diff --git a/CHANGELOG.md b/CHANGELOG.md
index 89cf87ddab..97e4bbae5f 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,3 +1,7 @@
+### 9.0.0-alpha.3: September 11th, 2016
+* Fix webpack HMR ([#1713](https://github.com/roots/sage/issues/1713))
+* Remove minor edits from CHANGELOG.md ([3516629](https://github.com/roots/sage/commit/3516629))
+
 ### 9.0.0-alpha.2: September 4th, 2016
 * Refactor build routine ([#1703](https://github.com/roots/sage/pull/1703))
 * Update `_grid.scss` to use `@include make-col-ready()` mixin ([#1706](https://github.com/roots/sage/pull/1706))
@@ -16,7 +20,7 @@
 * Refactor functions.php ([eae36be](https://github.com/roots/sage/commit/eae36be))
 * Rework template wrapper, bring back template_part() ([#1678](https://github.com/roots/sage/pull/1678))
 * Remove unused static variable in Wrapper ([9bfdd5a](https://github.com/roots/sage/commit/9bfdd5a))
-* Remove path.extname() check ([#1673](https://github.com/roots/sage/pull/1673))
+* Remove `path.extname()` check ([#1673](https://github.com/roots/sage/pull/1673))
 * Updated to align with the Bootstrap 4 docs ([#1667](https://github.com/roots/sage/pull/1667))
 * Add `npm prune` to Travis CI ([#1663](https://github.com/roots/sage/pull/1663))
 * Bootstrap NPM ^4.0.0-alpha.2 ([#1650](https://github.com/roots/sage/pull/1650))
diff --git a/README.md b/README.md
index c90660552f..2a402648ba 100644
--- a/README.md
+++ b/README.md
@@ -86,8 +86,8 @@ You now have all the necessary dependencies to run the build process.
 
 ### Build commands
 
+* `npm start` — Compile assets when file changes are made, start BrowserSync session
 * `npm run build` — Compile and optimize the files in your assets directory
-* `npm run start` — Compile assets when file changes are made, start BrowserSync session
 * `npm run build:production` — Compile assets for production
 
 #### Additional commands
@@ -98,7 +98,7 @@ You now have all the necessary dependencies to run the build process.
 
 ### Using BrowserSync
 
-To use BrowserSync during `npm run start` you need to update `devUrl` at the bottom of `assets/config.json` to reflect your local development hostname.
+To use BrowserSync during `npm start` you need to update `devUrl` at the bottom of `assets/config.json` to reflect your local development hostname.
 
 If your local development URL is `https://project-name.dev`, update the file to read:
 ```json
@@ -115,6 +115,20 @@ If you are not using [Bedrock](https://roots.io/bedrock/), update `publicPath` t
 ...
 ```
 
+By default, BrowserSync will use webpack's [HMR](https://webpack.github.io/docs/hot-module-replacement.html), which won't trigger a page reload in your browser.
+
+If you would like to force BrowserSync to reload the page whenever certain file types are edited, then add them to `watch` in `assets/config.json`.
+
+```json
+...
+  "watch": [
+    "assets/scripts/**/*.js",
+    "templates/**/*.php",
+    "src/**/*.php"
+  ],
+...
+```
+
 ## Documentation
 
