diff --git a/docs/generated/cli/create-nx-workspace.md b/docs/generated/cli/create-nx-workspace.md
index 6d16d6a18d13e..734d962e99c48 100644
--- a/docs/generated/cli/create-nx-workspace.md
+++ b/docs/generated/cli/create-nx-workspace.md
@@ -113,7 +113,7 @@ Workspace name (e.g. org name)
 
 Type: `boolean`
 
-Add Experimental app/ layout for next.js
+Enable the App Router for Next.js
 
 ### nxCloud
 
diff --git a/docs/generated/packages/next/generators/application.json b/docs/generated/packages/next/generators/application.json
index 6089512e1b5c7..f5531bc6db6ab 100644
--- a/docs/generated/packages/next/generators/application.json
+++ b/docs/generated/packages/next/generators/application.json
@@ -118,9 +118,9 @@
       },
       "appDir": {
         "type": "boolean",
-        "default": false,
-        "description": "Enable experimental app directory for the project",
-        "x-prompt": "Do you want to use experimental app/ in this project?"
+        "default": true,
+        "description": "Enable the App Router for this project.",
+        "x-prompt": "Would you like to use the App Router (recommended)?"
       },
       "rootProject": {
         "description": "Create an application at the root of the workspace.",
diff --git a/docs/generated/packages/nx/documents/create-nx-workspace.md b/docs/generated/packages/nx/documents/create-nx-workspace.md
index 6d16d6a18d13e..734d962e99c48 100644
--- a/docs/generated/packages/nx/documents/create-nx-workspace.md
+++ b/docs/generated/packages/nx/documents/create-nx-workspace.md
@@ -113,7 +113,7 @@ Workspace name (e.g. org name)
 
 Type: `boolean`
 
-Add Experimental app/ layout for next.js
+Enable the App Router for Next.js
 
 ### nxCloud
 
diff --git a/docs/generated/packages/workspace/generators/new.json b/docs/generated/packages/workspace/generators/new.json
index 592c94bc15cfb..4a131d0f7bb18 100644
--- a/docs/generated/packages/workspace/generators/new.json
+++ b/docs/generated/packages/workspace/generators/new.json
@@ -70,9 +70,9 @@
         "enum": ["express", "koa", "fastify", "nest", "none"]
       },
       "nextAppDir": {
-        "description": "Enable experimental app directory for the project",
+        "description": "Enable the App Router for this project.",
         "type": "boolean",
-        "default": false
+        "default": true
       },
       "e2eTestRunner": {
         "description": "The tool to use for running e2e tests.",
diff --git a/docs/generated/packages/workspace/generators/preset.json b/docs/generated/packages/workspace/generators/preset.json
index cc8405b93eb59..fdec817222661 100644
--- a/docs/generated/packages/workspace/generators/preset.json
+++ b/docs/generated/packages/workspace/generators/preset.json
@@ -82,9 +82,9 @@
         "default": false
       },
       "nextAppDir": {
-        "description": "Enable experimental app/ for the project",
+        "description": "Enable the App Router for this project.",
         "type": "boolean",
-        "default": false
+        "default": true
       },
       "e2eTestRunner": {
         "description": "The tool to use for running e2e tests.",
diff --git a/e2e/next/src/next-appdir.test.ts b/e2e/next/src/next-appdir.test.ts
new file mode 100644
index 0000000000000..9a7b47e32732f
--- /dev/null
+++ b/e2e/next/src/next-appdir.test.ts
@@ -0,0 +1,56 @@
+import {
+  cleanupProject,
+  isNotWindows,
+  killPorts,
+  newProject,
+  runCLI,
+  runCommandUntil,
+  tmpProjPath,
+  uniq,
+  updateFile,
+} from '@nx/e2e/utils';
+import { getData } from 'ajv/dist/compile/validate';
+import { detectPackageManager } from 'nx/src/utils/package-manager';
+import { checkApp } from './utils';
+import { p } from 'vitest/dist/types-b7007192';
+
+describe('Next.js App Router', () => {
+  let proj: string;
+
+  beforeEach(() => {
+    proj = newProject();
+  });
+
+  afterEach(() => {
+    cleanupProject();
+  });
+
+  it('should be able to generate and build app with default App Router', async () => {
+    const appName = uniq('app');
+    const jsLib = uniq('tslib');
+
+    runCLI(`generate @nx/next:app ${appName}`);
+    runCLI(`generate @nx/js:lib ${jsLib} --no-interactive`);
+
+    updateFile(
+      `apps/${appName}/app/page.tsx`,
+      `
+        import React from 'react';
+        import { ${jsLib} } from '@${proj}/${jsLib}';
+
+        export default async function Page() {
+          return (
+            <p>{${jsLib}()}</p>
+          );
+        };
+      `
+    );
+
+    await checkApp(appName, {
+      checkUnitTest: false,
+      checkLint: true,
+      checkE2E: false,
+      checkExport: false,
+    });
+  }, 300_000);
+});
diff --git a/e2e/next/src/next-component-tests.test.ts b/e2e/next/src/next-component-tests.test.ts
index a5ec4f0142ab2..1c7ce8ea1a914 100644
--- a/e2e/next/src/next-component-tests.test.ts
+++ b/e2e/next/src/next-component-tests.test.ts
@@ -65,7 +65,7 @@ describe('NextJs Component Testing', () => {
 });
 
