diff --git a/package.json b/package.json
index cebfddbe34e94..5089e6e1a140d 100644
--- a/package.json
+++ b/package.json
@@ -115,6 +115,8 @@
     ]
   },
   "dependencies": {
+    "@babel/core": "^7.11.1",
+    "@babel/register": "^7.10.5",
     "@elastic/datemath": "5.0.3",
     "@elastic/elasticsearch": "7.9.1",
     "@elastic/eui": "29.0.0",
@@ -126,6 +128,7 @@
     "@hapi/wreck": "^15.0.2",
     "@kbn/analytics": "1.0.0",
     "@kbn/apm-config-loader": "1.0.0",
+    "@kbn/babel-preset": "1.0.0",
     "@kbn/config": "1.0.0",
     "@kbn/config-schema": "1.0.0",
     "@kbn/i18n": "1.0.0",
@@ -211,7 +214,6 @@
     "rxjs": "^6.5.5",
     "seedrandom": "^3.0.5",
     "semver": "^5.7.0",
-    "source-map-support": "^0.5.19",
     "style-it": "^2.1.3",
     "symbol-observable": "^1.2.0",
     "tar": "4.4.13",
@@ -225,9 +227,7 @@
     "yauzl": "^2.10.0"
   },
   "devDependencies": {
-    "@babel/core": "^7.11.1",
     "@babel/parser": "^7.11.2",
-    "@babel/register": "^7.10.5",
     "@babel/types": "^7.11.0",
     "@elastic/apm-rum": "^5.6.1",
     "@elastic/charts": "23.0.0",
@@ -238,7 +238,6 @@
     "@elastic/github-checks-reporter": "0.0.20b3",
     "@elastic/makelogs": "^6.0.0",
     "@elastic/ui-ace": "0.2.3",
-    "@kbn/babel-preset": "1.0.0",
     "@kbn/dev-utils": "1.0.0",
     "@kbn/es": "1.0.0",
     "@kbn/es-archiver": "1.0.0",
diff --git a/packages/kbn-babel-preset/node_preset.js b/packages/kbn-babel-preset/node_preset.js
index 86817ed253e7c..45afe5d5ebc32 100644
--- a/packages/kbn-babel-preset/node_preset.js
+++ b/packages/kbn-babel-preset/node_preset.js
@@ -49,5 +49,13 @@ module.exports = (_, options = {}) => {
       ],
       require('./common_preset'),
     ],
+    plugins: [
+      [
+        require.resolve('babel-plugin-transform-define'),
+        {
+          'global.__BUILT_WITH_BABEL__': 'true',
+        },
+      ],
+    ],
   };
 };
diff --git a/packages/kbn-babel-preset/package.json b/packages/kbn-babel-preset/package.json
index 79d2fd8687dae..bc4e0ec338f94 100644
--- a/packages/kbn-babel-preset/package.json
+++ b/packages/kbn-babel-preset/package.json
@@ -14,6 +14,7 @@
     "@babel/preset-typescript": "^7.10.4",
     "babel-plugin-add-module-exports": "^1.0.2",
     "babel-plugin-styled-components": "^1.10.7",
+    "babel-plugin-transform-define": "^1.3.1",
     "babel-plugin-transform-react-remove-prop-types": "^0.4.24",
     "react-is": "^16.8.0",
     "styled-components": "^5.1.0"
diff --git a/packages/kbn-test/src/functional_tests/lib/babel_register_for_test_plugins.js b/packages/kbn-test/src/functional_tests/lib/babel_register_for_test_plugins.js
deleted file mode 100644
index 44ff579411bd9..0000000000000
--- a/packages/kbn-test/src/functional_tests/lib/babel_register_for_test_plugins.js
+++ /dev/null
@@ -1,39 +0,0 @@
-/*
- * Licensed to Elasticsearch B.V. under one or more contributor
- * license agreements. See the NOTICE file distributed with
- * this work for additional information regarding copyright
- * ownership. Elasticsearch B.V. licenses this file to you under
- * the Apache License, Version 2.0 (the "License"); you may
- * not use this file except in compliance with the License.
- * You may obtain a copy of the License at
- *
- *    http://www.apache.org/licenses/LICENSE-2.0
- *
- * Unless required by applicable law or agreed to in writing,
- * software distributed under the License is distributed on an
- * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
- * KIND, either express or implied.  See the License for the
- * specific language governing permissions and limitations
- * under the License.
- */
-
-const Path = require('path');
-
-const { REPO_ROOT } = require('@kbn/dev-utils');
-
-// modifies all future calls to require() to automatically
-// compile the required source with babel
-require('@babel/register')({
-  ignore: [/[\/\\](node_modules|target|dist)[\/\\]/],
-  only: [
-    Path.resolve(REPO_ROOT, 'test'),
-    Path.resolve(REPO_ROOT, 'x-pack/test'),
-    Path.resolve(REPO_ROOT, 'examples'),
-    Path.resolve(REPO_ROOT, 'x-pack/examples'),
-    // TODO: should should probably remove this link back to the source
-    Path.resolve(REPO_ROOT, 'x-pack/plugins/task_manager/server/config.ts'),
-  ],
-  babelrc: false,
-  presets: [require.resolve('@kbn/babel-preset/node_preset')],
-  extensions: ['.js', '.ts', '.tsx'],
-});
diff --git a/packages/kbn-test/src/functional_tests/lib/run_kibana_server.js b/packages/kbn-test/src/functional_tests/lib/run_kibana_server.js
index e7ec99467ecfd..fb9f8f7a52408 100644
--- a/packages/kbn-test/src/functional_tests/lib/run_kibana_server.js
+++ b/packages/kbn-test/src/functional_tests/lib/run_kibana_server.js
@@ -17,26 +17,9 @@
  * under the License.
  */
 
