diff --git a/CHANGELOG.md b/CHANGELOG.md
index 96a5198cf..0c57c6d86 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,3 +1,21 @@
+## [16.7.1](https://github.com/vuejs/vue-loader/compare/v16.7.0...v16.7.1) (2021-09-22)
+
+
+### Bug Fixes
+
+* remove pure annotation for custom blocks ([cd891e5](https://github.com/vuejs/vue-loader/commit/cd891e593bf7f8aff852f1d47fda2337de661bea))
+
+
+
+# [16.7.0](https://github.com/vuejs/vue-loader/compare/v16.6.0...v16.7.0) (2021-09-21)
+
+
+### Features
+
+* support optional @vue/compiler-sfc peer dep ([21725a4](https://github.com/vuejs/vue-loader/commit/21725a4ebc9c8d7f8a590d700017759327e21c2e))
+
+
+
 # [16.7.0](https://github.com/vuejs/vue-loader/compare/v16.6.0...v16.7.0) (2021-09-21)
 
 
diff --git a/README.md b/README.md
index 65e70e393..ccb87cdd8 100644
--- a/README.md
+++ b/README.md
@@ -9,9 +9,16 @@
 - `refSugar: boolean`: enable experimental ref sugar.
 
 - `customElement: boolean | RegExp`: enable custom elements mode. An SFC loaded in custom elements mode inlines its `<style>` tags as strings under the component's `styles` option. When used with `defineCustomElement` from Vue core, the styles will be injected into the custom element's shadow root.
+
   - Default is `/\.ce\.vue$/`
   - Setting to `true` will process all `.vue` files in custom element mode.
 
+- `enableTsInTemplate: boolean` (16.8+): allow TS expressions in templates when `<script>` has `lang="ts"`. Defaults to `true`.
+
+  - When used with `ts-loader`, due to `ts-loader`'s cache invalidation behavior, it sometimes prevents the template from being hot-reloaded in isolation, causing the component to reload despite only the template being edited. If this is annoying, you can set this option to `false` (and avoid using TS expressions in templates).
+
+  - Alternatively, leave this option on (by default) and use [`esbuild-loader`](https://github.com/privatenumber/esbuild-loader) to transpile TS instead, which doesn't suffer from this problem (it's also a lot faster). However, do note you will need to rely on TS type checking from other sources (e.g. IDE or `vue-tsc`).
+
 ## What is Vue Loader?
 
 `vue-loader` is a loader for [webpack](https://webpack.js.org/) that allows you to author Vue components in a format called [Single-File Components (SFCs)](./docs/spec.md):
diff --git a/example/TypeScript.vue b/example/TypeScript.vue
index 6e8dfc5b1..bc9fea17f 100644
--- a/example/TypeScript.vue
+++ b/example/TypeScript.vue
@@ -1,7 +1,8 @@
 <script setup lang="ts">
-let a: number = 12
+import { ref, Ref } from 'vue'
+const a: Ref<number> = ref(12)
 </script>
 
 <template>
-  <p>From TS: {{ a?.toFixed(2) }}</p>
+  <p @click="a++">From TSssss: {{ a.toFixed(2) }}</p>
 </template>
diff --git a/example/webpack.config.js b/example/webpack.config.js
index a7869ab87..c95fa0389 100644
--- a/example/webpack.config.js
+++ b/example/webpack.config.js
@@ -55,6 +55,7 @@ module.exports = (env = {}) => {
             loader: 'vue-loader',
             options: {
               refSugar: true,
+              enableTsInTemplate: false,
             },
           },
           {
diff --git a/package.json b/package.json
index 76f8ff5e5..f3d009d5f 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "vue-loader",
-  "version": "16.7.1",
+  "version": "16.8.0",
   "license": "MIT",
   "author": "Evan You",
   "main": "dist/index.js",
diff --git a/src/hotReload.ts b/src/hotReload.ts
index d29883b20..a445b650a 100644
--- a/src/hotReload.ts
+++ b/src/hotReload.ts
@@ -7,11 +7,12 @@ export function genHotReloadCode(
   return `
 /* hot reload */
 if (module.hot) {
-  script.__hmrId = "${id}"
+  __exports__.__hmrId = "${id}"
   const api = __VUE_HMR_RUNTIME__
   module.hot.accept()
-  if (!api.createRecord('${id}', script)) {
-    api.reload('${id}', script)
+  if (!api.createRecord('${id}', __exports__)) {
+    console.log('reload')
+    api.reload('${id}', __exports__)
   }
   ${templateRequest ? genTemplateHotReloadCode(id, templateRequest) : ''}
 }
@@ -21,6 +22,7 @@ if (module.hot) {
 function genTemplateHotReloadCode(id: string, request: string) {
   return `
   module.hot.accept(${request}, () => {
+    console.log('re-render')
     api.rerender('${id}', render)
   })
 `
diff --git a/src/index.ts b/src/index.ts
index 0dcd1471b..c93a3c433 100644
--- a/src/index.ts
+++ b/src/index.ts
@@ -36,6 +36,7 @@ export interface VueLoaderOptions {
   hotReload?: boolean
   exposeFilename?: boolean
   appendExtension?: boolean
+  enableTsInTemplate?: boolean
 