 function createAppWithCt(appName: string) {
-  runCLI(`generate @nx/next:app ${appName} --no-interactive`);
+  runCLI(`generate @nx/next:app ${appName} --no-interactive --appDir=false`);
   runCLI(
     `generate @nx/next:component button --project=${appName} --directory=components --flat --no-interactive`
   );
diff --git a/e2e/next/src/next-styles.test.ts b/e2e/next/src/next-styles.test.ts
index ed48cc993f9e2..6e1002c7fde6f 100644
--- a/e2e/next/src/next-styles.test.ts
+++ b/e2e/next/src/next-styles.test.ts
@@ -21,7 +21,9 @@ describe('Next.js apps', () => {
   it('should support different --style options', async () => {
     const lessApp = uniq('app');
 
-    runCLI(`generate @nx/next:app ${lessApp} --no-interactive --style=less`);
+    runCLI(
+      `generate @nx/next:app ${lessApp} --no-interactive --style=less --appDir=false`
+    );
 
     await checkApp(lessApp, {
       checkUnitTest: false,
@@ -32,7 +34,9 @@ describe('Next.js apps', () => {
 
     const stylusApp = uniq('app');
 
-    runCLI(`generate @nx/next:app ${stylusApp} --no-interactive --style=styl`);
+    runCLI(
+      `generate @nx/next:app ${stylusApp} --no-interactive --style=styl --appDir=false`
+    );
 
     await checkApp(stylusApp, {
       checkUnitTest: false,
@@ -44,7 +48,7 @@ describe('Next.js apps', () => {
     const scApp = uniq('app');
 
     runCLI(
-      `generate @nx/next:app ${scApp} --no-interactive --style=styled-components`
+      `generate @nx/next:app ${scApp} --no-interactive --style=styled-components --appDir=false`
     );
 
     await checkApp(scApp, {
@@ -57,7 +61,7 @@ describe('Next.js apps', () => {
     const emotionApp = uniq('app');
 
     runCLI(
-      `generate @nx/next:app ${emotionApp} --no-interactive --style=@emotion/styled`
+      `generate @nx/next:app ${emotionApp} --no-interactive --style=@emotion/styled --appDir=false`
     );
 
     await checkApp(emotionApp, {
diff --git a/e2e/next/src/next.test.ts b/e2e/next/src/next.test.ts
index 7136362c045ac..fa9416ed026cb 100644
--- a/e2e/next/src/next.test.ts
+++ b/e2e/next/src/next.test.ts
@@ -52,7 +52,9 @@ describe('Next.js Applications', () => {
     const jsLib = uniq('tslib');
     const buildableLib = uniq('buildablelib');
 
-    runCLI(`generate @nx/next:app ${appName} --no-interactive --style=css`);
+    runCLI(
+      `generate @nx/next:app ${appName} --no-interactive --style=css --appDir=false`
+    );
     runCLI(`generate @nx/next:lib ${nextLib} --no-interactive`);
     runCLI(`generate @nx/js:lib ${jsLib} --no-interactive`);
     runCLI(
@@ -231,7 +233,7 @@ describe('Next.js Applications', () => {
 
     const port = 4200;
 
-    runCLI(`generate @nx/next:app ${appName}`);
+    runCLI(`generate @nx/next:app ${appName} --appDir=false`);
     runCLI(`generate @nx/js:lib ${jsLib} --no-interactive`);
 
     const proxyConf = {
@@ -297,7 +299,9 @@ describe('Next.js Applications', () => {
   it('should support custom next.config.js and output it in dist', async () => {
     const appName = uniq('app');
 
-    runCLI(`generate @nx/next:app ${appName} --no-interactive --style=css`);
+    runCLI(
+      `generate @nx/next:app ${appName} --no-interactive --style=css --appDir=false`
+    );
 
     updateFile(
       `apps/${appName}/next.config.js`,
@@ -354,7 +358,9 @@ describe('Next.js Applications', () => {
   it('should support --js flag', async () => {
     const appName = uniq('app');
 