-import { resolve, relative } from 'path';
+import { resolve } from 'path';
 import { KIBANA_ROOT, KIBANA_EXEC, KIBANA_EXEC_PATH } from './paths';
 
-function extendNodeOptions(installDir) {
-  if (!installDir) {
-    return {};
-  }
-
-  const testOnlyRegisterPath = relative(
-    installDir,
-    require.resolve('./babel_register_for_test_plugins')
-  );
-
-  return {
-    NODE_OPTIONS: `--require=${testOnlyRegisterPath}${
-      process.env.NODE_OPTIONS ? ` ${process.env.NODE_OPTIONS}` : ''
-    }`,
-  };
-}
-
 export async function runKibanaServer({ procs, config, options }) {
   const { installDir } = options;
 
@@ -46,7 +29,6 @@ export async function runKibanaServer({ procs, config, options }) {
     env: {
       FORCE_COLOR: 1,
       ...process.env,
-      ...extendNodeOptions(installDir),
     },
     cwd: installDir || KIBANA_ROOT,
     wait: /http server running/,
diff --git a/scripts/build_plugin_list_docs.js b/scripts/build_plugin_list_docs.js
index 6f184ca7b14c6..54821a1b10ee8 100644
--- a/scripts/build_plugin_list_docs.js
+++ b/scripts/build_plugin_list_docs.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 require('@kbn/dev-utils').runPluginListCli();
diff --git a/scripts/es.js b/scripts/es.js
index 53b01d8cb4414..2d56496f2fdd2 100644
--- a/scripts/es.js
+++ b/scripts/es.js
@@ -17,7 +17,7 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 
 var resolve = require('path').resolve;
 var pkg = require('../package.json');
diff --git a/scripts/generate_plugin.js b/scripts/generate_plugin.js
index af3d31048ecfc..f695eabb30f21 100644
--- a/scripts/generate_plugin.js
+++ b/scripts/generate_plugin.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 require('@kbn/plugin-generator').runCli();
diff --git a/scripts/plugin_helpers.js b/scripts/plugin_helpers.js
index f28bf8fcfff90..a07ba7a9185f8 100644
--- a/scripts/plugin_helpers.js
+++ b/scripts/plugin_helpers.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 require('@kbn/plugin-helpers').runCli();
diff --git a/scripts/register_git_hook.js b/scripts/register_git_hook.js
index 50dfeaf46109f..af3f54619bcec 100644
--- a/scripts/register_git_hook.js
+++ b/scripts/register_git_hook.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 require('@kbn/dev-utils/target/precommit_hook/cli');
diff --git a/scripts/release_notes.js b/scripts/release_notes.js
index ee9275194ae94..f46ee5823d70d 100644
--- a/scripts/release_notes.js
+++ b/scripts/release_notes.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 require('@kbn/release-notes').runReleaseNotesCli();
diff --git a/scripts/telemetry_check.js b/scripts/telemetry_check.js
index 22a22b401cb15..06b3ed46bdba6 100644
--- a/scripts/telemetry_check.js
+++ b/scripts/telemetry_check.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 require('@kbn/telemetry-tools').runTelemetryCheck();
diff --git a/scripts/telemetry_extract.js b/scripts/telemetry_extract.js
index e2fbb64c26719..051bee26537b9 100644
--- a/scripts/telemetry_extract.js
+++ b/scripts/telemetry_extract.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('../src/setup_node_env/no_transpilation');
+require('../src/setup_node_env/prebuilt_dev_only_entry');
 require('@kbn/telemetry-tools').runTelemetryExtract();
diff --git a/src/cli/index.js b/src/cli/index.js
index e5480d2137624..45f88eaf82a5b 100644
--- a/src/cli/index.js
+++ b/src/cli/index.js
@@ -18,6 +18,5 @@
  */
 
