diff --git a/packages/react/src/generators/library/__snapshots__/library.spec.ts.snap b/packages/react/src/generators/library/__snapshots__/library.spec.ts.snap
index 820910f26b7e2..2395331590b98 100644
--- a/packages/react/src/generators/library/__snapshots__/library.spec.ts.snap
+++ b/packages/react/src/generators/library/__snapshots__/library.spec.ts.snap
@@ -51,7 +51,7 @@ import * as path from 'path';
         
         plugins: [react(),
 nxViteTsPaths(),
-dts({ entryRoot: 'src', tsConfigFilePath: path.join(__dirname, 'tsconfig.lib.json'), skipDiagnostics: true })],
+dts({ entryRoot: 'src', tsconfigPath: path.join(__dirname, 'tsconfig.lib.json') })],
         
     // Uncomment this if you are using workers. 
     // worker: {
diff --git a/packages/vite/src/generators/configuration/__snapshots__/configuration.spec.ts.snap b/packages/vite/src/generators/configuration/__snapshots__/configuration.spec.ts.snap
index 1eec26f8151e7..c8b9be9b9d2c8 100644
--- a/packages/vite/src/generators/configuration/__snapshots__/configuration.spec.ts.snap
+++ b/packages/vite/src/generators/configuration/__snapshots__/configuration.spec.ts.snap
@@ -17,8 +17,7 @@ export default defineConfig({
     nxViteTsPaths(),
     dts({
       entryRoot: 'src',
-      tsConfigFilePath: path.join(__dirname, 'tsconfig.lib.json'),
-      skipDiagnostics: true,
+      tsconfigPath: path.join(__dirname, 'tsconfig.lib.json'),
     }),
   ],
 
@@ -70,8 +69,7 @@ export default defineConfig({
     nxViteTsPaths(),
     dts({
       entryRoot: 'src',
-      tsConfigFilePath: path.join(__dirname, 'tsconfig.lib.json'),
-      skipDiagnostics: true,
+      tsconfigPath: path.join(__dirname, 'tsconfig.lib.json'),
     }),
   ],
 
@@ -157,8 +155,7 @@ export default defineConfig({
     react(),
     dts({
       entryRoot: 'src',
-      tsConfigFilePath: path.join(__dirname, 'tsconfig.lib.json'),
-      skipDiagnostics: true,
+      tsconfigPath: path.join(__dirname, 'tsconfig.lib.json'),
     }),
   ],
 
diff --git a/packages/vite/src/utils/generator-utils.ts b/packages/vite/src/utils/generator-utils.ts
index 49d5a071655b7..9bcea7666a6fd 100644
--- a/packages/vite/src/utils/generator-utils.ts
+++ b/packages/vite/src/utils/generator-utils.ts
@@ -419,7 +419,7 @@ export function createOrEditViteConfig(
 
   if (!onlyVitest && options.includeLib) {
     plugins.push(
-      `dts({ entryRoot: 'src', tsConfigFilePath: path.join(__dirname, 'tsconfig.lib.json'), skipDiagnostics: true })`
+      `dts({ entryRoot: 'src', tsconfigPath: path.join(__dirname, 'tsconfig.lib.json') })`
     );
   }
 
diff --git a/packages/vite/src/utils/versions.ts b/packages/vite/src/utils/versions.ts
index 503ba3005fda8..bc7e61da39333 100644
--- a/packages/vite/src/utils/versions.ts
+++ b/packages/vite/src/utils/versions.ts
@@ -4,7 +4,7 @@ export const vitestVersion = '^1.3.1';
 export const vitePluginReactVersion = '^4.2.0';
 export const vitePluginReactSwcVersion = '^3.5.0';
 export const jsdomVersion = '~22.1.0';
-export const vitePluginDtsVersion = '~2.3.0';
+export const vitePluginDtsVersion = '~3.8.1';
 export const happyDomVersion = '~9.20.3';
 export const edgeRuntimeVmVersion = '~3.0.2';
 
diff --git a/packages/vue/src/generators/library/__snapshots__/library.spec.ts.snap b/packages/vue/src/generators/library/__snapshots__/library.spec.ts.snap
index 6956d04adc273..6303461aa1e0f 100644
--- a/packages/vue/src/generators/library/__snapshots__/library.spec.ts.snap
+++ b/packages/vue/src/generators/library/__snapshots__/library.spec.ts.snap
@@ -17,8 +17,7 @@ export default defineConfig({
     nxViteTsPaths(),
     dts({
       entryRoot: 'src',
-      tsConfigFilePath: path.join(__dirname, 'tsconfig.lib.json'),
-      skipDiagnostics: true,
+      tsconfigPath: path.join(__dirname, 'tsconfig.lib.json'),
     }),
   ],
 
@@ -114,8 +113,7 @@ export default defineConfig({
     nxViteTsPaths(),
     dts({
       entryRoot: 'src',
-      tsConfigFilePath: path.join(__dirname, 'tsconfig.lib.json'),
-      skipDiagnostics: true,
+      tsconfigPath: path.join(__dirname, 'tsconfig.lib.json'),
     }),
   ],