diff --git a/WORKSPACE b/WORKSPACE
index 3d5e2af48b..2b0cb886f6 100644
--- a/WORKSPACE
+++ b/WORKSPACE
@@ -19,9 +19,6 @@ workspace(
         "@cypress_deps": ["packages/cypress/test/node_modules"],
         "@internal_npm_install_test_patches_npm_symlinked": ["internal/npm_install/test/patches_npm_symlinked/node_modules"],
         "@internal_npm_install_test_patches_yarn_symlinked": ["internal/npm_install/test/patches_yarn_symlinked/node_modules"],
-        "@internal_test_multi_linker_sub_deps": ["internal/linker/test/multi_linker/sub/node_modules"],
-        "@npm": ["node_modules"],
-        "@npm_node_patches": ["packages/node-patches/node_modules"],
     },
 )
 
diff --git a/docs/Built-ins.md b/docs/Built-ins.md
index 8683f41739..5944b4fbc4 100755
--- a/docs/Built-ins.md
+++ b/docs/Built-ins.md
@@ -899,6 +899,14 @@ Defaults to `True`
 
 (*Boolean*): Turn symlinking of node_modules on
 
+When False, the package manager will run in the external repository
+created by this rule.
+This requires that any files required for it to run should be listed in the
+`data` attribute. These files would include things like patch files that are
+read by a postinstall lifecycle hook such as the `patch-package` package uses.
+`package.json` and the lock file are already specified in dedicated attributes
+of this rule and do not need to be included in the `data`.
+
 When True, we run the package manager (npm or yarn) with the working directory
 set in your source tree, in the folder containing the package.json file.
 The resulting `node_modules` folder in the source tree will be symlinked to the
@@ -930,15 +938,7 @@ Using managed_directories will mean that
 2. if the `node_modules` folder is deleted from the source tree, Bazel will re-run the
    repository rule that creates it again on the next run.
 
-When False, the package manager will run in the external repository
-created by this rule.
-This requires that any files required for it to run should be listed in the
-`data` attribute. These files would include things like patch files that are
-read by a postinstall lifecycle hook such as the `patch-package` package uses.
-`package.json` and the lock file are already specified in dedicated attributes
-of this rule and do not need to be included in the `data`.
-
-Defaults to `True`
+Defaults to `False`
 
 <h4 id="npm_install-timeout">timeout</h4>
 
@@ -1586,6 +1586,14 @@ Defaults to `True`
 
 (*Boolean*): Turn symlinking of node_modules on
 
+When False, the package manager will run in the external repository
+created by this rule.
+This requires that any files required for it to run should be listed in the
+`data` attribute. These files would include things like patch files that are
+read by a postinstall lifecycle hook such as the `patch-package` package uses.
+`package.json` and the lock file are already specified in dedicated attributes
+of this rule and do not need to be included in the `data`.
+
 When True, we run the package manager (npm or yarn) with the working directory
 set in your source tree, in the folder containing the package.json file.
 The resulting `node_modules` folder in the source tree will be symlinked to the
@@ -1617,15 +1625,7 @@ Using managed_directories will mean that
 2. if the `node_modules` folder is deleted from the source tree, Bazel will re-run the
    repository rule that creates it again on the next run.
 
-When False, the package manager will run in the external repository
-created by this rule.
-This requires that any files required for it to run should be listed in the
-`data` attribute. These files would include things like patch files that are
-read by a postinstall lifecycle hook such as the `patch-package` package uses.
-`package.json` and the lock file are already specified in dedicated attributes
-of this rule and do not need to be included in the `data`.
-
-Defaults to `True`
+Defaults to `False`
 
 <h4 id="yarn_install-timeout">timeout</h4>
 
diff --git a/docs/dependencies.md b/docs/dependencies.md
index 582e5cb3b3..85a26f6fd1 100644
--- a/docs/dependencies.md
+++ b/docs/dependencies.md
@@ -29,9 +29,6 @@ This approach also allows you to use the generated fine-grained npm package depe
 which can significantly reduce the number of inputs to actions, making Bazel sand-boxing and
 remote-execution faster if there are a large number of files under `node_modules`.
 
