diff --git a/packages/next/src/build/webpack/config/ignore-list.ts b/packages/next/src/build/webpack/config/ignore-list.ts
new file mode 100644
index 0000000000000..266eccf10c2c6
--- /dev/null
+++ b/packages/next/src/build/webpack/config/ignore-list.ts
@@ -0,0 +1,7 @@
+export function shouldIgnorePath(modulePath: string): boolean {
+  return (
+    modulePath.includes('node_modules') ||
+    // Only relevant for when Next.js is symlinked e.g. in the Next.js monorepo
+    modulePath.includes('next/dist')
+  )
+}
diff --git a/packages/next/src/build/webpack/plugins/wellknown-errors-plugin/parseNotFoundError.ts b/packages/next/src/build/webpack/plugins/wellknown-errors-plugin/parseNotFoundError.ts
index a8c991fd09465..76a65f621aa7a 100644
--- a/packages/next/src/build/webpack/plugins/wellknown-errors-plugin/parseNotFoundError.ts
+++ b/packages/next/src/build/webpack/plugins/wellknown-errors-plugin/parseNotFoundError.ts
@@ -1,6 +1,9 @@
 import { bold, cyan, green, red, yellow } from '../../../../lib/picocolors'
 import { SimpleWebpackError } from './simpleWebpackError'
-import { createOriginalStackFrame } from '../../../../client/components/react-dev-overlay/server/middleware'
+import {
+  createOriginalStackFrame,
+  getIgnoredSources,
+} from '../../../../client/components/react-dev-overlay/server/middleware'
 import type { webpack } from 'next/dist/compiled/webpack/webpack'
 
 // Based on https://github.com/webpack/webpack/blob/fcdd04a833943394bbb0a9eeb54a962a24cc7e41/lib/stats/DefaultStatsFactoryPlugin.js#L422-L431
@@ -62,6 +65,7 @@ async function getSourceFrame(
         source: {
           type: 'bundle',
           sourceMap,
+          ignoredSources: getIgnoredSources(sourceMap),
           compilation,
           moduleId,
           modulePath: fileName,
diff --git a/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/CallStackFrame.tsx b/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/CallStackFrame.tsx
index 7a3f4e5c09075..d6afb06e61784 100644
--- a/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/CallStackFrame.tsx
+++ b/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/CallStackFrame.tsx
@@ -37,7 +37,7 @@ export const CallStackFrame: React.FC<{
 
   return (
     <div data-nextjs-call-stack-frame>
-      <h3 data-nextjs-frame-expanded={Boolean(frame.expanded)}>
+      <h3 data-nextjs-frame-expanded={!frame.ignored}>
         <HotlinkedText text={formattedMethod} />
       </h3>
       <div
diff --git a/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/index.tsx b/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/index.tsx
index 6f0a0e1e22f6a..206e9585202ec 100644
--- a/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/index.tsx
+++ b/packages/next/src/client/components/react-dev-overlay/internal/container/RuntimeError/index.tsx
@@ -8,34 +8,29 @@ import { GroupedStackFrames } from './GroupedStackFrames'
 export type RuntimeErrorProps = { error: ReadyRuntimeError }
 
 export function RuntimeError({ error }: RuntimeErrorProps) {
+  const { frames } = error
   const { firstFrame, allLeadingFrames, allCallStackFrames } =
     React.useMemo(() => {
-      const filteredFrames = error.frames
-        // Filter out nodejs internal frames since you can't do anything about them.
-        // e.g. node:internal/timers shows up pretty often due to timers, but not helpful to users.
-        // Only present the last line before nodejs internal trace.
-        .filter((f) => !f.sourceStackFrame.file?.startsWith('node:'))
-
-      const firstFirstPartyFrameIndex = filteredFrames.findIndex(
+      const firstFirstPartyFrameIndex = frames.findIndex(
         (entry) =>
-          entry.expanded &&
+          !entry.ignored &&
           Boolean(entry.originalCodeFrame) &&
           Boolean(entry.originalStackFrame)
       )
 