-    runCLI(`generate @nx/next:app ${appName} --no-interactive --js`);
+    runCLI(
+      `generate @nx/next:app ${appName} --no-interactive --js --appDir=false`
+    );
 
     checkFilesExist(`apps/${appName}/pages/index.js`);
 
diff --git a/e2e/next/src/utils.ts b/e2e/next/src/utils.ts
index dc4ef27ebf7f3..b0351ac4d5eff 100644
--- a/e2e/next/src/utils.ts
+++ b/e2e/next/src/utils.ts
@@ -18,14 +18,6 @@ export async function checkApp(
   }
 ) {
   const appsDir = opts.appsDir ?? 'apps';
-  const buildResult = runCLI(`build ${appName}`);
-  expect(buildResult).toContain(`Compiled successfully`);
-  checkFilesExist(`dist/${appsDir}/${appName}/.next/build-manifest.json`);
-
-  const packageJson = readJson(`dist/${appsDir}/${appName}/package.json`);
-  expect(packageJson.dependencies.react).toBeDefined();
-  expect(packageJson.dependencies['react-dom']).toBeDefined();
-  expect(packageJson.dependencies.next).toBeDefined();
 
   if (opts.checkLint) {
     const lintResults = runCLI(`lint ${appName}`);
@@ -39,8 +31,19 @@ export async function checkApp(
     );
   }
 
+  const buildResult = runCLI(`build ${appName}`);
+  expect(buildResult).toContain(`Successfully ran target build`);
+  checkFilesExist(`dist/${appsDir}/${appName}/.next/build-manifest.json`);
+
+  const packageJson = readJson(`dist/${appsDir}/${appName}/package.json`);
+  expect(packageJson.dependencies.react).toBeDefined();
+  expect(packageJson.dependencies['react-dom']).toBeDefined();
+  expect(packageJson.dependencies.next).toBeDefined();
+
   if (opts.checkE2E && runCypressTests()) {
-    const e2eResults = runCLI(`e2e ${appName}-e2e --no-watch`);
+    const e2eResults = runCLI(
+      `e2e ${appName}-e2e --no-watch --configuration=production`
+    );
     expect(e2eResults).toContain('All specs passed!');
     expect(await killPorts()).toBeTruthy();
   }
diff --git a/packages/create-nx-workspace/bin/create-nx-workspace.ts b/packages/create-nx-workspace/bin/create-nx-workspace.ts
index 899723404a9c1..fcc1be357012d 100644
--- a/packages/create-nx-workspace/bin/create-nx-workspace.ts
+++ b/packages/create-nx-workspace/bin/create-nx-workspace.ts
@@ -107,7 +107,7 @@ export const commandsObject: yargs.Argv<Arguments> = yargs
             type: 'boolean',
           })
           .option('nextAppDir', {
-            describe: chalk.dim`Add Experimental app/ layout for next.js`,
+            describe: chalk.dim`Enable the App Router for Next.js`,
             type: 'boolean',
           }),
         withNxCloud,
@@ -638,8 +638,8 @@ async function isNextAppDir(parsedArgs: yargs.Arguments<Arguments>) {
       .prompt<{ appDir: 'Yes' | 'No' }>([
         {
           name: 'appDir',
-          message: 'Do you want to use experimental app/ in this project?',
-          type: 'autocomplete',
+          message: 'Would you like to use the App Router (recommended)?',
+          type: 'autocomplete' as const,
           choices: [
             {
               name: 'No',
@@ -648,7 +648,7 @@ async function isNextAppDir(parsedArgs: yargs.Arguments<Arguments>) {
               name: 'Yes',
             },
           ],
-          initial: 'No' as any,
+          initial: 'Yes' as any,
         },
       ])
       .then((choice) => choice.appDir === 'Yes');
diff --git a/packages/next/migrations.json b/packages/next/migrations.json
index daad88978238b..092f0ce2ddcef 100644
--- a/packages/next/migrations.json
+++ b/packages/next/migrations.json
@@ -316,6 +316,22 @@
           "alwaysAddToPackageJson": false
         }
       }
+    },
+    "16.2.0": {
+      "version": "16.2.0-beta.0",
+      "requires": {
+        "next": ">=13.0.0"
+      },
+      "packages": {
+        "next": {
+          "version": "13.4.1",
+          "alwaysAddToPackageJson": false
+        },
+        "eslint-config-next": {
+          "version": "13.4.1",
+          "alwaysAddToPackageJson": false
+        }
+      }
     }
   }
 }
diff --git a/packages/next/plugins/with-less.ts b/packages/next/plugins/with-less.ts
index ef67e610cb94b..6df9a3c666ebc 100644
--- a/packages/next/plugins/with-less.ts
+++ b/packages/next/plugins/with-less.ts
@@ -6,14 +6,6 @@ import { WithNxOptions } from './with-nx';
 const addLessToRegExp = (rx) =>
   new RegExp(rx.source.replace('|sass', '|sass|less'), rx.flags);
 