 Sage 8 documentation is available at [https://roots.io/sage/docs/](https://roots.io/sage/docs/).
diff --git a/assets/build/config.js b/assets/build/config.js
index 83da856545..f930643d7f 100644
--- a/assets/build/config.js
+++ b/assets/build/config.js
@@ -47,4 +47,5 @@ module.exports = mergeWithConcat(config, {
         .map(file => path.join(config.paths.assets, file));
     },
   },
+  publicPath: `${config.publicPath}/${path.basename(config.paths.dist)}/`,
 });
diff --git a/assets/build/util/addHotMiddleware.js b/assets/build/util/addHotMiddleware.js
new file mode 100644
index 0000000000..8a0d108631
--- /dev/null
+++ b/assets/build/util/addHotMiddleware.js
@@ -0,0 +1,21 @@
+const qs = require('qs');
+
+/**
+ * Loop through webpack entry
+ * and add the hot middleware
+ * @param  {Object} entry webpack entry
+ * @return {Object} entry with hot middleware
+ */
+module.exports = (entry) => {
+  const results = {};
+  const hotMiddlewareScript = `webpack-hot-middleware/client?${qs.stringify({
+    timeout: 20000,
+    reload: false,
+  })}`;
+
+  Object.keys(entry).forEach(name => {
+    results[name] = Array.isArray(entry[name]) ? entry[name].slice(0) : [entry[name]];
+    results[name].push(hotMiddlewareScript);
+  });
+  return results;
+};
diff --git a/assets/build/util/assetsPluginProcessOutput.js b/assets/build/util/assetsPluginProcessOutput.js
new file mode 100644
index 0000000000..352da3baff
--- /dev/null
+++ b/assets/build/util/assetsPluginProcessOutput.js
@@ -0,0 +1,18 @@
+const path = require('path');
+
+/**
+ * Process AssetsPlugin output and format it
+ * for Sage: {"[name].[ext]":"[name]_[hash].[ext]"}
+ * @param  {Object} assets passed by processOutput
+ * @return {String}        JSON
+ */
+module.exports = (assets) => {
+  const results = {};
+  Object.keys(assets).forEach(name => {
+    Object.keys(assets[name]).forEach(ext => {
+      const filename = `${path.dirname(assets[name][ext])}/${path.basename(`${name}.${ext}`)}`;
+      results[filename] = assets[name][ext];
+    });
+  });
+  return JSON.stringify(results);
+};
diff --git a/assets/build/webpack.config.js b/assets/build/webpack.config.js
index e34d5724e0..7073812759 100644
--- a/assets/build/webpack.config.js
+++ b/assets/build/webpack.config.js
@@ -8,22 +8,28 @@ const ImageminPlugin = require('imagemin-webpack-plugin').default;
 const imageminMozjpeg = require('imagemin-mozjpeg');
 
 const mergeWithConcat = require('./util/mergeWithConcat');
+const addHotMiddleware = require('./util/addHotMiddleware');
 const webpackConfigProduction = require('./webpack.config.production');
 const webpackConfigWatch = require('./webpack.config.watch');
 const config = require('./config');
 
-const publicPath = `${config.publicPath}/${path.basename(config.paths.dist)}/`;
 const assetsFilenames = (config.enabled.cacheBusting) ? config.cacheBusting : '[name]';
 const sourceMapQueryStr = (config.enabled.sourceMaps) ? '+sourceMap' : '-sourceMap';
 
 const jsLoader = {
   test: /\.js$/,
   exclude: [/(node_modules|bower_components)(?![/|\\](bootstrap|foundation-sites))/],
-  loaders: [`babel?presets[]=${path.resolve('./node_modules/babel-preset-es2015')}&cacheDirectory`],
+  loaders: [{
+    loader: 'babel',
+    query: {
+      presets: [[path.resolve('./node_modules/babel-preset-es2015'), { modules: false }]],
+      cacheDirectory: true,
+    },
+  }],
 };
 
 if (config.enabled.watcher) {
-  jsLoader.loaders.unshift('monkey-hot');
+  jsLoader.loaders.unshift('monkey-hot?sourceType=module');
 }
 
 const webpackConfig = {
@@ -32,7 +38,7 @@ const webpackConfig = {
   devtool: (config.enabled.sourceMaps ? '#source-map' : undefined),
   output: {
     path: config.paths.dist,
-    publicPath,
+    publicPath: config.publicPath,
     filename: `scripts/${assetsFilenames}.js`,
   },
   module: {
@@ -148,11 +154,6 @@ const webpackConfig = {
       Tether: 'tether',
       'window.Tether': 'tether',
     }),
-    new webpack.DefinePlugin({
-      WEBPACK_PUBLIC_PATH: (config.enabled.watcher)
-        ? JSON.stringify(publicPath)
-        : false,
-    }),
     new webpack.LoaderOptionsPlugin({
       minimize: config.enabled.minify,
       debug: config.enabled.watcher,
@@ -181,19 +182,15 @@ if (config.env.production) {
 }
 
