diff --git a/package-lock.json b/package-lock.json
index 11e7820d..913b8a27 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -30,6 +30,7 @@
         "husky": "^9.1.7",
         "jsdom": "24.0.0",
         "lint-staged": "^15.5.0",
+        "magic-string": "^0.30.21",
         "prettier": "^3.6.2",
         "sinon": "^21.0.0",
         "tap-diff": "^0.1.1",
@@ -1147,9 +1148,9 @@
       }
     },
     "node_modules/@jridgewell/sourcemap-codec": {
-      "version": "1.5.0",
-      "resolved": "https://registry.npmjs.org/@jridgewell/sourcemap-codec/-/sourcemap-codec-1.5.0.tgz",
-      "integrity": "sha512-gv3ZRaISU3fjPAgNsriBRqGWQL6quFx04YMPW/zD8XMLsU32mhCCbfbO6KZFLjvYpCZ8zyDEgqsgf+PwPaM7GQ==",
+      "version": "1.5.5",
+      "resolved": "https://registry.npmjs.org/@jridgewell/sourcemap-codec/-/sourcemap-codec-1.5.5.tgz",
+      "integrity": "sha512-cYQ9310grqxueWbl+WuIUIaiUaDcj7WOq5fVhEljNVgRfOUhY9fy2zTvfoqWsnebh8Sl70VScFbICvJnLKB0Og==",
       "dev": true,
       "license": "MIT"
     },
@@ -4930,6 +4931,16 @@
         "yallist": "^3.0.2"
       }
     },
+    "node_modules/magic-string": {
+      "version": "0.30.21",
+      "resolved": "https://registry.npmjs.org/magic-string/-/magic-string-0.30.21.tgz",
+      "integrity": "sha512-vd2F4YUyEXKGcLHoq+TEyCjxueSeHnFxyyjNp80yg0XV4vUhnDer/lvvlqM/arB5bXQN5K2/3oinyCRyx8T2CQ==",
+      "dev": true,
+      "license": "MIT",
+      "dependencies": {
+        "@jridgewell/sourcemap-codec": "^1.5.5"
+      }
+    },
     "node_modules/make-dir": {
       "version": "4.0.0",
       "resolved": "https://registry.npmjs.org/make-dir/-/make-dir-4.0.0.tgz",
diff --git a/package.json b/package.json
index cceb4663..6141160e 100644
--- a/package.json
+++ b/package.json
@@ -48,6 +48,7 @@
     "husky": "^9.1.7",
     "jsdom": "24.0.0",
     "lint-staged": "^15.5.0",
+    "magic-string": "^0.30.21",
     "prettier": "^3.6.2",
     "sinon": "^21.0.0",
     "tap-diff": "^0.1.1",
diff --git a/src/lib/precompiler/precompiler.js b/src/lib/precompiler/precompiler.js
index c29e05ad..7552b20f 100644
--- a/src/lib/precompiler/precompiler.js
+++ b/src/lib/precompiler/precompiler.js
@@ -17,6 +17,7 @@
 
 import parser from '../templateparser/parser.js'
 import generator from '../codegenerator/generator.js'
+import MagicString from 'magic-string'
 
 export default (source, filePath, mode) => {
   if (
@@ -26,12 +27,9 @@ export default (source, filePath, mode) => {
     /\{.*?template\s*:\s*(['"`])((?:\\?.)*?)\1.*?\}/s.test(source) // object with template key
   ) {
     const templates = source.matchAll(/(?<!\/\/\s*)template\s*:\s*(['"`])((?:\\?.)*?)\1/gs)
-    let newSource = source
-    /*
-      if there are multiple templates in the file, we need to keep
-      track of the offset caused by the previous replacements
-    */
-    let offset = 0
+
+    // Use MagicString to track changes
+    const s = new MagicString(source)
 
     for (const template of templates) {
       if (template[2]) {
@@ -39,7 +37,8 @@ export default (source, filePath, mode) => {
 
         // Only process if it looks like a Blits template
         if (templateContent.match(/^\s*(<!--[\s\S]*?-->|<[A-Za-z][^>]*>)/s)) {
-          const templateStartIndex = template.index + offset
+          // Use original indices - MagicString handles position tracking automatically
+          const templateStartIndex = template.index
           const templateEndIndex = templateStartIndex + template[0].length
 
           // Parse the template
@@ -58,16 +57,26 @@ export default (source, filePath, mode) => {
             (fn) => fn.toString()
           )}], context: {}}`
 
-          offset += replacement.length - template[0].length
-
-          newSource =
-            newSource.substring(0, templateStartIndex) +
-            replacement +
-            newSource.substring(templateEndIndex)
+          // MagicString tracks all changes automatically, no offset needed
+          s.overwrite(templateStartIndex, templateEndIndex, replacement)
         }
       }
     }
-    return newSource
+
+    const newSource = s.toString()
+
+    if (newSource !== source) {
+      const fileName = filePath.split(/[\\/]/).pop()
+      return {
+        code: newSource,
+        map: s.generateMap({
+          hires: true,
+          source: fileName,
+          includeContent: true,
+          file: fileName,
+        }),
+      }
+    }
   }
   return source
 }
diff --git a/src/lib/reactivityguard/computedprops.js b/src/lib/reactivityguard/computedprops.js
index 8f3248f1..90ced535 100644
--- a/src/lib/reactivityguard/computedprops.js
+++ b/src/lib/reactivityguard/computedprops.js
@@ -213,7 +213,12 @@ export default (code) => {
       modifiedCode = modifiedCode.replace(mod.original, mod.replacement)
     }
 
-    return { code: modifiedCode }
+    // Returning code without a source map
+    // Vite will automatically chain this with the next plugin's source map (preCompiler)
+    return {
+      code: modifiedCode,
+      map: { mappings: '' },
+    }
   }
 
   return null
diff --git a/vite/preCompiler.js b/vite/preCompiler.js
index 176bb96d..e4d59828 100644
--- a/vite/preCompiler.js
+++ b/vite/preCompiler.js
@@ -32,12 +32,22 @@ export default function () {
 
       // we should only precompile .blits, .js and .ts files
       if (
-        fileExtension === '.js' ||
-        fileExtension === '.ts' ||
-        fileExtension === '.blits' ||
-        fileExtension === '.mjs'
+        filePath.indexOf('node_modules') === -1 &&
+        (fileExtension === '.js' ||
+          fileExtension === '.ts' ||
+          fileExtension === '.blits' ||
+          fileExtension === '.mjs')
       ) {
-        return compiler(source, filePath, config.mode)
+        const result = compiler(source, filePath, config.mode)
+
+        if (typeof result === 'object') {
+          return {
+            code: result.code,
+            map: result.map,
+          }
+        }
+        // No transformation needed - return null so Vite knows no changes were made
+        return null
       }
 
       // vite expects null if there is no modification