-> Note that as of Bazel 0.26, and with the recommended `managed_directories` attribute on the `workspace` rule in `/WORKSPACE`,
-> the Bazel-managed `node_modules` directory is placed in your workspace root in the standard location used by npm or yarn.
-
 ## Using Bazel-managed dependencies
 
 To have Bazel manage its own copy of `node_modules`, which is useful to avoid
@@ -65,8 +62,28 @@ npm_install(
 > If you don't need to pass any arguments to `node_repositories`,
   you can skip calling that function. `yarn_install` and `npm_install` will do it by default.
 
-You should now add the `@npm` workspace to the `managed_directories` option in the `workspace` rule at the top of the file. This tells Bazel that the `node_modules` directory is special and is managed by the package manager.
-Add the `workspace` rule if it isn't already in your `/WORKSPACE` file.
+### symlink_node_modules and managed_directories
+
+Set `symlink_node_modules` to `True` to configure `npm_install` and
+`yarn_install` to install `node_modules` inside the user workspace and have
+Bazel use the `node_modules` folder in the user workspace for the build via a
+symlink into the external repository it creates.
+
+```python
+load("@build_bazel_rules_nodejs//:index.bzl", "npm_install")
+
+npm_install(
+    name = "npm",
+    package_json = "//:package.json",
+    package_lock_json = "//:package-lock.json",
+    symlink_node_modules = True,
+)
+```
+
+You should now add the `@npm` workspace to the `managed_directories` option in
+the `workspace` rule at the top of the file. This tells Bazel that the
+`node_modules` directory is special and is managed by the package manager. Add
+the `workspace` rule if it isn't already in your `/WORKSPACE` file.
 
 ```python
 workspace(
@@ -75,7 +92,18 @@ workspace(
 )
 ```
 
-As of Bazel 0.26 this feature is still experimental, so also add this line to the `.bazelrc` to opt-in:
+As of rules_nodejs 5.0, `symlink_node_modules` defaults to `False` and using
+`managed_directories` is not recommended. We've found that the benefits of using
+`symlink_node_modules`, which allows bazel to use a `node_modules` directory
+that is in the user workspace, do not outweigh the downsides of the repository
+rules not defining all of their input and of having to re-run the repository
+rule if the user's `node_modules` folder is deleted. On persistent CI machines
+that will run clean the state of the clone between jobs the repository rule will
+run for every job with `symlink_node_modules` enabled. With it disabled, the
+repository rule will only re-run if any of its inputs changes between jobs. 
+
+NB: On older versions of Bazel you may have to add the following flag to your
+`.bazelrc` to enable managed directories.
 
 ```
 common --experimental_allow_incremental_repository_updates
@@ -131,13 +159,7 @@ and npm deps, `yarn_install` (or `npm_install`) can be called separately for
 each.
 
 ```python
-workspace(
-    name = "my_wksp",
-    managed_directories = {
-        "@app1_npm": ["app1/node_modules"],
-        "@app2_npm": ["app2/node_modules"],
-    },
-)
+workspace(name = "my_wksp")
 
