diff --git a/e2e/workspace-create-npm/src/create-nx-workspace-npm.test.ts b/e2e/workspace-create-npm/src/create-nx-workspace-npm.test.ts
index 850e2d7c6023a..c6f5f7a5a0580 100644
--- a/e2e/workspace-create-npm/src/create-nx-workspace-npm.test.ts
+++ b/e2e/workspace-create-npm/src/create-nx-workspace-npm.test.ts
@@ -136,6 +136,7 @@ describe('create-nx-workspace --preset=npm', () => {
     const tsconfig = readJson(`tsconfig.base.json`);
     expect(tsconfig.compilerOptions.paths).toEqual({
       [libName]: [`packages/${libName}/src/index.ts`],
+      [`${libName}/server`]: [`packages/${libName}/src/server.ts`],
     });
   });
 
diff --git a/packages/angular/src/generators/library/library.ts b/packages/angular/src/generators/library/library.ts
index 805ff94640752..8494d82412c79 100644
--- a/packages/angular/src/generators/library/library.ts
+++ b/packages/angular/src/generators/library/library.ts
@@ -3,12 +3,13 @@ import {
   formatFiles,
   GeneratorCallback,
   installPackagesTask,
+  joinPathFragments,
   removeDependenciesFromPackageJson,
   Tree,
 } from '@nrwl/devkit';
 import { jestProjectGenerator } from '@nrwl/jest';
 import { Linter } from '@nrwl/linter';
-import { updateRootTsConfig } from '@nrwl/js';
+import { addTsConfigPath } from '@nrwl/js';
 import { lt } from 'semver';
 import init from '../../generators/init/init';
 import { E2eTestRunner } from '../../utils/test-runners';
@@ -107,7 +108,9 @@ export async function libraryGenerator(
     addBuildableLibrariesPostCssDependencies(tree);
   }
 
-  updateRootTsConfig(tree, { ...libraryOptions, js: false });
+  addTsConfigPath(tree, libraryOptions.importPath, [
+    joinPathFragments(libraryOptions.projectRoot, './src', 'index.ts'),
+  ]);
 
   if (!libraryOptions.skipFormat) {
     await formatFiles(tree);
diff --git a/packages/expo/src/generators/library/library.ts b/packages/expo/src/generators/library/library.ts
index b4d2f1a1402f8..b1d79b82ea8b0 100644
--- a/packages/expo/src/generators/library/library.ts
+++ b/packages/expo/src/generators/library/library.ts
@@ -15,7 +15,7 @@ import {
   updateJson,
 } from '@nrwl/devkit';
 
-import { updateRootTsConfig } from '@nrwl/js';
+import { addTsConfigPath } from '@nrwl/js';
 
 import init from '../init/init';
 import { addLinting } from '../../utils/add-linting';
@@ -54,7 +54,13 @@ export async function expoLibraryGenerator(
   );
 
   if (!options.skipTsConfig) {
-    updateRootTsConfig(host, options);
+    addTsConfigPath(host, options.importPath, [
+      joinPathFragments(
+        options.projectRoot,
+        './src',
+        'index.' + (options.js ? 'js' : 'ts')
+      ),
+    ]);
   }
 
   const jestTask = await addJest(
diff --git a/packages/js/src/generators/library/library.ts b/packages/js/src/generators/library/library.ts
index 23be7456e67c4..d94e955032091 100644
--- a/packages/js/src/generators/library/library.ts
+++ b/packages/js/src/generators/library/library.ts
@@ -21,8 +21,8 @@ import {
 import { getImportPath } from 'nx/src/utils/path';
 
 import {
+  addTsConfigPath,
   getRelativePathToRootTsConfig,
-  updateRootTsConfig,
 } from '../../utils/typescript/ts-config';
 import { join } from 'path';
 import { addMinimalPublishScript } from '../../utils/minimal-publish-script';
@@ -117,7 +117,13 @@ export async function projectGenerator(
   }
 
