diff --git a/common.bazelrc b/common.bazelrc
index 0b5ddf2c8c..19e6d72d13 100644
--- a/common.bazelrc
+++ b/common.bazelrc
@@ -47,8 +47,8 @@ test --test_output=errors
 #     `nodejs_binary` and `nodejs_test` via the default value of the `default_env_vars` attribute of those rules.
 # --compilation_mode=dbg
 #     Rules may change their build outputs if the compilation mode is set to dbg. For example,
-#     mininfiers such as terser may make their output more human readable when this is set. `COMPILATION_MODE` will be passed to
-#     `nodejs_binary` and `nodejs_test` via the default value of the `default_env_vars` attribute of those rules.
+#     mininfiers such as terser may make their output more human readable when this is set. Rules will pass `COMPILATION_MODE`
+#     to `nodejs_binary` executables via the actions.run env attribute.
 #     See https://docs.bazel.build/versions/master/user-manual.html#flag--compilation_mode for more details.
 test:debug --test_output=streamed --test_strategy=exclusive --test_timeout=9999 --nocache_test_results --define=VERBOSE_LOGS=1
 # Use bazel run with `--config=debug` to turn on the NodeJS inspector agent.
diff --git a/examples/parcel/parcel.bzl b/examples/parcel/parcel.bzl
index d1eb224cd6..458dbffd12 100644
--- a/examples/parcel/parcel.bzl
+++ b/examples/parcel/parcel.bzl
@@ -36,6 +36,7 @@ def _parcel_impl(ctx):
         executable = ctx.executable.parcel,
         outputs = [ctx.outputs.bundle, ctx.outputs.sourcemap],
         arguments = args,
+        env = {"COMPILATION_MODE": ctx.var["COMPILATION_MODE"]},
         progress_message = "Bundling JavaScript %s [parcel]" % ctx.outputs.bundle.short_path,
     )
     return [DefaultInfo()]
diff --git a/examples/worker/uses_workers.bzl b/examples/worker/uses_workers.bzl
index 0456cdde57..609d940b70 100644
--- a/examples/worker/uses_workers.bzl
+++ b/examples/worker/uses_workers.bzl
@@ -22,6 +22,7 @@ def _work(ctx):
         execution_requirements = {"supports-workers": "1"},
         # The user can explicitly set the execution strategy
         mnemonic = "DoWork",
+        env = {"COMPILATION_MODE": ctx.var["COMPILATION_MODE"]},
     )
 
     return [DefaultInfo(files = depset([output]))]
diff --git a/internal/node/node.bzl b/internal/node/node.bzl
index 2c0bfefde4..a2450c3532 100644
--- a/internal/node/node.bzl
+++ b/internal/node/node.bzl
@@ -174,13 +174,6 @@ def _nodejs_binary_impl(ctx):
         if k in ctx.var.keys():
             env_vars += "export %s=\"%s\"\n" % (k, ctx.var[k])
 
-    if "DEBUG" in ctx.var and ctx.var["COMPILATION_MODE"] != "dbg":
-        print("""
-        WARNING: `--define DEBUG` no longer triggers a debugging build, use
-        `--compilation_mode=dbg` instead.
-
-        """)
-
     expected_exit_code = 0
     if hasattr(ctx.attr, "expected_exit_code"):
         expected_exit_code = ctx.attr.expected_exit_code
@@ -287,12 +280,10 @@ without losing the defaults that should be set in most cases.
 
 The set of default  environment variables is:
 
-- `COMPILATION_MODE`: rules use this environment variable to produce optimized (eg. mangled and minimized) or debugging output
-- `VERBOSE_LOGS`: rules use this environment variable to turn on debug output in their logs
-- `DEBUG`: used by some npm packages to print debugging logs
+- `VERBOSE_LOGS`: use by some rules & tools to turn on debug output in their logs
 - `NODE_DEBUG`: used by node.js itself to print more logs
 """,
-        default = ["COMPILATION_MODE", "VERBOSE_LOGS", "DEBUG", "NODE_DEBUG"],
+        default = ["VERBOSE_LOGS", "NODE_DEBUG"],
     ),
     "entry_point": attr.label(
         doc = """The script which should be executed first, usually containing a main function.
diff --git a/internal/pkg_web/pkg_web.bzl b/internal/pkg_web/pkg_web.bzl
index 9768b3bf83..41b72a314b 100644
--- a/internal/pkg_web/pkg_web.bzl
+++ b/internal/pkg_web/pkg_web.bzl
@@ -32,7 +32,7 @@ _ATTRS = {
     ),
 }
 