 yarn_install(
     name = "app1_npm",
diff --git a/e2e/bazel_managed_deps/WORKSPACE b/e2e/bazel_managed_deps/WORKSPACE
index c2d500e422..ecef8a4d91 100644
--- a/e2e/bazel_managed_deps/WORKSPACE
+++ b/e2e/bazel_managed_deps/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "e2e_bazel_managed_deps",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_bazel_managed_deps")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/concatjs_devserver/WORKSPACE b/e2e/concatjs_devserver/WORKSPACE
index d37ae3625a..52bd2427fa 100644
--- a/e2e/concatjs_devserver/WORKSPACE
+++ b/e2e/concatjs_devserver/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "e2e_concatjs_devserver",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_concatjs_devserver")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/coverage/WORKSPACE b/e2e/coverage/WORKSPACE
index 798a79fc5c..744d678389 100644
--- a/e2e/coverage/WORKSPACE
+++ b/e2e/coverage/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "e2e_coverage",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_coverage")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/fine_grained_symlinks/WORKSPACE b/e2e/fine_grained_symlinks/WORKSPACE
index 7bd4ddb684..c224da27fb 100644
--- a/e2e/fine_grained_symlinks/WORKSPACE
+++ b/e2e/fine_grained_symlinks/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "e2e_fine_grained_symlinks",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_fine_grained_symlinks")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/jasmine/WORKSPACE b/e2e/jasmine/WORKSPACE
index 5b85d75958..c7ce371b44 100644
--- a/e2e/jasmine/WORKSPACE
+++ b/e2e/jasmine/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "e2e_jasmine",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_jasmine")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/node_loader_no_preserve_symlinks/.bazelrc b/e2e/node_loader_no_preserve_symlinks/.bazelrc
index 3431057af6..f05d3ad5b2 100644
--- a/e2e/node_loader_no_preserve_symlinks/.bazelrc
+++ b/e2e/node_loader_no_preserve_symlinks/.bazelrc
@@ -1 +1,3 @@
 import %workspace%/../../common.bazelrc
+
+build --@build_bazel_rules_nodejs//nodejs:default_args=""
diff --git a/e2e/node_loader_no_preserve_symlinks/BUILD.bazel b/e2e/node_loader_no_preserve_symlinks/BUILD.bazel
index 26d3bb8155..a50c3b926e 100644
--- a/e2e/node_loader_no_preserve_symlinks/BUILD.bazel
+++ b/e2e/node_loader_no_preserve_symlinks/BUILD.bazel
@@ -9,5 +9,4 @@ nodejs_test(
         "@npm//:node_modules",
     ],
     entry_point = ":node_loader_test.spec.js",
-    templated_args = ["--nobazel_node_patches"],
 )
diff --git a/e2e/node_loader_no_preserve_symlinks/WORKSPACE b/e2e/node_loader_no_preserve_symlinks/WORKSPACE
index 727d656cd3..c5aed8bebb 100644
--- a/e2e/node_loader_no_preserve_symlinks/WORKSPACE
+++ b/e2e/node_loader_no_preserve_symlinks/WORKSPACE
@@ -1,9 +1,4 @@
-workspace(
-    name = "e2e_node_loader_no_preserve_symlinks",
-    managed_directories = {
-        "@npm": ["node_modules"],
-    },
-)
+workspace(name = "e2e_node_loader_no_preserve_symlinks")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/node_loader_preserve_symlinks/WORKSPACE b/e2e/node_loader_preserve_symlinks/WORKSPACE
index a46a3fb55a..bb3c12994d 100644
--- a/e2e/node_loader_preserve_symlinks/WORKSPACE
+++ b/e2e/node_loader_preserve_symlinks/WORKSPACE
@@ -1,9 +1,4 @@
-workspace(
-    name = "e2e_node_loader_preserve_symlinks",
-    managed_directories = {
-        "@npm": ["node_modules"],
-    },
-)
+workspace(name = "e2e_node_loader_preserve_symlinks")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/nodejs_image/WORKSPACE b/e2e/nodejs_image/WORKSPACE
index c9ff712e6c..df42aa9b0f 100644
--- a/e2e/nodejs_image/WORKSPACE
+++ b/e2e/nodejs_image/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "e2e_nodejs_image",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_nodejs_image")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/nodejs_repository/WORKSPACE b/e2e/nodejs_repository/WORKSPACE
index 452e4eee08..66b919f84f 100644
--- a/e2e/nodejs_repository/WORKSPACE
+++ b/e2e/nodejs_repository/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "nodejs_repository",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "nodejs_repository")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/packages/WORKSPACE b/e2e/packages/WORKSPACE
index 157c9487da..5fa76cf1e5 100644
--- a/e2e/packages/WORKSPACE
+++ b/e2e/packages/WORKSPACE
@@ -25,7 +25,6 @@ npm_install(
     data = ["//:postinstall.js"],
     package_json = "//:npm1/package.json",
     package_lock_json = "//:npm1/package-lock.json",
-    symlink_node_modules = False,
 )
 