   if (!schema.skipTsConfig) {
-    updateRootTsConfig(tree, options);
+    addTsConfigPath(tree, options.importPath, [
+      joinPathFragments(
+        options.projectRoot,
+        './src',
+        'index.' + (options.js ? 'js' : 'ts')
+      ),
+    ]);
   }
 
   if (!options.skipFormat) {
diff --git a/packages/js/src/utils/typescript/ts-config.ts b/packages/js/src/utils/typescript/ts-config.ts
index e52f146a3a210..6743ecaa8a4c7 100644
--- a/packages/js/src/utils/typescript/ts-config.ts
+++ b/packages/js/src/utils/typescript/ts-config.ts
@@ -52,38 +52,22 @@ export function getRootTsConfigFileName(tree: Tree): string | null {
   return null;
 }
 
-export function updateRootTsConfig(
-  host: Tree,
-  options: {
-    name: string;
-    importPath?: string;
-    projectRoot: string;
-    js?: boolean;
-  }
+export function addTsConfigPath(
+  tree: Tree,
+  importPath: string,
+  lookupPaths: string[]
 ) {
-  if (!options.importPath) {
-    throw new Error(
-      `Unable to update ${options.name} using the import path "${options.importPath}". Make sure to specify a valid import path one.`
-    );
-  }
-  updateJson(host, getRootTsConfigPathInTree(host), (json) => {
+  updateJson(tree, getRootTsConfigPathInTree(tree), (json) => {
     const c = json.compilerOptions;
-    c.paths = c.paths || {};
-    delete c.paths[options.name];
+    c.paths ??= {};
 
-    if (c.paths[options.importPath]) {
+    if (c.paths[importPath]) {
       throw new Error(
-        `You already have a library using the import path "${options.importPath}". Make sure to specify a unique one.`
+        `You already have a library using the import path "${importPath}". Make sure to specify a unique one.`
       );
     }
 
-    c.paths[options.importPath] = [
-      joinPathFragments(
-        options.projectRoot,
-        './src',
-        'index.' + (options.js ? 'js' : 'ts')
-      ),
-    ];
+    c.paths[importPath] = lookupPaths;
 