-function patchNextCSSWithLess(
-  nextCSSModule: any = require('next/dist/build/webpack/config/blocks/css')
-) {
-  nextCSSModule.regexLikeCss = addLessToRegExp(nextCSSModule.regexLikeCss);
-}
-
-patchNextCSSWithLess();
-
 export function withLess(
   configOrFn: NextConfigFn | WithNxOptions
 ): NextConfigFn {
@@ -108,4 +100,3 @@ export function withLess(
 
 module.exports = withLess;
 module.exports.withLess = withLess;
-module.exports.patchNext = patchNextCSSWithLess;
diff --git a/packages/next/plugins/with-stylus.ts b/packages/next/plugins/with-stylus.ts
index 3491cf4c4e6e0..a7322588491a6 100644
--- a/packages/next/plugins/with-stylus.ts
+++ b/packages/next/plugins/with-stylus.ts
@@ -6,14 +6,6 @@ import { WithNxOptions } from './with-nx';
 const addStylusToRegExp = (rx) =>
   new RegExp(rx.source.replace('|sass', '|sass|styl'), rx.flags);
 
-function patchNextCSSWithStylus(
-  nextCSSModule = require('next/dist/build/webpack/config/blocks/css') as any
-) {
-  nextCSSModule.regexLikeCss = addStylusToRegExp(nextCSSModule.regexLikeCss);
-}
-
-patchNextCSSWithStylus();
-
 export function withStylus(
   configOrFn: WithNxOptions | NextConfigFn
 ): NextConfigFn {
@@ -107,4 +99,3 @@ export function withStylus(
 
 module.exports = withStylus;
 module.exports.withStylus = withStylus;
-module.exports.patchNext = patchNextCSSWithStylus;
diff --git a/packages/next/src/generators/application/__snapshots__/application.spec.ts.snap b/packages/next/src/generators/application/__snapshots__/application.spec.ts.snap
index c9c272447c351..37486b754a5fe 100644
--- a/packages/next/src/generators/application/__snapshots__/application.spec.ts.snap
+++ b/packages/next/src/generators/application/__snapshots__/application.spec.ts.snap
@@ -1,7 +1,9 @@
 // Jest Snapshot v1, https://goo.gl/fbAQLP
 
 exports[`app --style styled-jsx should use <style jsx> in index page 1`] = `
-"export function Index() {
+"'use client';
+
+export default async function Index() {
   /*
    * Replace the elements below with your own.
    *
@@ -420,7 +422,5 @@ exports[`app --style styled-jsx should use <style jsx> in index page 1`] = `
     </div>
   );
 }
-
-export default Index;
 "
 `;
diff --git a/packages/next/src/generators/application/application.spec.ts b/packages/next/src/generators/application/application.spec.ts
index 96c54fdee488b..a145923cc53cf 100644
--- a/packages/next/src/generators/application/application.spec.ts
+++ b/packages/next/src/generators/application/application.spec.ts
@@ -50,12 +50,23 @@ describe('app', () => {
       });
     });
 
-    it('should generate files', async () => {
+    it('should generate files for app router layout', async () => {
       await applicationGenerator(tree, {
         name: 'myApp',
         style: 'css',
       });
       expect(tree.exists('apps/my-app/tsconfig.json')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/page.tsx')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/page.module.css')).toBeTruthy();
+    });
+
+    it('should generate files for pages layout', async () => {
+      await applicationGenerator(tree, {
+        name: 'myApp',
+        style: 'css',
+        appDir: false,
+      });
+      expect(tree.exists('apps/my-app/tsconfig.json')).toBeTruthy();
       expect(tree.exists('apps/my-app/pages/index.tsx')).toBeTruthy();
       expect(tree.exists('apps/my-app/specs/index.spec.tsx')).toBeTruthy();
       expect(tree.exists('apps/my-app/pages/index.module.css')).toBeTruthy();
@@ -91,13 +102,11 @@ describe('app', () => {
         style: 'scss',
       });
 
-      expect(tree.exists('apps/my-app/pages/index.module.scss')).toBeTruthy();
-      expect(tree.exists('apps/my-app/pages/styles.css')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/page.module.scss')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/global.css')).toBeTruthy();
 
-      const indexContent = tree.read('apps/my-app/pages/index.tsx', 'utf-8');
-      expect(indexContent).toContain(
-        `import styles from './index.module.scss'`
-      );
+      const indexContent = tree.read('apps/my-app/app/page.tsx', 'utf-8');
+      expect(indexContent).toContain(`import styles from './page.module.scss'`);
     });
   });
 
@@ -108,13 +117,11 @@ describe('app', () => {
         style: 'less',
       });
 
-      expect(tree.exists('apps/my-app/pages/index.module.less')).toBeTruthy();
-      expect(tree.exists('apps/my-app/pages/styles.less')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/page.module.less')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/global.less')).toBeTruthy();
 
-      const indexContent = tree.read('apps/my-app/pages/index.tsx', 'utf-8');
-      expect(indexContent).toContain(
-        `import styles from './index.module.less'`
-      );
+      const indexContent = tree.read('apps/my-app/app/page.tsx', 'utf-8');
+      expect(indexContent).toContain(`import styles from './page.module.less'`);
     });
   });
 
