diff --git a/index.ts b/index.ts
index 40e51dc..fd7c118 100644
--- a/index.ts
+++ b/index.ts
@@ -129,11 +129,14 @@ export default function sveltePlugin(options?: esbuildSvelteOptions): Plugin {
 
             //main loader
             build.onLoad({ filter: svelteFilter }, async (args) => {
+                let cachedFile = null;
+                let previousWatchFiles: string[] = [];
+
                 // if told to use the cache, check if it contains the file,
                 // and if the modified time is not greater than the time when it was cached
                 // if so, return the cached data
                 if (options?.cache === true && fileCache.has(args.path)) {
-                    const cachedFile = fileCache.get(args.path) || {
+                    cachedFile = fileCache.get(args.path) || {
                         dependencies: new Map(),
                         data: null,
                     }; // should never hit the null b/c of has check
@@ -177,13 +180,26 @@ export default function sveltePlugin(options?: esbuildSvelteOptions): Plugin {
 
                     //do preprocessor stuff if it exists
                     if (options?.preprocess) {
-                        let preprocessResult = await preprocess(
-                            originalSource,
-                            options.preprocess,
-                            {
-                                filename,
+                        let preprocessResult = null;
+
+                        try {
+                            preprocessResult = await preprocess(
+                              originalSource,
+                              options.preprocess,
+                              {
+                                  filename,
+                              }
+                            );
+                        }
+                        catch(e: any) {
+                            // if preprocess failed there are chances that an external dependency caused exception
+                            // to avoid stop watching those files, we keep the previous dependencies if available
+                            if (build.initialOptions.watch && cachedFile) {
+                                previousWatchFiles = Array.from(cachedFile.dependencies.keys());
                             }
-                        );
+                            throw e;
+                        }
+
                         if (preprocessResult.map) {
                             // normalize the sourcemap 'source' entrys to all match if they are the same file
                             // needed because of differing handling of file names in preprocessors
@@ -262,7 +278,7 @@ export default function sveltePlugin(options?: esbuildSvelteOptions): Plugin {
 
                     return result;
                 } catch (e: any) {
-                    return { errors: [convertMessage(e)] };
+                    return { errors: [convertMessage(e)], watchFiles: previousWatchFiles };
                 }
             });
 
diff --git a/test/fixtures/watch-preprocessing/entry.js b/test/fixtures/watch-preprocessing/entry.js
new file mode 100644
index 0000000..5b4c482
--- /dev/null
+++ b/test/fixtures/watch-preprocessing/entry.js
@@ -0,0 +1,5 @@
+import Test from "./external-styles.svelte";
+
+new Test({
+  target: document.body,
+});
diff --git a/test/fixtures/watch-preprocessing/external-styles.svelte b/test/fixtures/watch-preprocessing/external-styles.svelte
new file mode 100644
index 0000000..08995e7
--- /dev/null
+++ b/test/fixtures/watch-preprocessing/external-styles.svelte
@@ -0,0 +1,7 @@
+<style lang="scss">
+  @import "./external.scss";
+</style>
+
+<div>
+  <h1>Hello World</h1>
+</div>
diff --git a/test/fixtures/watch-preprocessing/external.scss b/test/fixtures/watch-preprocessing/external.scss
new file mode 100644
index 0000000..7cd741e
--- /dev/null
+++ b/test/fixtures/watch-preprocessing/external.scss
@@ -0,0 +1 @@
+p { color: red; }
\ No newline at end of file
diff --git a/test/watchPreprocessingTest.mjs b/test/watchPreprocessingTest.mjs
new file mode 100644
index 0000000..e4ada32
--- /dev/null
+++ b/test/watchPreprocessingTest.mjs
@@ -0,0 +1,75 @@
+import { test } from "uvu";
+import * as assert from "uvu/assert";
+import { writeFileSync } from "fs";
+import { fileURLToPath } from "url";
+import { dirname } from "path";
+import { build as _build } from "esbuild";
+import { sass } from "svelte-preprocess-sass";
+import sveltePlugin from "../dist/index.mjs";
+
+const __filename = fileURLToPath(import.meta.url);
+const __dirname = dirname(__filename);
+
+test("Watch and build while preprocess of external dependency succeed and fails", async () => {
+
+  function _createDeferred() {
+    let resolve = null;
+    let reject  = null;
+    const promise = new Promise((_resolve, _reject) => {
+      resolve = _resolve;
+      reject  = _reject;
+    });
+    promise.forceResolve = resolve;
+    promise.forceReject  = reject;
+    return promise;
+  }
+
+  let count = 0;
+  const firstRebuild = _createDeferred();
+  const secondRebuild = _createDeferred();
+
+  //more advanced
+  const results = await _build({
+    entryPoints: ["./test/fixtures/watch-preprocessing/entry.js"],
+    outdir: "../example/dist",
+    format: "esm",
+    minify: true,
+    bundle: true,
+    splitting: true,
+    write: false, //Don't write anywhere
+    sourcemap: "inline",
+    plugins: [
+      sveltePlugin({
+        preprocess: {
+          style: sass(),
+        },
+      }),
+    ],
+    watch: {
+      onRebuild(err, result) {
+        count++;
+        if (count === 1) {
+          firstRebuild.forceResolve(err);
+        }
+        else if (count === 2) {
+          secondRebuild.forceResolve(result);
+        }
+      },
+    },
+  });
+
+  // write external scss with invalid syntax
+  writeFileSync(`${__dirname}/fixtures/watch-preprocessing/external.scss`, 'p { color: red; }!$%^&*()@$%^@@');
+  const firstRebuildResult = await firstRebuild;
+  assert.ok(firstRebuildResult instanceof Error, 'First build did not fail');
+
+  // write external scss with valid syntax again
+  writeFileSync(`${__dirname}/fixtures/watch-preprocessing/external.scss`, 'p { color: red; }');
+  const secondRebuildResult = await secondRebuild;
+  assert.ok(secondRebuildResult.errors.length === 0, "Second build fail");
+
+  // stop watching
+  results.stop();
+});
+
+test.run();