     return json;
   });
diff --git a/packages/next/src/generators/library/lib/normalize-options.spec.ts b/packages/next/src/generators/library/lib/normalize-options.spec.ts
new file mode 100644
index 0000000000000..4af2562f4fec9
--- /dev/null
+++ b/packages/next/src/generators/library/lib/normalize-options.spec.ts
@@ -0,0 +1,26 @@
+import type { Tree } from '@nrwl/devkit';
+import { Linter } from '@nrwl/linter';
+import { createTreeWithEmptyWorkspace } from '@nrwl/devkit/testing';
+import { normalizeOptions } from './normalize-options';
+
+describe('normalizeOptions', () => {
+  let tree: Tree;
+
+  beforeEach(() => {
+    tree = createTreeWithEmptyWorkspace();
+  });
+
+  it('should set importPath and projectRoot', () => {
+    const options = normalizeOptions(tree, {
+      name: 'my-lib',
+      style: 'css',
+      linter: Linter.None,
+      unitTestRunner: 'jest',
+    });
+
+    expect(options).toMatchObject({
+      importPath: '@proj/my-lib',
+      projectRoot: 'my-lib',
+    });
+  });
+});
diff --git a/packages/next/src/generators/library/lib/normalize-options.ts b/packages/next/src/generators/library/lib/normalize-options.ts
new file mode 100644
index 0000000000000..13f23c0447964
--- /dev/null
+++ b/packages/next/src/generators/library/lib/normalize-options.ts
@@ -0,0 +1,32 @@
+import {
+  getImportPath,
+  getWorkspaceLayout,
+  joinPathFragments,
+  names,
+  Tree,
+} from '@nrwl/devkit';
+import { Schema } from '../schema';
+
+export interface NormalizedSchema extends Schema {
+  importPath: string;
+  projectRoot: string;
+}
+
+export function normalizeOptions(
+  host: Tree,
+  options: Schema
+): NormalizedSchema {
+  const name = names(options.name).fileName;
+  const projectDirectory = options.directory
+    ? `${names(options.directory).fileName}/${name}`
+    : name;
+
+  const { libsDir } = getWorkspaceLayout(host);
+  const projectRoot = joinPathFragments(libsDir, projectDirectory);
+  const { npmScope } = getWorkspaceLayout(host);
+  return {
+    ...options,
+    importPath: options.importPath ?? getImportPath(npmScope, projectDirectory),
+    projectRoot,
+  };
+}
diff --git a/packages/next/src/generators/library/library.spec.ts b/packages/next/src/generators/library/library.spec.ts
index 7905b85fa53ea..604ebac9a2270 100644
--- a/packages/next/src/generators/library/library.spec.ts
+++ b/packages/next/src/generators/library/library.spec.ts
@@ -4,9 +4,11 @@ import { createTreeWithEmptyWorkspace } from '@nrwl/devkit/testing';
 import { Linter } from '@nrwl/linter';
 import libraryGenerator from './library';
 import { Schema } from './schema';
+
 // need to mock cypress otherwise it'll use the nx installed version from package.json
 //  which is v9 while we are testing for the new v10 version
 jest.mock('@nrwl/cypress/src/utils/cypress-version');
+
 describe('next library', () => {
   let mockedInstalledCypressVersion: jest.Mock<
     ReturnType<typeof installedCypressVersion>
@@ -133,4 +135,31 @@ describe('next library', () => {
         .jsxImportSource
     ).toEqual('@emotion/react');
   });
+
+  it('should generate a server-only entry point', async () => {
+    const appTree = createTreeWithEmptyWorkspace();
+
+    await libraryGenerator(appTree, {
+      name: 'myLib',
+      linter: Linter.EsLint,
+      skipFormat: false,
+      skipTsConfig: false,
+      unitTestRunner: 'jest',
+      style: 'css',
+      component: true,
+    });
+
+    expect(appTree.read('my-lib/src/index.ts', 'utf-8')).toContain(
+      'React client components'
+    );
+    expect(appTree.read('my-lib/src/server.ts', 'utf-8')).toContain(
+      'React server components'
+    );
+    expect(
+      readJson(appTree, 'tsconfig.base.json').compilerOptions.paths
+    ).toMatchObject({
+      '@proj/my-lib': ['my-lib/src/index.ts'],
+      '@proj/my-lib/server': ['my-lib/src/server.ts'],
+    });
+  });
 });
diff --git a/packages/next/src/generators/library/library.ts b/packages/next/src/generators/library/library.ts
index 427c9bac4f5ca..b082d0c7ec56b 100644
--- a/packages/next/src/generators/library/library.ts
+++ b/packages/next/src/generators/library/library.ts
@@ -2,6 +2,7 @@ import {
   convertNxGenerator,
   formatFiles,
   GeneratorCallback,
+  getImportPath,
   getWorkspaceLayout,
   joinPathFragments,
   names,
@@ -10,19 +11,15 @@ import {
   updateJson,
 } from '@nrwl/devkit';
 import { libraryGenerator as reactLibraryGenerator } from '@nrwl/react/src/generators/library/library';
+import { addTsConfigPath } from '@nrwl/js';
 
 import { nextInitGenerator } from '../init/init';
 import { Schema } from './schema';
+import { normalizeOptions } from './lib/normalize-options';
 