-def move_files(output_name, files, action_factory, assembler, root_paths):
+def move_files(output_name, files, action_factory, var, assembler, root_paths):
     """Moves files into an output directory
 
     Args:
@@ -58,6 +58,7 @@ def move_files(output_name, files, action_factory, assembler, root_paths):
         executable = assembler,
         arguments = [args],
         execution_requirements = {"local": "1"},
+        env = {"COMPILATION_MODE": var["COMPILATION_MODE"]},
     )
     return depset([www_dir])
 
@@ -90,6 +91,7 @@ def _impl(ctx):
         ctx.label.name,
         ctx.files.srcs,
         ctx.actions,
+        ctx.var,
         ctx.executable._assembler,
         root_paths,
     )
diff --git a/internal/providers/node_runtime_deps_info.bzl b/internal/providers/node_runtime_deps_info.bzl
index c8d358bfc1..d9cd60a590 100644
--- a/internal/providers/node_runtime_deps_info.bzl
+++ b/internal/providers/node_runtime_deps_info.bzl
@@ -63,9 +63,15 @@ def run_node(ctx, inputs, arguments, executable, **kwargs):
     # To access runfiles, you must use a runfiles helper in the program instead
     add_arg(arguments, "--nobazel_patch_module_resolver")
 
+    # Forward the COMPILATION_MODE to node process as an environment variable
+    env = kwargs.pop("env", {})
+    if "COMPILATION_MODE" not in env.keys():
+        env["COMPILATION_MODE"] = ctx.var["COMPILATION_MODE"]
+
     ctx.actions.run(
         inputs = inputs + extra_inputs,
         arguments = arguments,
         executable = exec_exec,
+        env = env,
         **kwargs
     )
diff --git a/packages/labs/src/protobufjs/ts_proto_library.bzl b/packages/labs/src/protobufjs/ts_proto_library.bzl
index 2c825e0116..8be4d76fd1 100644
--- a/packages/labs/src/protobufjs/ts_proto_library.bzl
+++ b/packages/labs/src/protobufjs/ts_proto_library.bzl
@@ -15,7 +15,7 @@
 
 load("@build_bazel_rules_nodejs//:providers.bzl", "DeclarationInfo", "JSEcmaScriptModuleInfo", "JSNamedModuleInfo")
 
-def _run_pbjs(actions, executable, output_name, proto_files, suffix = ".js", wrap = "amd", amd_name = ""):
+def _run_pbjs(actions, executable, var, output_name, proto_files, suffix = ".js", wrap = "amd", amd_name = ""):
     js_file = actions.declare_file(output_name + suffix)
 
     # Create an intermediate file so that we can do some manipulation of the
@@ -36,6 +36,7 @@ def _run_pbjs(actions, executable, output_name, proto_files, suffix = ".js", wra
         inputs = proto_files,
         outputs = [js_tmpl_file],
         arguments = [args],
+        env = {"COMPILATION_MODE": var["COMPILATION_MODE"]},
     )
 
     actions.expand_template(
@@ -51,7 +52,7 @@ def _run_pbjs(actions, executable, output_name, proto_files, suffix = ".js", wra
     )
     return js_file
 
-def _run_pbts(actions, executable, js_file):
+def _run_pbts(actions, executable, var, js_file):
     ts_file = actions.declare_file(js_file.basename[:-len(".js")] + ".d.ts")
 
     # Reference of arguments:
@@ -66,6 +67,7 @@ def _run_pbts(actions, executable, js_file):
         inputs = [js_file],
         outputs = [ts_file],
         arguments = [args],
+        env = {"COMPILATION_MODE": var["COMPILATION_MODE"]},
     )
     return ts_file
 
@@ -88,6 +90,7 @@ def _ts_proto_library(ctx):
     js_es5 = _run_pbjs(
         ctx.actions,
         ctx.executable,
+        ctx.var,
         output_name,
         sources,
         amd_name = "/".join([p for p in [
@@ -98,6 +101,7 @@ def _ts_proto_library(ctx):
     js_es6 = _run_pbjs(
         ctx.actions,
         ctx.executable,
+        ctx.var,
         output_name,
         sources,
         suffix = ".mjs",
@@ -105,7 +109,7 @@ def _ts_proto_library(ctx):
     )
 