 npm_install(
@@ -34,7 +33,6 @@ npm_install(
     data = ["//:postinstall.js"],
     package_json = "//:npm2/package.json",
     package_lock_json = "//:npm2/package-lock.json",
-    symlink_node_modules = False,
 )
 
 yarn_install(
@@ -42,7 +40,6 @@ yarn_install(
     args = ["--prod"],
     data = ["//:postinstall.js"],
     package_json = "//:yarn1/package.json",
-    symlink_node_modules = False,
     yarn_lock = "//:yarn1/yarn.lock",
 )
 
@@ -51,6 +48,5 @@ yarn_install(
     args = ["--prod"],
     data = ["//:postinstall.js"],
     package_json = "//:yarn2/package.json",
-    symlink_node_modules = False,
     yarn_lock = "//:yarn2/yarn.lock",
 )
diff --git a/e2e/symlinked_node_modules_npm/WORKSPACE b/e2e/symlinked_node_modules_npm/WORKSPACE
index c01174a247..c00cc3ec9b 100644
--- a/e2e/symlinked_node_modules_npm/WORKSPACE
+++ b/e2e/symlinked_node_modules_npm/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "e2e_symlinked_node_modules_yarn",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_symlinked_node_modules_yarn")
 
 # There are some assertions that can only by made by running tests from within
 # this nested repository folder. These assertions are run in CI so we use
diff --git a/e2e/symlinked_node_modules_yarn/WORKSPACE b/e2e/symlinked_node_modules_yarn/WORKSPACE
index 3c5bea3c8c..42c918df38 100644
--- a/e2e/symlinked_node_modules_yarn/WORKSPACE
+++ b/e2e/symlinked_node_modules_yarn/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "e2e_symlinked_node_modules_yarn",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_symlinked_node_modules_yarn")
 
 # There are some assertions that can only by made by running tests from within
 # this nested repository folder. These assertions are run in CI so we use
diff --git a/e2e/typescript/WORKSPACE b/e2e/typescript/WORKSPACE
index 0e5fcf9310..077d2e17b7 100644
--- a/e2e/typescript/WORKSPACE
+++ b/e2e/typescript/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "e2e_typescript",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_typescript")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/e2e/webapp/WORKSPACE b/e2e/webapp/WORKSPACE
index 0248a6598d..f7f861c369 100644
--- a/e2e/webapp/WORKSPACE
+++ b/e2e/webapp/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "e2e_webapp",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "e2e_webapp")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/angular/WORKSPACE b/examples/angular/WORKSPACE
index 856222d3dc..cdc3e863c3 100644
--- a/examples/angular/WORKSPACE
+++ b/examples/angular/WORKSPACE
@@ -5,10 +5,7 @@
 # ESModule imports (and TypeScript imports) can be absolute starting with the workspace name.
 # The name of the workspace should match the npm package where we publish, so that these
 # imports also make sense when referencing the published package.
-workspace(
-    name = "examples_angular",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_angular")
 
 # These rules are built-into Bazel but we need to load them first to download more rules
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
diff --git a/examples/angular_bazel_architect/WORKSPACE b/examples/angular_bazel_architect/WORKSPACE
index 08e0288df9..f4bd5bdd97 100644
--- a/examples/angular_bazel_architect/WORKSPACE
+++ b/examples/angular_bazel_architect/WORKSPACE
@@ -29,11 +29,6 @@ yarn_install(
     name = "npm",
     data = ["//:patches/@angular-devkit+architect-cli+0.1102.2.patch"],
     package_json = "//:package.json",
-    # Turn off symlink_node_modules here as it causes extreme flakiness on buildkite
-    # macos CI with missing files in node_modules.
-    # TODO: track down the root cause of the flakiness; it may be something to
-    # do with how the Bazel team has setup their macos virtualization.
-    symlink_node_modules = False,
     yarn_lock = "//:yarn.lock",
 )
 