-export async function libraryGenerator(host: Tree, options: Schema) {
-  const name = names(options.name).fileName;
+export async function libraryGenerator(host: Tree, rawOptions: Schema) {
+  const options = normalizeOptions(host, rawOptions);
   const tasks: GeneratorCallback[] = [];
-  const projectDirectory = options.directory
-    ? `${names(options.directory).fileName}/${name}`
-    : name;
-
-  const { libsDir } = getWorkspaceLayout(host);
-  const projectRoot = joinPathFragments(libsDir, projectDirectory);
   const initTask = await nextInitGenerator(host, {
     ...options,
     skipFormat: true,
@@ -36,42 +33,78 @@ export async function libraryGenerator(host: Tree, options: Schema) {
   });
   tasks.push(libTask);
 
-  updateJson(host, joinPathFragments(projectRoot, '.babelrc'), (json) => {
-    if (options.style === '@emotion/styled') {
-      json.presets = [
-        [
-          '@nrwl/next/babel',
-          {
-            'preset-react': {
-              runtime: 'automatic',
-              importSource: '@emotion/react',
+  const indexPath = joinPathFragments(
+    options.projectRoot,
+    'src',
+    `index.${options.js ? 'js' : 'ts'}`
+  );
+  const indexContent = host.read(indexPath, 'utf-8');
+  host.write(
+    indexPath,
+    `// Use this file to export React client components (e.g. those with 'use client' directive) or other non-server utilities\n${indexContent}`
+  );
+  // Additional entry for Next.js libraries so React Server Components are exported from a separate entry point.
+  // This is needed because RSC exported from `src/index.ts` will mark the entire file as server-only and throw an error when used from a client component.
+  // See: https://github.com/nrwl/nx/issues/15830
+  const serverEntryPath = joinPathFragments(
+    options.projectRoot,
+    './src',
+    'server.' + (options.js ? 'js' : 'ts')
+  );
+  host.write(
+    joinPathFragments(
+      options.projectRoot,
+      'src',
+      `server.${options.js ? 'js' : 'ts'}`
+    ),
+    `// Use this file to export React server components\n`
+  );
+  addTsConfigPath(host, `${options.importPath}/server`, [serverEntryPath]);
+
+  updateJson(
+    host,
+    joinPathFragments(options.projectRoot, '.babelrc'),
+    (json) => {
+      if (options.style === '@emotion/styled') {
+        json.presets = [
+          [
+            '@nrwl/next/babel',
+            {
+              'preset-react': {
+                runtime: 'automatic',
+                importSource: '@emotion/react',
+              },
             },
-          },
-        ],
-      ];
-    } else if (options.style === 'styled-jsx') {
-      // next.js doesn't require the `styled-jsx/babel' plugin as it is already
-      // built-into the `next/babel` preset
-      json.presets = ['@nrwl/next/babel'];
-      json.plugins = (json.plugins || []).filter(
-        (x) => x !== 'styled-jsx/babel'
-      );
-    } else {
-      json.presets = ['@nrwl/next/babel'];
+          ],
+        ];
+      } else if (options.style === 'styled-jsx') {
+        // next.js doesn't require the `styled-jsx/babel' plugin as it is already
+        // built-into the `next/babel` preset
+        json.presets = ['@nrwl/next/babel'];
+        json.plugins = (json.plugins || []).filter(
+          (x) => x !== 'styled-jsx/babel'
+        );
+      } else {
+        json.presets = ['@nrwl/next/babel'];
+      }
+      return json;
     }
-    return json;
-  });
+  );
 
-  updateJson(host, joinPathFragments(projectRoot, 'tsconfig.json'), (json) => {
-    if (options.style === '@emotion/styled') {
-      json.compilerOptions.jsxImportSource = '@emotion/react';
+  updateJson(
+    host,
+    joinPathFragments(options.projectRoot, 'tsconfig.json'),
+    (json) => {
+      if (options.style === '@emotion/styled') {
+        json.compilerOptions.jsxImportSource = '@emotion/react';
+      }
+      return json;
     }
-    return json;
-  });
+  );
 