       return {
-        firstFrame: filteredFrames[firstFirstPartyFrameIndex] ?? null,
+        firstFrame: frames[firstFirstPartyFrameIndex] ?? null,
         allLeadingFrames:
           firstFirstPartyFrameIndex < 0
             ? []
-            : filteredFrames.slice(0, firstFirstPartyFrameIndex),
-        allCallStackFrames: filteredFrames.slice(firstFirstPartyFrameIndex + 1),
+            : frames.slice(0, firstFirstPartyFrameIndex),
+        allCallStackFrames: frames.slice(firstFirstPartyFrameIndex + 1),
       }
-    }, [error.frames])
+    }, [frames])
 
   const { leadingFramesGroupedByFramework, stackFramesGroupedByFramework } =
     React.useMemo(() => {
-      const leadingFrames = allLeadingFrames.filter((f) => f.expanded)
+      const leadingFrames = allLeadingFrames.filter((f) => !f.ignored)
 
       return {
         stackFramesGroupedByFramework:
diff --git a/packages/next/src/client/components/react-dev-overlay/internal/helpers/stack-frame.ts b/packages/next/src/client/components/react-dev-overlay/internal/helpers/stack-frame.ts
index 43254ee296012..3c45d792c16a9 100644
--- a/packages/next/src/client/components/react-dev-overlay/internal/helpers/stack-frame.ts
+++ b/packages/next/src/client/components/react-dev-overlay/internal/helpers/stack-frame.ts
@@ -8,7 +8,7 @@ export interface OriginalStackFrame extends OriginalStackFrameResponse {
   error: boolean
   reason: string | null
   external: boolean
-  expanded: boolean
+  ignored: boolean
   sourceStackFrame: StackFrame
 }
 
@@ -49,20 +49,15 @@ function getOriginalStackFrame(
       error: false,
       reason: null,
       external: false,
-      expanded: !Boolean(
-        /* collapsed */
-        (source.file?.includes('node_modules') ||
-          body.originalStackFrame?.file?.includes('node_modules') ||
-          body.originalStackFrame?.file?.startsWith('[turbopack]/')) ??
-          true
-      ),
       sourceStackFrame: source,
       originalStackFrame: body.originalStackFrame,
       originalCodeFrame: body.originalCodeFrame || null,
       sourcePackage: body.sourcePackage,
+      ignored: body.originalStackFrame?.ignored || false,
     }
   }
 
+  // TODO: merge this section into ignoredList handling
   if (
     source.file === '<anonymous>' ||
     source.file === 'file://' ||
@@ -73,11 +68,11 @@ function getOriginalStackFrame(
       error: false,
       reason: null,
       external: true,
-      expanded: false,
       sourceStackFrame: source,
       originalStackFrame: null,
       originalCodeFrame: null,
       sourcePackage: null,
+      ignored: true,
     })
   }
 
@@ -85,11 +80,11 @@ function getOriginalStackFrame(
     error: true,
     reason: err?.message ?? err?.toString() ?? 'Unknown Error',
     external: false,
-    expanded: false,
     sourceStackFrame: source,
     originalStackFrame: null,
     originalCodeFrame: null,
     sourcePackage: null,
+    ignored: false,
   }))
 }
 
diff --git a/packages/next/src/client/components/react-dev-overlay/server/middleware-turbopack.ts b/packages/next/src/client/components/react-dev-overlay/server/middleware-turbopack.ts
index b9dc0b0410efd..a416c230e4582 100644
--- a/packages/next/src/client/components/react-dev-overlay/server/middleware-turbopack.ts
+++ b/packages/next/src/client/components/react-dev-overlay/server/middleware-turbopack.ts
@@ -19,11 +19,13 @@ import type { Project, TurbopackStackFrame } from '../../../../build/swc/types'
 import { getSourceMapFromFile } from '../internal/helpers/get-source-map-from-file'
 import { findSourceMap } from 'node:module'
 
+type IgnorableStackFrame = StackFrame & { ignored: boolean }
+
 const currentSourcesByFile: Map<string, Promise<string | null>> = new Map()
 export async function batchedTraceSource(
   project: Project,
   frame: TurbopackStackFrame
-): Promise<{ frame: StackFrame; source: string | null } | undefined> {
+): Promise<{ frame: IgnorableStackFrame; source: string | null } | undefined> {
   const file = frame.file ? decodeURIComponent(frame.file) : undefined
   if (!file) return
 