@@ -125,13 +132,11 @@ describe('app', () => {
         style: 'styl',
       });
 
-      expect(tree.exists('apps/my-app/pages/index.module.styl')).toBeTruthy();
-      expect(tree.exists('apps/my-app/pages/styles.styl')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/page.module.styl')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/global.styl')).toBeTruthy();
 
-      const indexContent = tree.read('apps/my-app/pages/index.tsx', 'utf-8');
-      expect(indexContent).toContain(
-        `import styles from './index.module.styl'`
-      );
+      const indexContent = tree.read('apps/my-app/app/page.tsx', 'utf-8');
+      expect(indexContent).toContain(`import styles from './page.module.styl'`);
     });
   });
 
@@ -143,12 +148,12 @@ describe('app', () => {
       });
 
       expect(
-        tree.exists('apps/my-app/pages/index.module.styled-components')
+        tree.exists('apps/my-app/app/page.module.styled-components')
       ).toBeFalsy();
-      expect(tree.exists('apps/my-app/pages/styles.css')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/global.css')).toBeTruthy();
 
-      const indexContent = tree.read('apps/my-app/pages/index.tsx', 'utf-8');
-      expect(indexContent).not.toContain(`import styles from './index.module`);
+      const indexContent = tree.read('apps/my-app/app/page.tsx', 'utf-8');
+      expect(indexContent).not.toContain(`import styles from './page.module`);
       expect(indexContent).toContain(`import styled from 'styled-components'`);
     });
   });
@@ -161,12 +166,12 @@ describe('app', () => {
       });
 
       expect(
-        tree.exists('apps/my-app/pages/index.module.styled-components')
+        tree.exists('apps/my-app/app/page.module.styled-components')
       ).toBeFalsy();
-      expect(tree.exists('apps/my-app/pages/styles.css')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/global.css')).toBeTruthy();
 
-      const indexContent = tree.read('apps/my-app/pages/index.tsx', 'utf-8');
-      expect(indexContent).not.toContain(`import styles from './index.module`);
+      const indexContent = tree.read('apps/my-app/app/page.tsx', 'utf-8');
+      expect(indexContent).not.toContain(`import styles from './page.module`);
       expect(indexContent).toContain(`import styled from '@emotion/styled'`);
     });
 
@@ -191,15 +196,13 @@ describe('app', () => {
         style: 'styled-jsx',
       });
 
-      const indexContent = tree.read('apps/my-app/pages/index.tsx', 'utf-8');
+      const indexContent = tree.read('apps/my-app/app/page.tsx', 'utf-8');
 
       expect(indexContent).toMatchSnapshot();
-      expect(
-        tree.exists('apps/my-app/pages/index.module.styled-jsx')
-      ).toBeFalsy();
-      expect(tree.exists('apps/my-app/pages/styles.css')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/page.module.styled-jsx')).toBeFalsy();
+      expect(tree.exists('apps/my-app/app/global.css')).toBeTruthy();
 
-      expect(indexContent).not.toContain(`import styles from './index.module`);
+      expect(indexContent).not.toContain(`import styles from './page.module`);
       expect(indexContent).not.toContain(
         `import styled from 'styled-components'`
       );
@@ -311,7 +314,7 @@ describe('app', () => {
       style: 'css',
     });
 
-    const appContent = tree.read('apps/my-app/pages/index.tsx', 'utf-8');
+    const appContent = tree.read('apps/my-app/app/page.tsx', 'utf-8');
 
     expect(appContent).not.toMatch(/extends Component/);
   });
@@ -419,7 +422,7 @@ describe('app', () => {
         js: true,
       });
 
-      expect(tree.exists('apps/my-app/pages/index.js')).toBeTruthy();
+      expect(tree.exists('apps/my-app/app/page.js')).toBeTruthy();
       expect(tree.exists('apps/my-app/specs/index.spec.js')).toBeTruthy();
       expect(tree.exists('apps/my-app/index.d.js')).toBeFalsy();
       expect(tree.exists('apps/my-app/index.d.ts')).toBeFalsy();
@@ -450,8 +453,17 @@ describe('app', () => {
         appDir: true,
       });
 
