diff --git a/packages/@vue/cli-plugin-unit-mocha/index.js b/packages/@vue/cli-plugin-unit-mocha/index.js
index cfdec0aa5f..ad1975a684 100644
--- a/packages/@vue/cli-plugin-unit-mocha/index.js
+++ b/packages/@vue/cli-plugin-unit-mocha/index.js
@@ -12,16 +12,18 @@ module.exports = api => {
 
       // when target === 'node', vue-loader will attempt to generate
       // SSR-optimized code. We need to turn that off here.
-      // the `optimizeSSR` option is only available in vue-loader 15
-      if (!isVue3) {
-        webpackConfig.module
+      webpackConfig.module
         .rule('vue')
           .use('vue-loader')
           .tap(options => {
-            options.optimizeSSR = false
+            if (isVue3) {
+              options.isServerBuild = false
+            } else {
+              options.optimizeSSR = false
+            }
+
             return options
           })
-      }
     }
   })
 
diff --git a/packages/@vue/cli-service/package.json b/packages/@vue/cli-service/package.json
index 9e30d1bfdb..5e5c993043 100644
--- a/packages/@vue/cli-service/package.json
+++ b/packages/@vue/cli-service/package.json
@@ -80,7 +80,7 @@
     "webpack-merge": "^4.2.2"
   },
   "optionalDependencies": {
-    "vue-loader-v16": "npm:vue-loader@^16.0.0-beta.7"
+    "vue-loader-v16": "npm:vue-loader@^16.1.0"
   },
   "peerDependencies": {
     "@vue/compiler-sfc": "^3.0.0-beta.14",