 if (config.enabled.watcher) {
-  module.exports = mergeWithConcat(webpackConfig, webpackConfigWatch);
+  module.exports = mergeWithConcat(webpackConfig, webpackConfigWatch, {
+    entry: addHotMiddleware(webpackConfig.entry),
+  });
 }
 
 if (config.enabled.uglifyJs) {
   module.exports.plugins.push(
     new webpack.optimize.UglifyJsPlugin({
-      compress: config.enabled.minify ? {
-        drop_debugger: true,
-        dead_code: true,
-        warnings: false,
-      } : false,
       sourceMap: config.enabled.sourceMaps,
-      output: { comments: false },
     })
   );
 }
diff --git a/assets/build/webpack.config.production.js b/assets/build/webpack.config.production.js
index 4a320d7b5d..ab8de65d13 100644
--- a/assets/build/webpack.config.production.js
+++ b/assets/build/webpack.config.production.js
@@ -1,34 +1,17 @@
 const AssetsPlugin = require('assets-webpack-plugin');
 const OptimizeCssAssetsPlugin = require('optimize-css-assets-webpack-plugin');
 const cssnano = require('cssnano');
-const path = require('path');
 
+const processOutput = require('./util/assetsPluginProcessOutput');
 const config = require('./config');
 
-/**
- * Process AssetsPlugin output and format it
- * for Sage: {"[name].[ext]":"[name]_[hash].[ext]"}
- * @param  {Object} assets passed by processOutput
- * @return {String}        JSON
- */
-const assetsPluginProcessOutput = (assets) => {
-  const results = {};
-  Object.keys(assets).forEach(name => {
-    Object.keys(assets[name]).forEach(ext => {
-      const filename = `${path.dirname(assets[name][ext])}/${path.basename(`${name}.${ext}`)}`;
-      results[filename] = assets[name][ext];
-    });
-  });
-  return JSON.stringify(results);
-};
-
 module.exports = {
   plugins: [
     new AssetsPlugin({
       path: config.paths.dist,
       filename: 'assets.json',
       fullPath: false,
-      processOutput: assetsPluginProcessOutput,
+      processOutput,
     }),
     new OptimizeCssAssetsPlugin({
       cssProcessor: cssnano,
diff --git a/assets/build/webpack.config.watch.js b/assets/build/webpack.config.watch.js
index aa84a9c180..6f68603a90 100644
--- a/assets/build/webpack.config.watch.js
+++ b/assets/build/webpack.config.watch.js
@@ -1,21 +1,24 @@
-const BrowserSyncPlugin = require('browser-sync-webpack-plugin');
-const url = require('url');
+const webpack = require('webpack');
+const BrowserSyncPlugin = require('./webpack.plugin.browsersync');
 
 const config = require('./config');
 