     # pbts doesn't understand '.mjs' extension so give it the es5 file
-    dts = _run_pbts(ctx.actions, ctx.executable, js_es5)
+    dts = _run_pbts(ctx.actions, ctx.executable, ctx.var, js_es5)
 
     # Return a structure that is compatible with the deps[] of a ts_library.
     declarations = depset([dts])
diff --git a/packages/labs/src/webpack/webpack_bundle.bzl b/packages/labs/src/webpack/webpack_bundle.bzl
index 6b2184da8a..6de1c19b8d 100644
--- a/packages/labs/src/webpack/webpack_bundle.bzl
+++ b/packages/labs/src/webpack/webpack_bundle.bzl
@@ -39,6 +39,7 @@ def _webpack_bundle(ctx):
         outputs = [ctx.outputs.bundle, ctx.outputs.sourcemap],
         arguments = [args],
         progress_message = "Bundling JavaScript %s [webpack]" % ctx.outputs.bundle.path,
+        env = {"COMPILATION_MODE": ctx.var["COMPILATION_MODE"]},
     )
     return [DefaultInfo()]
 
diff --git a/packages/rollup/test/version_stamp/BUILD.bazel b/packages/rollup/test/version_stamp/BUILD.bazel
index 7c3f4cf1c3..4398c6ca30 100644
--- a/packages/rollup/test/version_stamp/BUILD.bazel
+++ b/packages/rollup/test/version_stamp/BUILD.bazel
@@ -22,4 +22,5 @@ golden_file_test(
     # Leave off the ".js" extension to test that it's the default output
     actual = "version_stamp",
     golden = "golden.js_",
+    golden_debug = "golden_debug.js_",
 )
diff --git a/packages/rollup/test/version_stamp/golden_debug.js_ b/packages/rollup/test/version_stamp/golden_debug.js_
new file mode 100644
index 0000000000..d336f784a4
--- /dev/null
+++ b/packages/rollup/test/version_stamp/golden_debug.js_
@@ -0,0 +1,7 @@
+/**
+ * @license A dummy license banner that goes at the top of the file.
+ * This is version v1.2.3_debug
+ */
+
+// License banner with version stamp will appear here
+console.error('stamp');
diff --git a/packages/rollup/test/version_stamp/rollup.config.js b/packages/rollup/test/version_stamp/rollup.config.js
index 6442d3f7c7..0f79697862 100644
--- a/packages/rollup/test/version_stamp/rollup.config.js
+++ b/packages/rollup/test/version_stamp/rollup.config.js
@@ -1,3 +1,5 @@
+const DEBUG = process.env['COMPILATION_MODE'] === 'dbg';
+
 // Parse the stamp file produced by Bazel from the version control system
 let version = '<unknown>';
 if (bazel_stamp_file) {
@@ -8,6 +10,9 @@ if (bazel_stamp_file) {
   // Don't assume BUILD_SCM_VERSION exists
   if (versionTag) {
     version = 'v' + versionTag.split(' ')[1].trim();
+    if (DEBUG) {
+      version += '_debug';
+    }
   }
 }
 
diff --git a/packages/terser/src/terser_minified.bzl b/packages/terser/src/terser_minified.bzl
index 8b3e7609dd..475ec06160 100644
--- a/packages/terser/src/terser_minified.bzl
+++ b/packages/terser/src/terser_minified.bzl
@@ -170,6 +170,7 @@ def _terser(ctx):
         outputs = outputs,
         executable = ctx.executable.terser_bin,
         arguments = [args],
+        env = {"COMPILATION_MODE": ctx.var["COMPILATION_MODE"]},
         progress_message = "Minifying JavaScript %s [terser]" % (outputs[0].short_path),
     )
 
diff --git a/packages/typescript/src/internal/build_defs.bzl b/packages/typescript/src/internal/build_defs.bzl
index e917f199d3..0b15f19d65 100644
--- a/packages/typescript/src/internal/build_defs.bzl
+++ b/packages/typescript/src/internal/build_defs.bzl
@@ -156,6 +156,7 @@ def _compile_action(ctx, inputs, outputs, tsconfig_file, node_opts, description
         execution_requirements = {
             "supports-workers": str(int(ctx.attr.supports_workers)),
         },
+        env = {"COMPILATION_MODE": ctx.var["COMPILATION_MODE"]},
     )
 
     # Enable the replay_params in case an aspect needs to re-build this library.