diff --git a/examples/app/WORKSPACE b/examples/app/WORKSPACE
index 9f93f14c38..e5c47f0cde 100644
--- a/examples/app/WORKSPACE
+++ b/examples/app/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_app",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_app")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/closure/WORKSPACE b/examples/closure/WORKSPACE
index e15e186d2a..5559d4a804 100644
--- a/examples/closure/WORKSPACE
+++ b/examples/closure/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_closure",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_closure")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/create-react-app/WORKSPACE b/examples/create-react-app/WORKSPACE
index c76630299d..6846b57f96 100644
--- a/examples/create-react-app/WORKSPACE
+++ b/examples/create-react-app/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "create_react_app",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "create_react_app")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
@@ -20,6 +17,7 @@ load("@build_bazel_rules_nodejs//:index.bzl", "yarn_install")
 yarn_install(
     # Name this npm so that Bazel Label references look like @npm//package
     name = "npm",
+    data = ["//:patches/jest-haste-map+26.6.2.patch"],
     exports_directories_only = True,
     package_json = "//:package.json",
     yarn_lock = "//:yarn.lock",
diff --git a/examples/cypress/BUILD.bazel b/examples/cypress/BUILD.bazel
index 6ea386e723..5d7c406eb2 100644
--- a/examples/cypress/BUILD.bazel
+++ b/examples/cypress/BUILD.bazel
@@ -47,7 +47,10 @@ cypress_web_test(
     # A cypress config file is required
     config_file = "cypress.json",
     # Any runtime dependencies you need to boot your server or run your tests
-    data = ["@yarn//rxjs"],
+    data = [
+        "@yarn//express",
+        "@yarn//rxjs",
+    ],
     # Your cypress plugin used to configure cypress and boot your server
     plugin_file = ":plugin_file",
 )
diff --git a/examples/cypress/WORKSPACE b/examples/cypress/WORKSPACE
index ea88eaa7e3..114e9d2c17 100644
--- a/examples/cypress/WORKSPACE
+++ b/examples/cypress/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_cypress",
-    managed_directories = {"@yarn": ["node_modules"]},
-)
+workspace(name = "examples_cypress")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/esbuild/WORKSPACE b/examples/esbuild/WORKSPACE
index 09457996f7..a79273ede1 100644
--- a/examples/esbuild/WORKSPACE
+++ b/examples/esbuild/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_esbuild",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_esbuild")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/from_source/WORKSPACE b/examples/from_source/WORKSPACE
index 33761c7ea8..24fc85742b 100644
--- a/examples/from_source/WORKSPACE
+++ b/examples/from_source/WORKSPACE
@@ -43,6 +43,5 @@ yarn_install(
     exports_directories_only = True,
     package_json = "//:package.json",
     strict_visibility = True,
-    symlink_node_modules = False,
     yarn_lock = "//:yarn.lock",
 )
diff --git a/examples/jest/WORKSPACE b/examples/jest/WORKSPACE
index 8fd543a687..346b2bc031 100644
--- a/examples/jest/WORKSPACE
+++ b/examples/jest/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_jest",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_jest")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/kotlin/WORKSPACE b/examples/kotlin/WORKSPACE
index f62bb5bb73..7c003a7275 100644
--- a/examples/kotlin/WORKSPACE
+++ b/examples/kotlin/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "kotlin_example",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "kotlin_example")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/nestjs/WORKSPACE b/examples/nestjs/WORKSPACE
index 62a171bb88..a4c08ced12 100644
--- a/examples/nestjs/WORKSPACE
+++ b/examples/nestjs/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_nestjs",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_nestjs")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/parcel/WORKSPACE b/examples/parcel/WORKSPACE
index 128a070861..58c4c7338a 100644
--- a/examples/parcel/WORKSPACE
+++ b/examples/parcel/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_parcel",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_parcel")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/protobufjs/WORKSPACE b/examples/protobufjs/WORKSPACE
index 40788e0107..ecccd245de 100644
--- a/examples/protobufjs/WORKSPACE
+++ b/examples/protobufjs/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_protobufjs",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_protobufjs")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/react_webpack/WORKSPACE b/examples/react_webpack/WORKSPACE
index 03c4afe696..1c224adb28 100644
--- a/examples/react_webpack/WORKSPACE
+++ b/examples/react_webpack/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "react_webpack",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "react_webpack")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/vendored_node/WORKSPACE b/examples/vendored_node/WORKSPACE
index a60c07c5b7..5397699d6b 100644
--- a/examples/vendored_node/WORKSPACE
+++ b/examples/vendored_node/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_vendored_node",
-    managed_directories = {"@npm": ["npm/node_modules"]},
-)
+workspace(name = "examples_vendored_node")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/vendored_node_and_yarn/WORKSPACE b/examples/vendored_node_and_yarn/WORKSPACE
index f81e2e1904..ae9129a194 100644
--- a/examples/vendored_node_and_yarn/WORKSPACE
+++ b/examples/vendored_node_and_yarn/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_vendored_node_and_yarn",
-    managed_directories = {"@npm": ["npm/node_modules"]},
-)
+workspace(name = "examples_vendored_node_and_yarn")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/vue/WORKSPACE b/examples/vue/WORKSPACE
index cac8e79226..eaf65f0b7d 100644
--- a/examples/vue/WORKSPACE
+++ b/examples/vue/WORKSPACE
@@ -1,7 +1,4 @@
-workspace(
-    name = "vue_example",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "vue_example")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/web_testing/WORKSPACE b/examples/web_testing/WORKSPACE
index 6e1e4c87c8..0ec8f2a979 100644
--- a/examples/web_testing/WORKSPACE
+++ b/examples/web_testing/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_webtesting",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_webtesting")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/webapp/WORKSPACE b/examples/webapp/WORKSPACE
index 33518e875d..58bc7611b3 100644
--- a/examples/webapp/WORKSPACE
+++ b/examples/webapp/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_webapp",
-    managed_directories = {"@npm_deps": ["node_modules"]},
-)
+workspace(name = "examples_webapp")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/examples/worker/WORKSPACE b/examples/worker/WORKSPACE
index 58d383d8df..3f05790da4 100644
--- a/examples/worker/WORKSPACE
+++ b/examples/worker/WORKSPACE
@@ -12,10 +12,7 @@
 # See the License for the specific language governing permissions and
 # limitations under the License.
 