   updateJson(
     host,
-    joinPathFragments(projectRoot, 'tsconfig.lib.json'),
+    joinPathFragments(options.projectRoot, 'tsconfig.lib.json'),
     (json) => {
       if (!json.files) {
         json.files = [];
diff --git a/packages/next/src/generators/library/schema.d.ts b/packages/next/src/generators/library/schema.d.ts
index 82862f1591225..7b707e50daab9 100644
--- a/packages/next/src/generators/library/schema.d.ts
+++ b/packages/next/src/generators/library/schema.d.ts
@@ -5,8 +5,8 @@ export interface Schema {
   name: string;
   directory?: string;
   style: SupportedStyles;
-  skipTsConfig: boolean;
-  skipFormat: boolean;
+  skipTsConfig?: boolean;
+  skipFormat?: boolean;
   tags?: string;
   pascalCaseFiles?: boolean;
   routing?: boolean;
diff --git a/packages/next/src/utils/versions.ts b/packages/next/src/utils/versions.ts
index 53d0ae41f0bb6..b715ba421a059 100644
--- a/packages/next/src/utils/versions.ts
+++ b/packages/next/src/utils/versions.ts
@@ -1,8 +1,8 @@
 export const nxVersion = require('../../package.json').version;
 
-export const nextVersion = '13.1.1';
-export const eslintConfigNextVersion = '13.1.1';
-export const sassVersion = '1.55.0';
+export const nextVersion = '13.3.0';
+export const eslintConfigNextVersion = '13.3.0';
+export const sassVersion = '1.61.0';
 export const lessLoader = '11.1.0';
 export const stylusLoader = '7.1.0';
 export const emotionServerVersion = '11.10.0';
diff --git a/packages/react-native/src/generators/library/library.ts b/packages/react-native/src/generators/library/library.ts
index df89fad5edd42..13e75be167aeb 100644
--- a/packages/react-native/src/generators/library/library.ts
+++ b/packages/react-native/src/generators/library/library.ts
@@ -15,7 +15,7 @@ import {
   updateJson,
 } from '@nrwl/devkit';
 
-import { getRelativePathToRootTsConfig, updateRootTsConfig } from '@nrwl/js';
+import { addTsConfigPath, getRelativePathToRootTsConfig } from '@nrwl/js';
 import init from '../init/init';
 import { addLinting } from '../../utils/add-linting';
 import { addJest } from '../../utils/add-jest';
@@ -64,7 +64,9 @@ export async function reactNativeLibraryGenerator(
   }
 
   if (!options.skipTsConfig) {
-    updateRootTsConfig(host, { ...options, js: false });
+    addTsConfigPath(host, options.importPath, [
+      joinPathFragments(options.projectRoot, './src', 'index.ts'),
+    ]);
   }
 
   if (!options.skipFormat) {
diff --git a/packages/react/src/generators/library/library.ts b/packages/react/src/generators/library/library.ts
index 19fc801aed1b0..f9145ad2cf81d 100644
--- a/packages/react/src/generators/library/library.ts
+++ b/packages/react/src/generators/library/library.ts
@@ -10,7 +10,7 @@ import {
   updateJson,
 } from '@nrwl/devkit';
 
-import { updateRootTsConfig } from '@nrwl/js';
+import { addTsConfigPath } from '@nrwl/js';
 
 import { nxVersion } from '../../utils/versions';
 import componentGenerator from '../component/component';
@@ -162,8 +162,15 @@ export async function libraryGenerator(host: Tree, schema: Schema) {
   setDefaults(host, options);
 
   extractTsConfigBase(host);
+
   if (!options.skipTsConfig) {
-    updateRootTsConfig(host, options);
+    addTsConfigPath(host, options.importPath, [
+      joinPathFragments(
+        options.projectRoot,
+        './src',
+        'index.' + (options.js ? 'js' : 'ts')
+      ),
+    ]);
   }
 
   if (!options.skipFormat) {