-      expect(tree.exists('apps/testApp/pages/styles.css')).toBeFalsy();
-
+      const tsConfig = readJson(tree, 'apps/test-app/tsconfig.json');
+      expect(tsConfig.include).toEqual([
+        '**/*.ts',
+        '**/*.tsx',
+        '**/*.js',
+        '**/*.jsx',
+        '../../apps/test-app/.next/types/**/*.ts',
+        '../../dist/apps/test-app/.next/types/**/*.ts',
+        'next-env.d.ts',
+      ]);
+      expect(tree.exists('apps/test-app/pages/styles.css')).toBeFalsy();
       expect(tree.exists('apps/test-app/app/global.css')).toBeTruthy();
       expect(tree.exists('apps/test-app/app/page.tsx')).toBeTruthy();
       expect(tree.exists('apps/test-app/app/layout.tsx')).toBeTruthy();
@@ -459,5 +471,25 @@ describe('app', () => {
       expect(tree.exists('apps/test-app/app/page.module.css')).toBeTruthy();
       expect(tree.exists('apps/test-app/public/favicon.ico')).toBeTruthy();
     });
+
+    it('should add layout types correctly for standalone apps', async () => {
+      await applicationGenerator(tree, {
+        name: 'testApp',
+        style: 'css',
+        appDir: true,
+        rootProject: true,
+      });
+
+      const tsConfig = readJson(tree, 'tsconfig.json');
+      expect(tsConfig.include).toEqual([
+        '**/*.ts',
+        '**/*.tsx',
+        '**/*.js',
+        '**/*.jsx',
+        '.next/types/**/*.ts',
+        'dist/test-app/.next/types/**/*.ts',
+        'next-env.d.ts',
+      ]);
+    });
   });
 });
diff --git a/packages/next/src/generators/application/files/app/layout.tsx__tmpl__ b/packages/next/src/generators/application/files/app/layout.tsx__tmpl__
index 498a427d892ab..05df75692b49b 100644
--- a/packages/next/src/generators/application/files/app/layout.tsx__tmpl__
+++ b/packages/next/src/generators/application/files/app/layout.tsx__tmpl__
@@ -1,8 +1,7 @@
-import Head from 'next/head';
 import './global.<%= stylesExt %>';
 
 export const metadata = {
-  title: 'Nx Next App',
+  title: 'Welcome to <%= name %>',
   description: 'Generated by create-nx-workspace',
 }
 
@@ -13,9 +12,6 @@ export default function RootLayout({
 }) {
   return (
     <html lang="en">
-    <Head>
-       <title>Welcome to <%= name %>!</title>
-    </Head>
       <body>{children}</body>
     </html>
   )
diff --git a/packages/next/src/generators/application/files/common/next.config.js__tmpl__ b/packages/next/src/generators/application/files/common/next.config.js__tmpl__
index 3b589f48df978..eaecc4924c881 100644
--- a/packages/next/src/generators/application/files/common/next.config.js__tmpl__
+++ b/packages/next/src/generators/application/files/common/next.config.js__tmpl__
@@ -17,11 +17,6 @@ const nextConfig = {
     // See: https://github.com/gregberge/svgr
     svgr: false,
   },
-  <% if(appDir) { %>
-  experimental: {
-    appDir: true
-  },
-  <% } %>
 };
 
 const plugins = [
@@ -43,11 +38,6 @@ const nextConfig = {
     // See: https://github.com/gregberge/svgr
     svgr: false,
   },
-  <% if(appDir) { %>
-  experimental: {
-    appDir: true
-  },
-  <% } %>
 };
 
 const plugins = [
@@ -72,11 +62,6 @@ const nextConfig = {
     // See: https://github.com/gregberge/svgr
     svgr: false,
   },
-  <% if(appDir) { %>
-  experimental: {
-    appDir: true
-  },
-  <% } %>
 };
 
 const plugins = [
@@ -96,11 +81,6 @@ const nextConfig = {
     // See: https://github.com/gregberge/svgr
     svgr: false,
   },
-  <% if(appDir) { %>
-  experimental: {
-    appDir: true
-  },
-  <% } %>
 };
 
 const plugins = [
diff --git a/packages/next/src/generators/application/files/common/tsconfig.json__tmpl__ b/packages/next/src/generators/application/files/common/tsconfig.json__tmpl__
index 885d5aa75a7d5..b6c3c4a68cf09 100644
--- a/packages/next/src/generators/application/files/common/tsconfig.json__tmpl__
+++ b/packages/next/src/generators/application/files/common/tsconfig.json__tmpl__
@@ -14,6 +14,16 @@
     "incremental": true,
     "plugins": [{ "name": "next" }]
   },
-  "include": ["**/*.ts", "**/*.tsx", "**/*.js", "**/*.jsx", "next-env.d.ts"],
+  "include": [
+    "**/*.ts",
+    "**/*.tsx",
+    "**/*.js",
+    "**/*.jsx",
+    <% if (appDir) { %>
+      "<%= layoutTypeSrcPath %>",
+      "<%= layoutTypeDistPath %>",
+    <% } %>
+    "next-env.d.ts"
+  ],
   "exclude": ["node_modules", "jest.config.ts", "src/**/*.spec.ts", "src/**/*.test.ts"]
 }
diff --git a/packages/next/src/generators/application/lib/add-project.ts b/packages/next/src/generators/application/lib/add-project.ts
index 14a1cf1c0a7ec..a141e3bb8d91c 100644
--- a/packages/next/src/generators/application/lib/add-project.ts
+++ b/packages/next/src/generators/application/lib/add-project.ts
@@ -1,7 +1,6 @@
 import { NormalizedSchema } from './normalize-options';
 import {
   addProjectConfiguration,
-  joinPathFragments,
   ProjectConfiguration,
   Tree,
 } from '@nx/devkit';
@@ -9,18 +8,13 @@ import {
 export function addProject(host: Tree, options: NormalizedSchema) {
   const targets: Record<string, any> = {};
 