-workspace(
-    name = "examples_worker",
-    managed_directories = {"@npm": ["node_modules"]},
-)
+workspace(name = "examples_worker")
 
 load("@bazel_tools//tools/build_defs/repo:http.bzl", "http_archive")
 
diff --git a/internal/npm_install/npm_install.bzl b/internal/npm_install/npm_install.bzl
index 4f6e109e42..fb4a92669e 100644
--- a/internal/npm_install/npm_install.bzl
+++ b/internal/npm_install/npm_install.bzl
@@ -335,6 +335,14 @@ to the source `package.json`.""",
     "symlink_node_modules": attr.bool(
         doc = """Turn symlinking of node_modules on
 
+When False, the package manager will run in the external repository
+created by this rule.
+This requires that any files required for it to run should be listed in the
+`data` attribute. These files would include things like patch files that are
+read by a postinstall lifecycle hook such as the `patch-package` package uses.
+`package.json` and the lock file are already specified in dedicated attributes
+of this rule and do not need to be included in the `data`.
+
 When True, we run the package manager (npm or yarn) with the working directory
 set in your source tree, in the folder containing the package.json file.
 The resulting `node_modules` folder in the source tree will be symlinked to the
@@ -365,16 +373,8 @@ Using managed_directories will mean that
    in the external repository folder, and
 2. if the `node_modules` folder is deleted from the source tree, Bazel will re-run the
    repository rule that creates it again on the next run.
-
-When False, the package manager will run in the external repository
-created by this rule.
-This requires that any files required for it to run should be listed in the
-`data` attribute. These files would include things like patch files that are
-read by a postinstall lifecycle hook such as the `patch-package` package uses.
-`package.json` and the lock file are already specified in dedicated attributes
-of this rule and do not need to be included in the `data`.
 """,
-        default = True,
+        default = False,
     ),
     "timeout": attr.int(
         default = 3600,
diff --git a/npm_deps.bzl b/npm_deps.bzl
index 31632c3113..617ac69949 100644
--- a/npm_deps.bzl
+++ b/npm_deps.bzl
@@ -117,7 +117,6 @@ js_library(
             "@test_multi_linker/lib-d": "@build_bazel_rules_nodejs//internal/linker/test/multi_linker/lib_d",
             "@test_multi_linker/lib-d2": "@build_bazel_rules_nodejs//internal/linker/test/multi_linker/lib_d",
         },
-        symlink_node_modules = False,
         exports_directories_only = True,
         package_json = "//:package.json",
         yarn_lock = "//:yarn.lock",
@@ -137,7 +136,6 @@ js_library(
         },
         package_json = "//internal/linker/test/multi_linker:package.json",
         package_path = "internal/linker/test/multi_linker",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker:yarn.lock",
     )
 
