diff --git a/test/development/acceptance/ReactRefreshLogBox.test.ts b/test/development/acceptance/ReactRefreshLogBox.test.ts
index 6cf70ac6c6247..225352b112cb4 100644
--- a/test/development/acceptance/ReactRefreshLogBox.test.ts
+++ b/test/development/acceptance/ReactRefreshLogBox.test.ts
@@ -180,8 +180,8 @@ describe('ReactRefreshLogBox', () => {
              |       ^",
            "stack": [
              "[project]/index.js [ssr] (ecmascript) index.js (3:7)",
-             "<FIXME-next-dist-dir>",
-             "<FIXME-next-dist-dir>",
+             "[project]/pages/index.js [ssr] (ecmascript) <module evaluation> pages/index.js (1:1)",
+             "[project]/pages/index.js [ssr] (ecmascript) pages/index.js (1:1)",
              "<FIXME-next-dist-dir>",
            ],
          }
diff --git a/turbopack/crates/turbopack-ecmascript/src/references/mod.rs b/turbopack/crates/turbopack-ecmascript/src/references/mod.rs
index 92f2c605e5363..fb502a5183f0c 100644
--- a/turbopack/crates/turbopack-ecmascript/src/references/mod.rs
+++ b/turbopack/crates/turbopack-ecmascript/src/references/mod.rs
@@ -276,6 +276,7 @@ impl AnalyzeEcmascriptModuleResultBuilder {
     /// If you're unsure about which function to use, use `add_reference()`
     pub fn add_esm_evaluation_reference(&mut self, idx: usize) {
         self.esm_references.insert(idx);
+        self.esm_local_references.insert(idx);
         self.esm_evaluation_references.insert(idx);
     }
 
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/index.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/index.js
index 3679165968879..371cacd646dcd 100644
--- a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/index.js
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/index.js
@@ -1,3 +1,20 @@
+import {
+  a as a0,
+  b as b0,
+  c as c0,
+  d as d0,
+  e as e0,
+  def as def0,
+} from "package-named";
+it("should optimize named reexports from side effect free module", () => {
+  expect(a0).toBe("a");
+  expect(b0).toBe("b");
+  expect(c0).toBe("x");
+  expect(d0).toBe("y");
+  expect(e0).toBe("x");
+  expect(def0).toBe("default");
+});
+
 import {
   a as a1,
   b as b1,
@@ -7,8 +24,8 @@ import {
   local as local1,
   default as default1,
   def as def1,
-} from "package-named";
-it("should optimize named reexports from side effect free module", () => {
+} from "package-named-local";
+it("should optimize named reexports with locals from side effect free module", () => {
   expect(a1).toBe("a");
   expect(b1).toBe("b");
   expect(c1).toBe("x");
@@ -19,11 +36,10 @@ it("should optimize named reexports from side effect free module", () => {
   expect(def1).toBe("default");
 });
 
-import { a as a2, b as b2, local as local2 } from "package-star";
+import { a as a2, b as b2 } from "package-star";
 it("should optimize star reexports from side effect free module", () => {
   expect(a2).toBe("a");
   expect(b2).toBe("b");
-  expect(local2).toBe("local");
 });
 