-  const outputPath = joinPathFragments(
-    'dist',
-    options.appProjectRoot,
-    ...(options.rootProject ? [options.name] : [])
-  );
   targets.build = {
     executor: '@nx/next:build',
     outputs: ['{options.outputPath}'],
     defaultConfiguration: 'production',
     options: {
       root: options.appProjectRoot,
-      outputPath: outputPath,
+      outputPath: options.outputPath,
     },
     configurations: {
       development: {
diff --git a/packages/next/src/generators/application/lib/create-application-files.ts b/packages/next/src/generators/application/lib/create-application-files.ts
index a1e4290a73b89..ba7d46fab7a11 100644
--- a/packages/next/src/generators/application/lib/create-application-files.ts
+++ b/packages/next/src/generators/application/lib/create-application-files.ts
@@ -3,6 +3,7 @@ import {
   generateFiles,
   joinPathFragments,
   names,
+  offsetFromRoot as _offsetFromRoot,
   readJson,
   toJS,
   Tree,
@@ -17,11 +18,25 @@ import {
 } from './create-application-files.helpers';
 
 export function createApplicationFiles(host: Tree, options: NormalizedSchema) {
+  const offsetFromRoot = _offsetFromRoot(options.appProjectRoot);
+  const layoutTypeSrcPath = joinPathFragments(
+    offsetFromRoot,
+    options.appProjectRoot,
+    '.next/types/**/*.ts'
+  );
+  const layoutTypeDistPath = joinPathFragments(
+    offsetFromRoot,
+    options.outputPath,
+    '.next/types/**/*.ts'
+  );
   const templateVariables = {
     ...names(options.name),
     ...options,
     dot: '.',
     tmpl: '',
+    offsetFromRoot,
+    layoutTypeSrcPath,
+    layoutTypeDistPath,
     rootTsConfigPath: getRelativePathToRootTsConfig(
       host,
       options.appProjectRoot
@@ -29,6 +44,7 @@ export function createApplicationFiles(host: Tree, options: NormalizedSchema) {
     appContent: createAppJsx(options.name),
     styleContent: createStyleRules(),
     pageStyleContent: `.page {}`,
+
     stylesExt:
       options.style === 'less' || options.style === 'styl'
         ? options.style
diff --git a/packages/next/src/generators/application/lib/normalize-options.ts b/packages/next/src/generators/application/lib/normalize-options.ts
index a3e4fda72c4c3..58b89aa8cb690 100644
--- a/packages/next/src/generators/application/lib/normalize-options.ts
+++ b/packages/next/src/generators/application/lib/normalize-options.ts
@@ -13,6 +13,7 @@ import { Schema } from '../schema';
 export interface NormalizedSchema extends Schema {
   projectName: string;
   appProjectRoot: string;
+  outputPath: string;
   e2eProjectName: string;
   e2eProjectRoot: string;
   parsedTags: string[];
@@ -28,6 +29,7 @@ export function normalizeOptions(
   const { layoutDirectory, projectDirectory } = extractLayoutDirectory(
     options.directory
   );
+  const name = names(options.name).fileName;
 
   const appDirectory = projectDirectory
     ? `${names(projectDirectory).fileName}/${names(options.name).fileName}`
@@ -46,13 +48,19 @@ export function normalizeOptions(
     ? '.'
     : joinPathFragments(appsDir, `${appDirectory}-e2e`);
 
+  const outputPath = joinPathFragments(
+    'dist',
+    appProjectRoot,
+    ...(options.rootProject ? [name] : [])
+  );
+
   const parsedTags = options.tags
     ? options.tags.split(',').map((s) => s.trim())
     : [];
 
   const fileName = 'index';
 
-  const appDir = options.appDir ?? false;
+  const appDir = options.appDir ?? true;
 