@@ -155,7 +153,6 @@ js_library(
         },
         package_json = "//internal/linker/test/multi_linker/test_a:package.json",
         package_path = "internal/linker/test/multi_linker/test_a",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/test_a:yarn.lock",
     )
 
@@ -163,7 +160,6 @@ js_library(
         name = "internal_test_multi_linker_test_b_deps",
         package_json = "//internal/linker/test/multi_linker/test_b:package.json",
         package_path = "internal/linker/test/multi_linker/test_b",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/test_b:yarn.lock",
     )
 
@@ -171,7 +167,6 @@ js_library(
         name = "internal_test_multi_linker_test_c_deps",
         package_json = "//internal/linker/test/multi_linker/test_c:package.json",
         package_path = "internal/linker/test/multi_linker/test_c",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/test_c:yarn.lock",
     )
 
@@ -179,7 +174,6 @@ js_library(
         name = "internal_test_multi_linker_test_d_deps",
         package_json = "//internal/linker/test/multi_linker/test_d:package.json",
         package_path = "internal/linker/test/multi_linker/test_d",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/test_d:yarn.lock",
     )
 
@@ -189,7 +183,6 @@ js_library(
         args = ["--production"],
         package_json = "//internal/linker/test/multi_linker/lib_b:package.json",
         package_path = "internal/linker/test/multi_linker/lib_b",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/lib_b:yarn.lock",
     )
 
@@ -199,7 +192,6 @@ js_library(
         args = ["--production"],
         package_json = "//internal/linker/test/multi_linker/lib_c:lib/package.json",
         package_path = "internal/linker/test/multi_linker/lib_c/lib",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/lib_c:lib/yarn.lock",
     )
 
@@ -217,7 +209,6 @@ js_library(
         },
         package_json = "//internal/linker/test/multi_linker/sub:package.json",
         package_path = "internal/linker/test/multi_linker/sub/dev",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/sub:yarn.lock",
     )
 
@@ -246,7 +237,6 @@ js_library(
         args = ["--production"],
         package_json = "//internal/linker/test/multi_linker/onep_a:package.json",
         package_path = "internal/linker/test/multi_linker/onep_a",
-        symlink_node_modules = False,
         yarn_lock = "//internal/linker/test/multi_linker/onep_a:yarn.lock",
     )
 
@@ -270,7 +260,6 @@ js_library(
             ".proto",
         ],
         package_json = "//:tools/fine_grained_deps_yarn/package.json",
-        symlink_node_modules = False,
         yarn_lock = "//:tools/fine_grained_deps_yarn/yarn.lock",
     )
 
@@ -296,7 +285,6 @@ js_library(
         npm_command = "install",
         package_json = "//:tools/fine_grained_deps_npm/package.json",
         package_lock_json = "//:tools/fine_grained_deps_npm/package-lock.json",
-        symlink_node_modules = False,
     )
 
     yarn_install(
@@ -311,7 +299,6 @@ js_library(
         },
         exports_directories_only = True,
         package_json = "//:tools/fine_grained_deps_yarn/package.json",
-        symlink_node_modules = False,
         yarn_lock = "//:tools/fine_grained_deps_yarn/yarn.lock",
     )
 