   isServerBuild?: boolean
 }
@@ -178,7 +179,8 @@ export default function loader(
     const idQuery = `&id=${id}`
     const scopedQuery = hasScoped ? `&scoped=true` : ``
     const attrsQuery = attrsToQuery(descriptor.template.attrs)
-    const tsQuery = isTS ? `&ts=true` : ``
+    const tsQuery =
+      options.enableTsInTemplate !== false && isTS ? `&ts=true` : ``
     const query = `?vue&type=template${idQuery}${scopedQuery}${tsQuery}${attrsQuery}${resourceQuery}`
     templateRequest = stringifyRequest(src + query)
     templateImport = `import { ${renderFnName} } from ${templateRequest}`
@@ -245,10 +247,6 @@ export default function loader(
     propsToAttach.push([`__scopeId`, `"data-v-${id}"`])
   }
 
-  if (needsHotReload) {
-    code += genHotReloadCode(id, templateRequest)
-  }
-
   // Expose filename. This is used by the devtools and Vue runtime warnings.
   if (!isProduction) {
     // Expose the file's full path in development, so that it can be opened
@@ -286,13 +284,19 @@ export default function loader(
 
   // finalize
   if (!propsToAttach.length) {
-    code += `\n\nexport default script`
+    code += `\n\nconst __exports__ = script;`
   } else {
     code += `\n\nimport exportComponent from ${exportHelperPath}`
-    code += `\nexport default /*#__PURE__*/exportComponent(script, [${propsToAttach
+    code += `\nconst __exports__ = /*#__PURE__*/exportComponent(script, [${propsToAttach
       .map(([key, val]) => `['${key}',${val}]`)
       .join(',')}])`
   }
+
+  if (needsHotReload) {
+    code += genHotReloadCode(id, templateRequest)
+  }
+
+  code += `\n\nexport default __exports__`
   return code
 }
 
diff --git a/src/resolveScript.ts b/src/resolveScript.ts
index c5b6261b6..0d8eea655 100644
--- a/src/resolveScript.ts
+++ b/src/resolveScript.ts
@@ -66,7 +66,9 @@ export function resolveScript(
           compiler: templateCompiler,
           compilerOptions: {
             ...options.compilerOptions,
-            ...resolveTemplateTSOptions(descriptor, options.compilerOptions),
+            ...(options.enableTsInTemplate
+              ? resolveTemplateTSOptions(descriptor, options.compilerOptions)
+              : null),
           },
           transformAssetUrls: options.transformAssetUrls || true,
         },
diff --git a/src/templateLoader.ts b/src/templateLoader.ts
index 67574371b..00db6cbe6 100644
--- a/src/templateLoader.ts
+++ b/src/templateLoader.ts
@@ -63,7 +63,9 @@ const TemplateLoader: webpack.loader.Loader = function (source, inMap) {
       ...options.compilerOptions,
       scopeId: query.scoped ? `data-v-${scopeId}` : undefined,
       bindingMetadata: script ? script.bindings : undefined,
-      ...resolveTemplateTSOptions(descriptor, options.compilerOptions),
+      ...(options.enableTsInTemplate
+        ? resolveTemplateTSOptions(descriptor, options.compilerOptions)
+        : null),
     },
     transformAssetUrls: options.transformAssetUrls || true,
   })

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