diff --git a/docs/generated/manifests/nx-api.json b/docs/generated/manifests/nx-api.json
index 86b1c286b1..ce544edfe3 100644
--- a/docs/generated/manifests/nx-api.json
+++ b/docs/generated/manifests/nx-api.json
@@ -2841,7 +2841,7 @@
         "type": "generator"
       },
       "/nx-api/storybook/generators/cypress-project": {
-        "description": "Add cypress e2e app to test a UI library that is set up for Storybook.",
+        "description": "Add cypress E2E app to test a ui library that is set up for Storybook.",
         "file": "generated/packages/storybook/generators/cypress-project.json",
         "hidden": false,
         "name": "cypress-project",
diff --git a/docs/generated/packages-metadata.json b/docs/generated/packages-metadata.json
index 487165933f..e508db9895 100644
--- a/docs/generated/packages-metadata.json
+++ b/docs/generated/packages-metadata.json
@@ -2811,7 +2811,7 @@
         "type": "generator"
       },
       {
-        "description": "Add cypress e2e app to test a UI library that is set up for Storybook.",
+        "description": "Add cypress E2E app to test a ui library that is set up for Storybook.",
         "file": "generated/packages/storybook/generators/cypress-project.json",
         "hidden": false,
         "name": "cypress-project",
diff --git a/docs/generated/packages/storybook/generators/cypress-project.json b/docs/generated/packages/storybook/generators/cypress-project.json
index cf1579a86e..6ad6af0e5f 100644
--- a/docs/generated/packages/storybook/generators/cypress-project.json
+++ b/docs/generated/packages/storybook/generators/cypress-project.json
@@ -7,6 +7,7 @@
     "$id": "cypress-configure",
     "title": "Cypress Configuration",
     "description": "Add cypress E2E app to test a ui library that is set up for Storybook.",
+    "x-deprecated": "Use 'interactionTests' instead when running '@nx/storybook:configuration'. This generator will be removed in v21.",
     "type": "object",
     "properties": {
       "name": {
@@ -53,7 +54,8 @@
     "required": ["name"],
     "presets": []
   },
-  "description": "Add cypress e2e app to test a UI library that is set up for Storybook.",
+  "description": "Add cypress E2E app to test a ui library that is set up for Storybook.",
+  "x-deprecated": "Deprecated: Use 'interactionTests' instead when running '@nx/storybook:configuration'. This generator will be removed in v21.",
   "hidden": false,
   "implementation": "/packages/storybook/src/generators/cypress-project/cypress-project.ts",
   "aliases": [],
diff --git a/packages/storybook/generators.json b/packages/storybook/generators.json
index ad9d9cef04..ac3469bcfe 100644
--- a/packages/storybook/generators.json
+++ b/packages/storybook/generators.json
@@ -18,7 +18,8 @@
     "cypress-project": {
       "factory": "./src/generators/cypress-project/cypress-project",
       "schema": "./src/generators/cypress-project/schema.json",
-      "description": "Add cypress e2e app to test a UI library that is set up for Storybook.",
+      "description": "Add cypress E2E app to test a ui library that is set up for Storybook.",
+      "x-deprecated": "Deprecated: Use 'interactionTests' instead when running '@nx/storybook:configuration'. This generator will be removed in v21.",
       "hidden": false
     },
     "migrate-7": {
diff --git a/packages/storybook/presets/cypress.ts b/packages/storybook/presets/cypress.ts
index 30d5e9bf37..4c11545d5d 100644
--- a/packages/storybook/presets/cypress.ts
+++ b/packages/storybook/presets/cypress.ts
@@ -1,8 +1,14 @@
-import { nxE2EPreset } from '@nx/cypress/plugins/cypress-preset';
+import {
+  NxCypressE2EPresetOptions,
+  nxE2EPreset,
+} from '@nx/cypress/plugins/cypress-preset';
 
-export function nxE2EStorybookPreset(filePath: string) {
+export function nxE2EStorybookPreset(
+  filePath: string,
+  options?: NxCypressE2EPresetOptions
+) {
   return {
-    ...nxE2EPreset(filePath),
+    ...nxE2EPreset(filePath, options),
     baseUrl: 'http://localhost:4400',
   };
 }
diff --git a/packages/storybook/src/generators/cypress-project/__snapshots__/cypress-project.spec.ts.snap b/packages/storybook/src/generators/cypress-project/__snapshots__/cypress-project.spec.ts.snap
index a7beee5475..a9cf97371d 100644
--- a/packages/storybook/src/generators/cypress-project/__snapshots__/cypress-project.spec.ts.snap
+++ b/packages/storybook/src/generators/cypress-project/__snapshots__/cypress-project.spec.ts.snap
@@ -1,5 +1,22 @@
 // Jest Snapshot v1, https://goo.gl/fbAQLP
 