 require('../apm')();
-require('../setup_node_env/no_transpilation');
-require('../setup_node_env/babel_register/polyfill');
+require('../setup_node_env');
 require('./cli');
diff --git a/src/cli/serve/integration_tests/invalid_config.test.ts b/src/cli/serve/integration_tests/invalid_config.test.ts
index a72142faa22fe..fd6fa1bf192fc 100644
--- a/src/cli/serve/integration_tests/invalid_config.test.ts
+++ b/src/cli/serve/integration_tests/invalid_config.test.ts
@@ -18,10 +18,10 @@
  */
 
 import { spawnSync } from 'child_process';
+import { resolve } from 'path';
 
-import { REPO_ROOT } from '@kbn/dev-utils';
-
-const INVALID_CONFIG_PATH = require.resolve('./__fixtures__/invalid_config.yml');
+const ROOT_DIR = resolve(__dirname, '../../../../');
+const INVALID_CONFIG_PATH = resolve(__dirname, '__fixtures__/invalid_config.yml');
 
 interface LogEntry {
   message: string;
@@ -35,11 +35,11 @@ describe('cli invalid config support', function () {
     function () {
       // Unused keys only throw once LegacyService starts, so disable migrations so that Core
       // will finish the start lifecycle without a running Elasticsearch instance.
-      const { error, status, stdout, stderr } = spawnSync(
+      const { error, status, stdout } = spawnSync(
         process.execPath,
-        ['scripts/kibana', '--config', INVALID_CONFIG_PATH, '--migrations.skip=true'],
+        ['src/cli', '--config', INVALID_CONFIG_PATH, '--migrations.skip=true'],
         {
-          cwd: REPO_ROOT,
+          cwd: ROOT_DIR,
         }
       );
 
@@ -57,21 +57,13 @@ describe('cli invalid config support', function () {
         }));
 