 module.exports = {
   output: { pathinfo: true },
   debug: true,
-  devTool: 'cheap-module-source-map',
+  devtool: '#cheap-module-source-map',
   plugins: [
+    new webpack.optimize.OccurrenceOrderPlugin(),
+    new webpack.HotModuleReplacementPlugin(),
+    new webpack.NoErrorsPlugin(),
+    new webpack.DefinePlugin({
+      WEBPACK_PUBLIC_PATH: JSON.stringify(config.publicPath),
+    }),
     new BrowserSyncPlugin({
-      host: url.parse(config.proxyUrl).hostname,
-      port: url.parse(config.proxyUrl).port,
-      proxy: config.devUrl,
-      files: [
-        'templates/**/*.php',
-        'src/**/*.php',
-      ],
+      target: config.devUrl,
+      publicPath: config.publicPath,
+      proxyUrl: config.proxyUrl,
+      browserSyncOptions: { files: config.watch },
     }),
   ],
 };
diff --git a/assets/build/webpack.plugin.browsersync.js b/assets/build/webpack.plugin.browsersync.js
new file mode 100644
index 0000000000..a55ae7bc5f
--- /dev/null
+++ b/assets/build/webpack.plugin.browsersync.js
@@ -0,0 +1,55 @@
+'use strict'; // eslint-disable-line strict
+
+const webpackDevMiddleware = require('webpack-dev-middleware');
+const webpackHotMiddleware = require('webpack-hot-middleware');
+const browserSync = require('browser-sync');
+const url = require('url');
+
+const mergeWithConcat = require('./util/mergeWithConcat');
+
+module.exports = class {
+  constructor(options) {
+    this.watcher = null;
+    this.compiler = null;
+    this.options = mergeWithConcat({
+      proxyUrl: 'https://localhost:3000',
+      callback() {},
+    }, options);
+  }
+  apply(compiler) {
+    if (this.options.disable) {
+      return;
+    }
+    this.compiler = compiler;
+    compiler.plugin('done', this.doneCompiling);
+  }
+  doneCompiling() {
+    if (!this.watcher) {
+      this.watcher = browserSync.create();
+      this.compiler.plugin('compilation', () => this.watcher.notify('Rebuilding...'));
+      this.start();
+    }
+    // Optionally add logic for this.watcher.reload()
+  }
+  start() {
+    const watcherConfig = mergeWithConcat({
+      host: url.parse(this.options.proxyUrl).hostname,
+      port: url.parse(this.options.proxyUrl).port,
+      proxy: {
+        target: this.options.target,
+        middleware: this.middleware(),
+      },
+    }, this.options.browserSyncOptions);
+    this.watcher.init(watcherConfig, this.options.callback.bind(this));
+  }
+  middleware() {
+    this.webpackDevMiddleware = webpackDevMiddleware(this.compiler, {
+      publicPath: this.options.publicPath,
+      stats: { colors: true },
+    });
+    this.webpackHotMiddleware = webpackHotMiddleware(this.compiler, {
+      log: this.watcher.notify.bind(this.watcher),
+    });
+    return [this.webpackDevMiddleware, this.webpackHotMiddleware];
+  }
+};
diff --git a/assets/config.json b/assets/config.json
index 2cbec6164d..3405de1e1f 100644
--- a/assets/config.json
+++ b/assets/config.json
@@ -8,6 +8,10 @@
       "./scripts/customizer.js"
     ]
   },
+  "watch": [
+    "templates/**/*.php",
+    "src/**/*.php"
+  ],
   "publicPath": "/app/themes/sage",
   "devUrl": "https://example.dev",
   "proxyUrl": "https://localhost:3000",
diff --git a/package.json b/package.json
index b20d56064c..5166b671d1 100644
--- a/package.json
+++ b/package.json
@@ -35,16 +35,15 @@
     "babel-core": "^6.14.0",
     "babel-eslint": "^6.1.2",
     "babel-loader": "^6.2.5",
-    "babel-preset-es2015-webpack": "^6.4.3",
+    "babel-preset-es2015": "^6.14.0",
     "babel-register": "^6.14.0",
     "babel-runtime": "^6.11.6",
     "body-parser": "^1.15.2",
     "browser-sync": "^2.15.0",
-    "browser-sync-webpack-plugin": "^1.1.2",
     "clean-webpack-plugin": "^0.1.10",
     "css-loader": "^0.25.0",
     "cssnano": "^3.7.4",
-    "eslint": "^3.4.0",
+    "eslint": "^3.5.0",
     "eslint-config-airbnb": "^11.0.0",
     "eslint-config-airbnb-es5": "^1.0.9",
     "eslint-loader": "^1.5.0",
@@ -59,7 +58,7 @@
     "imports-loader": "^0.6.5",
     "lodash": "^4.15.0",
     "minimist": "^1.2.0",
-    "monkey-hot-loader": "0.0.3",
+    "monkey-hot-loader": "github:rmarscher/monkey-hot-loader#webpack2-import",
     "node-sass": "^3.9.3",
     "optimize-css-assets-webpack-plugin": "^1.3.0",
     "postcss": "^5.2.0",
@@ -70,7 +69,9 @@
     "sass-loader": "^4.0.2",
     "style-loader": "^0.13.1",
     "url-loader": "^0.5.7",
-    "webpack": "^2.1.0-beta.22"
+    "webpack": "^2.1.0-beta.22",
+    "webpack-dev-middleware": "^1.7.0",
+    "webpack-hot-middleware": "^2.12.2"
   },
   "dependencies": {
     "bootstrap": "github:twbs/bootstrap#v4-dev",