+exports[`@nx/storybook:cypress-project should generate a correct cypress.config.ts file when using inferred plugins 1`] = `
+"import { defineConfig } from 'cypress';
+import { nxE2EStorybookPreset } from '@nx/storybook/presets/cypress';
+
+export default defineConfig({
+  e2e: nxE2EStorybookPreset(__dirname, {
+    cypressDir: 'src',
+    webServerCommands: {
+      default: 'npx nx run test-ui-lib:storybook',
+      ci: 'npx nx run test-ui-lib:storybook:ci',
+    },
+    ciWebServerCommand: 'npx nx run test-ui-lib:storybook:ci',
+  }),
+});
+"
+`;
+
 exports[`@nx/storybook:cypress-project should generate files 1`] = `
 "import { defineConfig } from 'cypress';
 import { nxE2EStorybookPreset } from '@nx/storybook/presets/cypress';
diff --git a/packages/storybook/src/generators/cypress-project/cypress-project.spec.ts b/packages/storybook/src/generators/cypress-project/cypress-project.spec.ts
index f30527fc88..6f903d3da2 100644
--- a/packages/storybook/src/generators/cypress-project/cypress-project.spec.ts
+++ b/packages/storybook/src/generators/cypress-project/cypress-project.spec.ts
@@ -1,4 +1,16 @@
-import { readJson, readProjectConfiguration, Tree } from '@nx/devkit';
+jest.mock('nx/src/project-graph/plugins/loader', () => ({
+  ...jest.requireActual('nx/src/project-graph/plugins/loader'),
+  loadNxPlugin: jest.fn().mockImplementation(() => {
+    return [Promise.resolve({}), () => {}];
+  }),
+}));
+import {
+  readJson,
+  readNxJson,
+  readProjectConfiguration,
+  Tree,
+  updateNxJson,
+} from '@nx/devkit';
 import { createTreeWithEmptyWorkspace } from '@nx/devkit/testing';
 import { Linter } from '@nx/eslint';
 import { libraryGenerator } from '@nx/js';
@@ -60,4 +72,26 @@ describe('@nx/storybook:cypress-project', () => {
       tree.exists('apps/one/two/test-ui-lib-e2e/cypress.config.ts')
     ).toBeTruthy();
   });
+
+  it('should generate a correct cypress.config.ts file when using inferred plugins', async () => {
+    // ARRANGE
+    const nxJson = readNxJson(tree);
+    nxJson.plugins ??= [];
+    nxJson.plugins.push('@nx/cypress/plugin');
+    updateNxJson(tree, nxJson);
+
+    // ACT
+    await cypressProjectGenerator(tree, {
+      name: 'test-ui-lib',
+      linter: Linter.EsLint,
+    });
+
+    // ASSERT
+    expect(tree.exists('apps/test-ui-lib-e2e/cypress.config.ts')).toBeTruthy();
+    const cypressConfig = tree.read(
+      'apps/test-ui-lib-e2e/cypress.config.ts',
+      'utf-8'
+    );
+    expect(cypressConfig).toMatchSnapshot();
+  });
 });
diff --git a/packages/storybook/src/generators/cypress-project/cypress-project.ts b/packages/storybook/src/generators/cypress-project/cypress-project.ts
index 0ce8ef1ffb..5a7d4e9103 100644
--- a/packages/storybook/src/generators/cypress-project/cypress-project.ts
+++ b/packages/storybook/src/generators/cypress-project/cypress-project.ts
@@ -5,7 +5,9 @@ import {
   formatFiles,
   generateFiles,
   joinPathFragments,
+  logger,
   readJson,
+  readNxJson,
   readProjectConfiguration,
   Tree,
   updateJson,
@@ -43,6 +45,9 @@ export async function cypressProjectGeneratorInternal(
   tree: Tree,
   schema: CypressConfigureSchema
 ) {
+  logger.warn(
+    `Use 'interactionTests' instead when running '@nx/storybook:configuration'. This generator will be removed in v21.`
+  );
   const { configurationGenerator } = ensurePackage<
     typeof import('@nx/cypress')
   >('@nx/cypress', nxVersion);
@@ -73,7 +78,6 @@ export async function cypressProjectGeneratorInternal(
     project: projectName,
     js: schema.js,
     linter: schema.linter,
-    directory: projectRoot,
     devServerTarget: `${schema.name}:storybook`,
     skipFormat: true,
   });
@@ -84,12 +88,28 @@ export async function cypressProjectGeneratorInternal(
     schema.directory
   );
   removeUnneededFiles(tree, generatedCypressProjectName, schema.js);
-  addBaseUrlToCypressConfig(tree, generatedCypressProjectName);
-  updateAngularJsonBuilder(tree, {
-    e2eProjectName: generatedCypressProjectName,
-    targetProjectName: schema.name,
-    ciTargetName: schema.ciTargetName,
-  });
+
+  const project = readProjectConfiguration(tree, generatedCypressProjectName);
+  if (project.targets.e2e && project.targets.e2e.options) {
+    addBaseUrlToCypressConfig(tree, generatedCypressProjectName, project.root);
+    updateAngularJsonBuilder(tree, {
+      e2eProjectName: generatedCypressProjectName,
+      targetProjectName: schema.name,
+      ciTargetName: schema.ciTargetName,
+    });
+  } else if (hasCypressPlugin(tree)) {
+    generateCypressConfigForInferredPlugin(
+      tree,
+      generatedCypressProjectName,
+      project.root,
+      schema.name,
+      schema.ciTargetName
+    );
+  } else {
+    throw new Error(
+      `Unable to generate Cypress Project for Storybook project. Please report this issue at https://github.com/nrwl/nx/issues/new/choose`
+    );
+  }
 