@@ -31,10 +33,15 @@ export async function batchedTraceSource(
   if (!sourceFrame) return
 
   let source = null
+  let ignored = true
   // Don't look up source for node_modules or internals. These can often be large bundled files.
   if (
     sourceFrame.file &&
-    !(sourceFrame.file.includes('node_modules') || sourceFrame.isInternal)
+    !(
+      sourceFrame.file.includes('node_modules') ||
+      // isInternal means resource starts with turbopack://[turbopack]
+      sourceFrame.isInternal
+    )
   ) {
     let sourcePromise = currentSourcesByFile.get(sourceFrame.file)
     if (!sourcePromise) {
@@ -46,18 +53,22 @@ export async function batchedTraceSource(
         currentSourcesByFile.delete(sourceFrame.file!)
       }, 100)
     }
-
+    ignored = false
     source = await sourcePromise
   }
 
+  // TODO: get ignoredList from turbopack source map
+  const ignorableFrame = {
+    file: sourceFrame.file,
+    lineNumber: sourceFrame.line ?? 0,
+    column: sourceFrame.column ?? 0,
+    methodName: sourceFrame.methodName ?? frame.methodName ?? '<unknown>',
+    ignored,
+    arguments: [],
+  }
+
   return {
-    frame: {
-      file: sourceFrame.file,
-      lineNumber: sourceFrame.line ?? 0,
-      column: sourceFrame.column ?? 0,
-      methodName: sourceFrame.methodName ?? frame.methodName ?? '<unknown>',
-      arguments: [],
-    },
+    frame: ignorableFrame,
     source,
   }
 }
diff --git a/packages/next/src/client/components/react-dev-overlay/server/middleware.ts b/packages/next/src/client/components/react-dev-overlay/server/middleware.ts
index b1c6e42d98a47..ac8baf005f7ed 100644
--- a/packages/next/src/client/components/react-dev-overlay/server/middleware.ts
+++ b/packages/next/src/client/components/react-dev-overlay/server/middleware.ts
@@ -21,18 +21,43 @@ export { getSourceMapFromFile }
 
 import type { IncomingMessage, ServerResponse } from 'http'
 import type webpack from 'webpack'
-import type { RawSourceMap } from 'next/dist/compiled/source-map08'
+import type {
+  NullableMappedPosition,
+  RawSourceMap,
+} from 'next/dist/compiled/source-map08'
 import { formatFrameSourceFile } from '../internal/helpers/webpack-module-path'
+import type { MappedPosition } from 'source-map'
+
+function shouldIgnorePath(modulePath: string): boolean {
+  return (
+    modulePath.includes('node_modules') ||
+    // Only relevant for when Next.js is symlinked e.g. in the Next.js monorepo
+    modulePath.includes('next/dist')
+  )
+}
+
+type IgnoredSources = Array<{ url: string; ignored: boolean }>
+
+export interface IgnorableStackFrame extends StackFrame {
+  ignored: boolean
+}
+
+type SourceAttributes = {
+  sourcePosition: NullableMappedPosition
+  sourceContent: string | null
+}
 
 type Source =
   | {
       type: 'file'
       sourceMap: RawSourceMap
+      ignoredSources: IgnoredSources
       modulePath: string
     }
   | {
       type: 'bundle'
       sourceMap: RawSourceMap
+      ignoredSources: IgnoredSources
       compilation: webpack.Compilation
       moduleId: string
       modulePath: string
@@ -58,7 +83,7 @@ function getSourcePath(source: string) {
 async function findOriginalSourcePositionAndContent(
   sourceMap: RawSourceMap,
   position: { line: number; column: number | null }
-) {
+): Promise<SourceAttributes | null> {
   const consumer = await new SourceMapConsumer(sourceMap)
   try {
     const sourcePosition = consumer.originalPositionFor({
@@ -85,9 +110,50 @@ async function findOriginalSourcePositionAndContent(
   }
 }
 
