ b/lib/hot-api.js
@@ -1,51 +1,103 @@
-import { Registry, configure as configureProxy, createProxy } from 'svelte-dev-helper';
+import { makeApplyHmr } from 'svelte-hmr/runtime';
 
-let hotOptions = {
-	noPreserveState: false
-};
+// eslint-disable-next-line no-undef
+const g = typeof window !== 'undefined' ? window : global;
 
-export function configure(options) {
-	hotOptions = Object.assign(hotOptions, options);
-	configureProxy(hotOptions);
-}
+const globalKey =
+	typeof Symbol !== 'undefined'
+		? Symbol('SVELTE_LOADER_HOT')
+		: '__SVELTE_LOADER_HOT';
 
-export function register(id, component) {
+if (!g[globalKey]) {
+	// do updating refs counting to know when a full update has been applied
+	let updatingCount = 0;
 
-	//store original component in registry
-	Registry.set(id, {
-		rollback: null,
-		component,
-		instances: []
-	});
+	const notifyStart = () => {
+		updatingCount++;
+	};
 
-	//create the proxy itself
-	const proxy = createProxy(id);
+	const notifyError = reload => err => {
+		const errString = (err && err.stack) || err;
+		// eslint-disable-next-line no-console
+		console.error(
+			'[HMR] Failed to accept update (nollup compat mode)',
+			errString
+		);
+		reload();
+		notifyEnd();
+	};
 
-	//patch the registry record with proxy constructor
-	const record = Registry.get(id);
-	record.proxy = proxy;
-	Registry.set(id, record);
+	const notifyEnd = () => {
+		updatingCount--;
+		if (updatingCount === 0) {
+			// NOTE this message is important for timing in tests
+			// eslint-disable-next-line no-console
+			console.log('[HMR:Svelte] Up to date');
+		}
+	};
 
-	return proxy;
+	g[globalKey] = {
+		hotStates: {},
+		notifyStart,
+		notifyError,
+		notifyEnd,
+	};
 }
 
-export function reload(id, component) {
+const runAcceptHandlers = acceptHandlers => {
+	const queue = [...acceptHandlers];
+	const next = () => {
+		const cur = queue.shift();
+		if (cur) {
+			return cur(null).then(next);
+		} else {
+			return Promise.resolve(null);
+		}
+	};
+	return next();
+};
 
-	const record = Registry.get(id);
+export const applyHmr = makeApplyHmr(args => {
+	const { notifyStart, notifyError, notifyEnd } = g[globalKey];
+	const { m, reload } = args;
 
-	//keep reference to previous version to enable rollback
-	record.rollback = record.component;
+	let acceptHandlers = (m.hot.data && m.hot.data.acceptHandlers) || [];
+	let nextAcceptHandlers = [];
 
-	//replace component in registry with newly loaded component
-	record.component = component;
+	m.hot.dispose(data => {
+		data.acceptHandlers = nextAcceptHandlers;
+	});
 
-	Registry.set(id, record);
+	const dispose = (...args) => m.hot.dispose(...args);
 
-	//re-render the proxy instances
-	record.instances.slice().forEach(function(instance) {
-		instance && instance._rerender();
+	const accept = handler => {
+		if (nextAcceptHandlers.length === 0) {
+			m.hot.accept();
+		}
+		nextAcceptHandlers.push(handler);
+	};
+
+	const check = status => {
+		if (status === 'ready') {
+			notifyStart();
+		} else if (status === 'idle') {
+			runAcceptHandlers(acceptHandlers)
+				.then(notifyEnd)
+				.catch(notifyError(reload));
+		}
+	};
+
+	m.hot.addStatusHandler(check);
+
+	m.hot.dispose(() => {
+		m.hot.removeStatusHandler(check);
 	});
 
-	//return the original proxy constructor that was `register()`-ed
-	return record.proxy;
-}
\ No newline at end of file
+	const hot = {
+		data: m.hot.data,
+		dispose,
+		accept,
+	};
+
+	return Object.assign({}, args, { hot });
+});
diff --git a/lib/make-hot.js b/lib/make-hot.js
new file mode 100644
index 00000000..531bc2b5
--- /dev/null
+++ b/lib/make-hot.js
@@ -0,0 +1,12 @@
+const { walk } = require('svelte/compiler');
+const { createMakeHot } = require('svelte-hmr');
+
+const hotApi = require.resolve('./hot-api.js');
+
+const makeHot = createMakeHot({
+	walk,
+	meta: 'module',
+	hotApi,
+});
+
+module.exports.makeHot = makeHot;
diff --git a/package.json b/package.json
index eefd5d3a..3966c81d 100644
--- a/package.json
+++ b/package.json
@@ -16,7 +16,8 @@
   ],
   "dependencies": {
     "loader-utils": "^1.1.0",
-    "svelte-dev-helper": "^1.1.9"
+    "svelte-dev-helper": "^1.1.9",
+    "svelte-hmr": "^0.12.2"
   },
   "devDependencies": {
     "chai": "^4.1.2",
diff --git a/test/loader.spec.js b/test/loader.spec.js
index e9c40b49..db9dd1e2 100644
--- a/test/loader.spec.js
+++ b/test/loader.spec.js
@@ -307,7 +307,7 @@ describe('loader', () => {
 					function(err, code, map) {
 						expect(err).not.to.exist;
 
-						expect(code).not.to.contain('module.hot.accept();');
+						expect(code).not.to.contain('module && module.hot');
 					},
 					{}
 				)
@@ -320,8 +320,8 @@ describe('loader', () => {
 					function(err, code, map) {
 						expect(err).not.to.exist;
 
-						expect(code).to.contain('module.hot.accept();');
-						expect(code).not.to.contain('configure({"noPreserveState":true});');
+						expect(code).to.contain('module && module.hot');
+						expect(code).not.to.contain('"noPreserveState":true');
 					},
 					{ hotReload: true }
 				)
@@ -334,8 +334,8 @@ describe('loader', () => {
 					function(err, code, map) {
 						expect(err).not.to.exist;
 
-						expect(code).to.contain('module.hot.accept();');
-						expect(code).to.contain('configure({"noPreserveState":true});');
+						expect(code).to.contain('module && module.hot');
+						expect(code).to.contain('"noPreserveState":true');
 					},
 					{
 						hotReload: true,
@@ -353,7 +353,7 @@ describe('loader', () => {
 					function(err, code, map) {
 						expect(err).not.to.exist;
 
-						expect(code).not.to.contain('module.hot.accept();');
+						expect(code).not.to.contain('module && module.hot');
 					},
 					{
 						hotReload: true,
@@ -369,7 +369,7 @@ describe('loader', () => {
 					function(err, code, map) {
 						expect(err).not.to.exist;
 
-						expect(code).to.contain(require.resolve('../lib/hot-api.js').replace(/[/\\]/g, '/'));
+						expect(code).to.contain('lib/hot-api.js');
 					},
 					{ hotReload: true }
 				)