@@ -329,13 +316,11 @@ js_library(
         npm_command = "install",
         package_json = "//:tools/fine_grained_deps_npm/package.json",
         package_lock_json = "//:tools/fine_grained_deps_npm/package-lock.json",
-        symlink_node_modules = False,
     )
 
     yarn_install(
         name = "fine_grained_no_bin",
         package_json = "//:tools/fine_grained_no_bin/package.json",
-        symlink_node_modules = False,
         yarn_lock = "//:tools/fine_grained_no_bin/yarn.lock",
     )
 
@@ -384,7 +369,6 @@ filegroup(
   ],
 )""",
         package_json = "//:tools/fine_grained_goldens/package.json",
-        symlink_node_modules = False,
         yarn_lock = "//:tools/fine_grained_goldens/yarn.lock",
     )
 
@@ -424,7 +408,6 @@ filegroup(
 )""",
         exports_directories_only = True,
         package_json = "//:tools/fine_grained_goldens/package.json",
-        symlink_node_modules = False,
         yarn_lock = "//:tools/fine_grained_goldens/yarn.lock",
     )
 
@@ -448,7 +431,6 @@ filegroup(
             # add scripts.new
             "scripts.new": "added",
         },
-        symlink_node_modules = False,
         yarn_lock = "//internal/npm_install/test/patches_yarn:yarn.lock",
         quiet = False,
         manual_build_file_contents = """exports_files(["_/internal/npm_install/test/patches_yarn/package.json"])""",
@@ -475,7 +457,6 @@ filegroup(
             # add scripts.new
             "scripts.new": "added",
         },
-        symlink_node_modules = False,
         quiet = False,
         manual_build_file_contents = """exports_files(["_/internal/npm_install/test/patches_npm/package.json"])""",
     )
@@ -550,7 +531,6 @@ filegroup(
 )""",
         package_json = "//:tools/fine_grained_goldens/package.json",
         package_path = "tools/fine_grained_goldens",
-        symlink_node_modules = False,
         yarn_lock = "//:tools/fine_grained_goldens/yarn.lock",
     )
 
@@ -564,12 +544,12 @@ filegroup(
         name = "cypress_deps",
         package_json = "//packages/cypress/test:package.json",
         yarn_lock = "//packages/cypress/test:yarn.lock",
+        symlink_node_modules = True,
     )
 
     yarn_install(
         name = "rollup_test_multi_linker_deps",
         package_json = "//packages/rollup/test/multi_linker:package.json",
         package_path = "packages/rollup/test/multi_linker",
-        symlink_node_modules = False,
         yarn_lock = "//packages/rollup/test/multi_linker:yarn.lock",
     )
diff --git a/packages/create/index.js b/packages/create/index.js
index f67806f1b3..8c3e7a584c 100644
--- a/packages/create/index.js
+++ b/packages/create/index.js
@@ -167,9 +167,6 @@ def fetch_dependencies():
 workspace(
     # How this workspace would be referenced with absolute labels from another workspace
     name = "${wkspName}",
-    # Map the @npm bazel workspace to the node_modules directory.
-    # This lets Bazel use the same node_modules as other local tooling.
-    managed_directories = {"@npm": ["node_modules"]},
 )
 
 load("//tools:bazel_deps.bzl", "fetch_dependencies")
diff --git a/toolchains/esbuild/esbuild_repositories.bzl b/toolchains/esbuild/esbuild_repositories.bzl
index bcdadf712c..c2f5aaa15d 100644
--- a/toolchains/esbuild/esbuild_repositories.bzl
+++ b/toolchains/esbuild/esbuild_repositories.bzl
@@ -77,6 +77,5 @@ def esbuild_repositories(name = "", npm_repository = "npm", npm_args = []):
             # Disable scripts as we don't need the javascript shim replaced wit the binary.
             "--ignore-scripts",
         ] + npm_args,
-        symlink_node_modules = False,
         package_path = package_path,
     )