+export function getIgnoredSources(sourceMap: RawSourceMap): IgnoredSources {
+  const ignoreList = new Set<number>()
+  const moduleFilenames = sourceMap?.sources ?? []
+
+  for (let index = 0; index < moduleFilenames.length; index++) {
+    // bundlerFilePath case: webpack://./app/page.tsx
+    const bundlerFilePath = moduleFilenames[index]
+    // Format the path to the normal file path
+    const formattedFilePath = formatFrameSourceFile(bundlerFilePath)
+    if (shouldIgnorePath(formattedFilePath)) {
+      ignoreList.add(index)
+    }
+  }
+
+  const ignoredSources = sourceMap.sources.map((source, index) => {
+    return {
+      url: source,
+      ignored: ignoreList.has(sourceMap.sources.indexOf(source)),
+      content: sourceMap.sourcesContent?.[index] ?? null,
+    }
+  })
+  return ignoredSources
+}
+
+function isIgnoredSource(
+  source: Source,
+  sourcePosition: MappedPosition | NullableMappedPosition
+) {
+  if (sourcePosition.source == null) {
+    return true
+  }
+  for (const ignoredSource of source.ignoredSources) {
+    if (ignoredSource.ignored && ignoredSource.url === sourcePosition.source) {
+      return true
+    }
+  }
+
+  return false
+}
+
 function createStackFrame(searchParams: URLSearchParams) {
+  const file = searchParams.get('file') as string
   return {
-    file: searchParams.get('file') as string,
+    file,
     methodName: searchParams.get('methodName') as string,
     lineNumber: parseInt(searchParams.get('lineNumber') ?? '0', 10) || 0,
     column: parseInt(searchParams.get('column') ?? '0', 10) || 0,
@@ -99,7 +165,7 @@ function findOriginalSourcePositionAndContentFromCompilation(
   moduleId: string | undefined,
   importedModule: string,
   compilation: webpack.Compilation
-) {
+): SourceAttributes | null {
   const module = getModuleById(moduleId, compilation)
   return module?.buildInfo?.importLocByPath?.get(importedModule) ?? null
 }
@@ -136,27 +202,34 @@ export async function createOriginalStackFrame({
     })
   })()
 
-  if (!result?.sourcePosition.source) {
+  if (!result) {
     return null
   }
-
   const { sourcePosition, sourceContent } = result
 
-  const filePath = path.resolve(
-    rootDirectory,
-    getSourcePath(
-      // When sourcePosition.source is the loader path the modulePath is generally better.
-      (sourcePosition.source.includes('|')
-        ? source.modulePath
-        : sourcePosition.source) || source.modulePath
-    )
+  if (!sourcePosition.source) {
+    return null
+  }
+
+  const ignored =
+    isIgnoredSource(source, sourcePosition) ||
+    // If the source file is externals, should be excluded even it's not ignored source.
+    // e.g. webpack://next/dist/.. needs to be ignored
+    shouldIgnorePath(source.modulePath)
+
+  const sourcePath = getSourcePath(
+    // When sourcePosition.source is the loader path the modulePath is generally better.
+    (sourcePosition.source!.includes('|')
+      ? source.modulePath
+      : sourcePosition.source) || source.modulePath
   )
+  const filePath = path.resolve(rootDirectory, sourcePath)
 
   const resolvedFilePath = sourceContent
     ? path.relative(rootDirectory, filePath)
     : sourcePosition.source
 
-  const traced = {
+  const traced: IgnorableStackFrame = {
     file: resolvedFilePath,
     lineNumber: sourcePosition.line,
     column: (sourcePosition.column ?? 0) + 1,
@@ -168,7 +241,8 @@ export async function createOriginalStackFrame({
         ?.replace('__WEBPACK_DEFAULT_EXPORT__', 'default')
         ?.replace('__webpack_exports__.', ''),
     arguments: [],
-  } satisfies StackFrame
+    ignored,
+  }
 
   return {
     originalStackFrame: traced,
@@ -201,7 +275,7 @@ export async function getSourceMapFromCompilation(
   }
 }
 