   const styledModule = /^(css|scss|less|styl)$/.test(options.style)
     ? null
@@ -63,17 +71,18 @@ export function normalizeOptions(
   return {
     ...options,
     appDir,
-    name: names(options.name).fileName,
-    projectName: appProjectName,
-    linter: options.linter || Linter.EsLint,
-    unitTestRunner: options.unitTestRunner || 'jest',
-    e2eTestRunner: options.e2eTestRunner || 'cypress',
-    style: options.style || 'css',
     appProjectRoot,
-    e2eProjectRoot,
     e2eProjectName,
-    parsedTags,
+    e2eProjectRoot,
+    e2eTestRunner: options.e2eTestRunner || 'cypress',
     fileName,
+    linter: options.linter || Linter.EsLint,
+    name,
+    outputPath,
+    parsedTags,
+    projectName: appProjectName,
+    style: options.style || 'css',
     styledModule,
+    unitTestRunner: options.unitTestRunner || 'jest',
   };
 }
diff --git a/packages/next/src/generators/application/lib/show-possible-warnings.ts b/packages/next/src/generators/application/lib/show-possible-warnings.ts
index 7dba548a61dd3..39eb119623adc 100644
--- a/packages/next/src/generators/application/lib/show-possible-warnings.ts
+++ b/packages/next/src/generators/application/lib/show-possible-warnings.ts
@@ -4,7 +4,7 @@ import { NormalizedSchema } from './normalize-options';
 export function showPossibleWarnings(tree: Tree, options: NormalizedSchema) {
   if (options.style === '@emotion/styled' && options.appDir) {
     logger.warn(
-      `Emotion may not work with the experimental appDir layout. See: https://beta.nextjs.org/docs/styling/css-in-js`
+      `Emotion may not work with the App Router. See: https://beta.nextjs.org/docs/styling/css-in-js`
     );
   }
 }
diff --git a/packages/next/src/generators/application/schema.json b/packages/next/src/generators/application/schema.json
index 39bf2d17f8848..469b72598a9dc 100644
--- a/packages/next/src/generators/application/schema.json
+++ b/packages/next/src/generators/application/schema.json
@@ -121,9 +121,9 @@
     },
     "appDir": {
       "type": "boolean",
-      "default": false,
-      "description": "Enable experimental app directory for the project",
-      "x-prompt": "Do you want to use experimental app/ in this project?"
+      "default": true,
+      "description": "Enable the App Router for this project.",
+      "x-prompt": "Would you like to use the App Router (recommended)?"
     },
     "rootProject": {
       "description": "Create an application at the root of the workspace.",
diff --git a/packages/next/src/utils/versions.ts b/packages/next/src/utils/versions.ts
index b715ba421a059..dcd1d2360896d 100644
--- a/packages/next/src/utils/versions.ts
+++ b/packages/next/src/utils/versions.ts
@@ -1,10 +1,10 @@
 export const nxVersion = require('../../package.json').version;
 
-export const nextVersion = '13.3.0';
-export const eslintConfigNextVersion = '13.3.0';
-export const sassVersion = '1.61.0';
+export const nextVersion = '13.4.1';
+export const eslintConfigNextVersion = '13.4.1';
+export const sassVersion = '1.62.1';
 export const lessLoader = '11.1.0';
 export const stylusLoader = '7.1.0';
-export const emotionServerVersion = '11.10.0';
+export const emotionServerVersion = '11.11.0';
 export const babelPluginStyledComponentsVersion = '1.10.7';
 export const tsLibVersion = '^2.3.0';
diff --git a/packages/workspace/src/generators/new/schema.json b/packages/workspace/src/generators/new/schema.json
index 4a2171424be24..6a52ea58a0f5f 100644
--- a/packages/workspace/src/generators/new/schema.json
+++ b/packages/workspace/src/generators/new/schema.json
@@ -73,9 +73,9 @@
       "enum": ["express", "koa", "fastify", "nest", "none"]
     },
     "nextAppDir": {
-      "description": "Enable experimental app directory for the project",
+      "description": "Enable the App Router for this project.",
       "type": "boolean",
-      "default": false
+      "default": true
     },
     "e2eTestRunner": {
       "description": "The tool to use for running e2e tests.",
diff --git a/packages/workspace/src/generators/preset/preset.spec.ts b/packages/workspace/src/generators/preset/preset.spec.ts
index 809112438663c..14cc8dda8ad41 100644
--- a/packages/workspace/src/generators/preset/preset.spec.ts
+++ b/packages/workspace/src/generators/preset/preset.spec.ts
@@ -48,7 +48,7 @@ describe('preset', () => {
       style: 'css',
       linter: 'eslint',
     });
-    expect(tree.exists('/apps/proj/pages/index.tsx')).toBe(true);
+    expect(tree.exists('/apps/proj/app/page.tsx')).toBe(true);
   });
 
   it(`should create files (preset = ${Preset.Express})`, async () => {
diff --git a/packages/workspace/src/generators/preset/schema.json b/packages/workspace/src/generators/preset/schema.json
index 56e69cdeee903..becdf86f04c7c 100644
--- a/packages/workspace/src/generators/preset/schema.json
+++ b/packages/workspace/src/generators/preset/schema.json
@@ -85,9 +85,9 @@
       "default": false
     },
     "nextAppDir": {
-      "description": "Enable experimental app/ for the project",
+      "description": "Enable the App Router for this project.",
       "type": "boolean",
-      "default": false
+      "default": true
     },
     "e2eTestRunner": {
       "description": "The tool to use for running e2e tests.",