       expect(error).toBe(undefined);
-
-      if (!fatalLogLine) {
-        throw new Error(
-          `cli did not log the expected fatal error message:\n\nstdout: \n${stdout}\n\nstderr:\n${stderr}`
-        );
-      }
-
+      expect(status).toBe(64);
       expect(fatalLogLine.message).toContain(
         'Error: Unknown configuration key(s): "unknown.key", "other.unknown.key", "other.third", "some.flat.key", ' +
           '"some.array". Check for spelling errors and ensure that expected plugins are installed.'
       );
       expect(fatalLogLine.tags).toEqual(['fatal', 'root']);
       expect(fatalLogLine.type).toEqual('log');
-
-      expect(status).toBe(64);
     },
     20 * 1000
   );
diff --git a/src/dev/build/tasks/copy_source_task.ts b/src/dev/build/tasks/copy_source_task.ts
index 78e1395586a17..948e2357effb0 100644
--- a/src/dev/build/tasks/copy_source_task.ts
+++ b/src/dev/build/tasks/copy_source_task.ts
@@ -37,8 +37,6 @@ export const CopySource: Task = {
         '!src/cli/repl/**',
         '!src/functional_test_runner/**',
         '!src/dev/**',
-        '!src/setup_node_env/babel_register/index.js',
-        '!src/setup_node_env/babel_register/register.js',
         '!**/public/**',
         'typings/**',
         'config/kibana.yml',
diff --git a/src/setup_node_env/babel_register/register.js b/src/setup_node_env/babel_register/register.js
index 3c0bd387c8e44..6d573d8922244 100644
--- a/src/setup_node_env/babel_register/register.js
+++ b/src/setup_node_env/babel_register/register.js
@@ -46,13 +46,27 @@ var ignore = [
 
   // ignore paths matching `/canvas/canvas_plugin/`
   /[\/\\]canvas[\/\\]canvas_plugin[\/\\]/,
-
-  // ignore any path in the packages, unless it is in the package's
-  // root `src` directory, in any test or __tests__ directory, or it
-  // ends with .test.js, .test.ts, or .test.tsx
-  /[\/\\]packages[\/\\](eslint-|kbn-)[^\/\\]+[\/\\](?!src[\/\\].*|(.+[\/\\])?(test|__tests__)[\/\\].+|.+\.test\.(js|ts|tsx)$)(.+$)/,
 ];
 
+if (global.__BUILT_WITH_BABEL__) {
+  // when building the Kibana source we replace the statement
+  // `global.__BUILT_WITH_BABEL__` with the value `true` so that
+  // when @babel/register is required for the first time by users
+  // it will exclude kibana's `src` directory.
+  //
+  // We still need @babel/register for plugins though, we've been
+  // building their server code at require-time since version 4.2
+  // TODO: the plugin install process could transpile plugin server code...
+  ignore.push(resolve(__dirname, '../../../src'));
+} else {
+  ignore.push(
+    // ignore any path in the packages, unless it is in the package's
+    // root `src` directory, in any test or __tests__ directory, or it
+    // ends with .test.js, .test.ts, or .test.tsx
+    /[\/\\]packages[\/\\](eslint-|kbn-)[^\/\\]+[\/\\](?!src[\/\\].*|(.+[\/\\])?(test|__tests__)[\/\\].+|.+\.test\.(js|ts|tsx)$)(.+$)/
+  );
+}
+
 // modifies all future calls to require() to automatically
 // compile the required source with babel
 require('@babel/register')({
diff --git a/src/setup_node_env/index.js b/src/setup_node_env/index.js
index 60f0982f50d20..d84249df7fd8f 100644
--- a/src/setup_node_env/index.js
+++ b/src/setup_node_env/index.js
@@ -17,5 +17,5 @@
  * under the License.
  */
 
-require('./no_transpilation');
+require('./prebuilt_dev_only_entry');
 require('./babel_register');
diff --git a/src/setup_node_env/no_transpilation.js b/src/setup_node_env/prebuilt_dev_only_entry.js
similarity index 100%
rename from src/setup_node_env/no_transpilation.js
rename to src/setup_node_env/prebuilt_dev_only_entry.js
diff --git a/x-pack/package.json b/x-pack/package.json
index 4145d8d72cc63..5742200b55d9f 100644
--- a/x-pack/package.json
+++ b/x-pack/package.json
@@ -32,7 +32,6 @@
     "@cypress/webpack-preprocessor": "^5.4.1",
     "@elastic/apm-rum-react": "^1.2.5",
     "@elastic/maki": "6.3.0",
-    "@kbn/babel-preset": "1.0.0",
     "@kbn/dev-utils": "1.0.0",
     "@kbn/es": "1.0.0",
     "@kbn/expect": "1.0.0",
@@ -281,6 +280,7 @@
     "@elastic/node-crypto": "1.2.1",
     "@elastic/numeral": "^2.5.0",
     "@elastic/safer-lodash-set": "0.0.0",
+    "@kbn/babel-preset": "1.0.0",
     "@kbn/config-schema": "1.0.0",
     "@kbn/i18n": "1.0.0",
     "@kbn/interpreter": "1.0.0",
diff --git a/yarn.lock b/yarn.lock
index 806424b222ad3..971a94bfe56c3 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -7545,6 +7545,14 @@ babel-plugin-syntax-jsx@^6.18.0:
   resolved "https://registry.yarnpkg.com/babel-plugin-syntax-jsx/-/babel-plugin-syntax-jsx-6.18.0.tgz#0af32a9a6e13ca7a3fd5069e62d7b0f58d0d8946"
   integrity sha1-CvMqmm4Tyno/1QaeYtew9Y0NiUY=
 