-export async function getSource(
+async function getSource(
   filename: string,
   options: {
     getCompilations: () => webpack.Compilation[]
@@ -215,11 +289,11 @@ export async function getSource(
 
   if (filename.startsWith('file:')) {
     const sourceMap = await getSourceMapFromFile(filename)
-
     return sourceMap
       ? {
           type: 'file',
           sourceMap,
+          ignoredSources: getIgnoredSources(sourceMap),
           modulePath: filename.replace(/^file:\/\//, ''),
         }
       : undefined
@@ -241,9 +315,29 @@ export async function getSource(
   for (const compilation of getCompilations()) {
     // TODO: `ignoreList`
     const sourceMap = await getSourceMapFromCompilation(moduleId, compilation)
+    const ignoreList = []
+    const moduleFilenames = sourceMap?.sources ?? []
+
+    for (let index = 0; index < moduleFilenames.length; index++) {
+      // bundlerFilePath case: webpack://./app/page.tsx
+      const bundlerFilePath = moduleFilenames[index]
+      // Format the path to the normal file path
+      const formattedFilePath = formatFrameSourceFile(bundlerFilePath)
+      if (shouldIgnorePath(formattedFilePath)) {
+        ignoreList.push(index)
+      }
+    }
 
     if (sourceMap) {
-      return { type: 'bundle', sourceMap, compilation, moduleId, modulePath }
+      const ignoredSources = getIgnoredSources(sourceMap)
+      return {
+        type: 'bundle',
+        sourceMap,
+        compilation,
+        moduleId,
+        modulePath,
+        ignoredSources,
+      }
     }
   }
 
@@ -270,24 +364,11 @@ export function getOverlayMiddleware(options: {
       const isEdgeServer = searchParams.get('isEdgeServer') === 'true'
       const isAppDirectory = searchParams.get('isAppDirectory') === 'true'
       const frame = createStackFrame(searchParams)
-
-      let sourcePackage = findSourcePackage(frame)
-
-      if (
-        !(
-          /^(rsc:\/\/React\/[^/]+\/)?(webpack-internal:\/\/\/|(file|webpack):\/\/)/.test(
-            frame.file
-          ) && frame.lineNumber
-        )
-      ) {
-        if (sourcePackage) return json(res, { sourcePackage })
-        return badRequest(res)
-      }
-
       const formattedFilePath = formatFrameSourceFile(frame.file)
       const filePath = path.join(rootDirectory, formattedFilePath)
       const isNextjsSource = filePath.startsWith(NEXT_PROJECT_ROOT)
 
+      let sourcePackage = findSourcePackage(frame)
       let source: Source | undefined
 
       if (isNextjsSource) {
diff --git a/packages/next/src/client/components/react-dev-overlay/server/shared.ts b/packages/next/src/client/components/react-dev-overlay/server/shared.ts
index 6ebfd3d43518f..efa87a0317eca 100644
--- a/packages/next/src/client/components/react-dev-overlay/server/shared.ts
+++ b/packages/next/src/client/components/react-dev-overlay/server/shared.ts
@@ -10,7 +10,7 @@ import isInternal, {
 export type SourcePackage = 'react' | 'next'
 
 export interface OriginalStackFrameResponse {
-  originalStackFrame?: StackFrame | null
+  originalStackFrame?: (StackFrame & { ignored: boolean }) | null
   originalCodeFrame?: string | null
   /** We use this to group frames in the error overlay */
   sourcePackage?: SourcePackage | null
diff --git a/packages/next/src/server/lib/router-utils/setup-dev-bundler.ts b/packages/next/src/server/lib/router-utils/setup-dev-bundler.ts
index 953efd257c26a..2106524da5204 100644
--- a/packages/next/src/server/lib/router-utils/setup-dev-bundler.ts
+++ b/packages/next/src/server/lib/router-utils/setup-dev-bundler.ts
@@ -69,6 +69,7 @@ import {
   getSourceMapFromCompilation,
   getSourceMapFromFile,
   parseStack,
+  getIgnoredSources,
 } from '../../../client/components/react-dev-overlay/server/middleware'
 import {
   batchedTraceSource,
@@ -1012,6 +1013,7 @@ async function startWatcher(opts: SetupOpts) {
                     type: 'bundle',
                     sourceMap,
                     compilation,
+                    ignoredSources: getIgnoredSources(sourceMap),
                     moduleId,
                     modulePath,
                   },