 import {
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/a.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/a.js
new file mode 100644
index 0000000000000..9233cce2f0e18
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/a.js
@@ -0,0 +1 @@
+export const a = "a";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/b.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/b.js
new file mode 100644
index 0000000000000..79044b663db8b
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/b.js
@@ -0,0 +1,2 @@
+const myB = "b";
+export { myB as b };
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/default.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/default.js
new file mode 100644
index 0000000000000..17e060e96f9f2
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/default.js
@@ -0,0 +1 @@
+export default "default";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/index.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/index.js
new file mode 100644
index 0000000000000..cf8203e5ada10
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/index.js
@@ -0,0 +1,12 @@
+export { notCompiled } from "./not-compiled.js";
+export { notExecuted } from "./not-executed.js";
+export * from "./not-compiled.js";
+export * from "./not-executed.js";
+export { a } from "./a.js";
+export { b } from "./b.js";
+export { x as c } from "./x.js";
+export { y as d } from "./y.js";
+export { x as e } from "./y.js";
+export { default as def } from "./default.js";
+export const local = "local";
+export default "local-default";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/not-compiled.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/not-compiled.js
new file mode 100644
index 0000000000000..850b713f4687f
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/not-compiled.js
@@ -0,0 +1 @@
+)))
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/not-executed.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/not-executed.js
new file mode 100644
index 0000000000000..d7651bb289d5d
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/not-executed.js
@@ -0,0 +1 @@
+throw new Error("Module should not be executed");
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/package.json b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/package.json
new file mode 100644
index 0000000000000..a43829151e142
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/package.json
@@ -0,0 +1,3 @@
+{
+  "sideEffects": false
+}
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/x.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/x.js
new file mode 100644
index 0000000000000..985ed7b9d82e5
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/x.js
@@ -0,0 +1 @@
+export const x = "x";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/y.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/y.js
new file mode 100644
index 0000000000000..7e92113032c4c
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named-local/y.js
@@ -0,0 +1,3 @@
+export * from "./x.js";
+
+export const y = "y";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named/index.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named/index.js
index b0f6fbe6d4214..2607288865a33 100644
--- a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named/index.js
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-named/index.js
@@ -10,5 +10,3 @@ export { x as c } from "./x.js";
 export { y as d } from "./y.js";
 export { x as e } from "./y.js";
 export { default as def } from "./default.js";
-export const local = "local";
-export default "local-default";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-star/index.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-star/index.js
index ee0717661118d..a9932284c5cf4 100644
--- a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-star/index.js
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/basic/input/node_modules/package-star/index.js
@@ -1,5 +1,4 @@
 export { notCompiled } from "./not-compiled.js";
-export { notExisting } from "./not-existing.js";
 export { notExecuted } from "./not-executed.js";
 export * from "./not-executed.js";
 export * from "./a.js";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/index.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/index.js
new file mode 100644
index 0000000000000..dab6b80b1bce2
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/index.js
@@ -0,0 +1,5 @@
+import getValue from "./reexport.js";
+
+it("should not optimize away side effects", () => {
+  expect(getValue()).toBe(42);
+});
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/package.json b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/package.json
new file mode 100644
index 0000000000000..ad9f3bdb826df
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/package.json
@@ -0,0 +1,6 @@
+{
+  "sideEffects": [
+    "./index.js",
+    "./valueSetter.js"
+  ]
+}
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/reexport.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/reexport.js
new file mode 100644
index 0000000000000..43e26e14878b6
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/reexport.js
@@ -0,0 +1,7 @@
+import { value } from "./valueSetter.js";
+
+export { value } from "./valueSetter.js";
+
+export default () => {
+    return value
+}
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/valueContainer.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/valueContainer.js
new file mode 100644
index 0000000000000..d31ec4e34e2b8
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/valueContainer.js
@@ -0,0 +1,4 @@
+export let value = undefined;
+export function setValue(newValue) {
+    value = newValue;
+}
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/valueSetter.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/valueSetter.js
new file mode 100644
index 0000000000000..3d64dab93fd07
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/input/valueSetter.js
@@ -0,0 +1,3 @@
+import { setValue } from "./valueContainer.js";
+setValue(42);
+export * from "./valueContainer.js";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/options.json b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/options.json
new file mode 100644
index 0000000000000..af13697f09f93
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/side-effects-optimization/follow-keeps-side-effect/options.json
@@ -0,0 +1,3 @@
+{
+  "treeShakingMode": "reexports-only"
+}
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/tree-shaking/follow-keeps-side-effect/input/index.js b/turbopack/crates/turbopack-tests/tests/execution/turbopack/tree-shaking/follow-keeps-side-effect/input/index.js
new file mode 100644
index 0000000000000..69c69a74041e1
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/tree-shaking/follow-keeps-side-effect/input/index.js
@@ -0,0 +1 @@
+import "../../../side-effects-optimization/follow-keeps-side-effect/input/index.js";
diff --git a/turbopack/crates/turbopack-tests/tests/execution/turbopack/tree-shaking/follow-keeps-side-effect/options.json b/turbopack/crates/turbopack-tests/tests/execution/turbopack/tree-shaking/follow-keeps-side-effect/options.json
new file mode 100644
index 0000000000000..000d78a6b3cbb
--- /dev/null
+++ b/turbopack/crates/turbopack-tests/tests/execution/turbopack/tree-shaking/follow-keeps-side-effect/options.json
@@ -0,0 +1,3 @@
+{
+  "treeShakingMode": "module-fragments"
+}