+babel-plugin-transform-define@^1.3.1:
+  version "1.3.1"
+  resolved "https://registry.yarnpkg.com/babel-plugin-transform-define/-/babel-plugin-transform-define-1.3.1.tgz#b21b7bad3b84cf8e3f07cdc8c660b99cbbc01213"
+  integrity sha512-JXZ1xE9jIbKCGYZ4wbSMPSI5mdS4DRLi5+SkTHgZqWn5YIf/EucykkzUsPmzJlpkX8fsMVdLnA5vt/LvT97Zbg==
+  dependencies:
+    lodash "^4.17.11"
+    traverse "0.6.6"
+
 babel-plugin-transform-inline-consecutive-adds@^0.4.3:
   version "0.4.3"
   resolved "https://registry.yarnpkg.com/babel-plugin-transform-inline-consecutive-adds/-/babel-plugin-transform-inline-consecutive-adds-0.4.3.tgz#323d47a3ea63a83a7ac3c811ae8e6941faf2b0d1"
@@ -27102,10 +27110,10 @@ source-map-support@^0.3.2:
   dependencies:
     source-map "0.1.32"
 
-source-map-support@^0.5.1, source-map-support@^0.5.16, source-map-support@^0.5.19, source-map-support@^0.5.6, source-map-support@^0.5.9, source-map-support@~0.5.12:
-  version "0.5.19"
-  resolved "https://registry.yarnpkg.com/source-map-support/-/source-map-support-0.5.19.tgz#a98b62f86dcaf4f67399648c085291ab9e8fed61"
-  integrity sha512-Wonm7zOCIJzBGQdB+thsPar0kYuCIzYvxZwlBa87yi/Mdjv7Tip2cyVbLj5o0cFPN4EVkuTwb3GDDyUx2DGnGw==
+source-map-support@^0.5.1, source-map-support@^0.5.16, source-map-support@^0.5.6, source-map-support@^0.5.9, source-map-support@~0.5.12:
+  version "0.5.16"
+  resolved "https://registry.yarnpkg.com/source-map-support/-/source-map-support-0.5.16.tgz#0ae069e7fe3ba7538c64c98515e35339eac5a042"
+  integrity sha512-efyLRJDr68D9hBBNIPWFjhpFzURh+KJykQwvMyW5UiZzYwoF6l4YMMDIJJEyFWxWCqfyxLzz6tSfUFR+kXXsVQ==
   dependencies:
     buffer-from "^1.0.0"
     source-map "^0.6.0"
@@ -28928,7 +28936,7 @@ traverse-chain@~0.1.0:
   resolved "https://registry.yarnpkg.com/traverse-chain/-/traverse-chain-0.1.0.tgz#61dbc2d53b69ff6091a12a168fd7d433107e40f1"
   integrity sha1-YdvC1Ttp/2CRoSoWj9fUMxB+QPE=
 
-traverse@^0.6.6, traverse@~0.6.6:
+traverse@0.6.6, traverse@^0.6.6, traverse@~0.6.6:
   version "0.6.6"
   resolved "https://registry.yarnpkg.com/traverse/-/traverse-0.6.6.tgz#cbdf560fd7b9af632502fed40f918c157ea97137"
   integrity sha1-y99WD9e5r2MlAv7UD5GMFX6pcTc=