   if (!schema.skipFormat) {
     await formatFiles(tree);
@@ -98,10 +118,19 @@ export async function cypressProjectGeneratorInternal(
   return cypressTask;
 }
 
+function hasCypressPlugin(tree: Tree) {
+  const nxJson = readNxJson(tree);
+  return nxJson.plugins?.some((p) =>
+    typeof p === 'string'
+      ? p === '@nx/cypress/plugin'
+      : p.plugin === '@nx/cypress/plugin'
+  );
+}
+
 function removeUnneededFiles(tree: Tree, projectName: string, js: boolean) {
   const { sourceRoot, root } = readProjectConfiguration(tree, projectName);
   const fileType = js ? 'js' : 'ts';
-  if (tree.exists(join(root, 'cypress.config.ts'))) {
+  if (tree.exists(joinPathFragments(root, 'cypress.config.ts'))) {
     safeFileDelete(tree, `${sourceRoot}/e2e/app.cy.${fileType}`);
     safeFileDelete(tree, `${sourceRoot}/support/app.po.${fileType}`);
   } else {
@@ -110,10 +139,44 @@ function removeUnneededFiles(tree: Tree, projectName: string, js: boolean) {
   }
 }
 
-function addBaseUrlToCypressConfig(tree: Tree, projectName: string) {
-  const projectRoot = readProjectConfiguration(tree, projectName).root;
-  const cypressJson = join(projectRoot, 'cypress.json');
-  const cypressTs = join(projectRoot, 'cypress.config.ts');
+function generateCypressConfigForInferredPlugin(
+  tree: Tree,
+  projectName: string,
+  projectRoot: string,
+  targetProjectName: string,
+  ciTargetName?: string
+) {
+  const cypressJson = joinPathFragments(projectRoot, 'cypress.json');
+  const cypressTs = joinPathFragments(projectRoot, 'cypress.config.ts');
+
+  if (tree.exists(cypressJson)) {
+    tree.delete(cypressJson);
+  }
+  if (tree.exists(cypressTs)) {
+    // cypress >= v10
+    tree.delete(cypressTs);
+    generateFiles(
+      tree,
+      join(__dirname, 'files', 'inferred-target'),
+      projectRoot,
+      {
+        defaultWebServerCommand: `npx nx run ${targetProjectName}:storybook`,
+        ciWebServerCommand: ciTargetName
+          ? `npx nx run ${targetProjectName}:${ciTargetName}:ci`
+          : `npx nx run ${targetProjectName}:storybook:ci`,
+        tpl: '',
+      }
+    );
+  }
+}
+
+function addBaseUrlToCypressConfig(
+  tree: Tree,
+  projectName: string,
+  projectRoot: string
+) {
+  const cypressJson = joinPathFragments(projectRoot, 'cypress.json');
+  const cypressTs = joinPathFragments(projectRoot, 'cypress.config.ts');
   // TODO(caleb): remove this when cypress < v10 is deprecated
 
   if (tree.exists(cypressJson)) {
@@ -125,9 +188,14 @@ function addBaseUrlToCypressConfig(tree: Tree, projectName: string) {
   } else if (tree.exists(cypressTs)) {
     // cypress >= v10
     tree.delete(cypressTs);
-    generateFiles(tree, join(__dirname, 'files'), projectRoot, {
-      tpl: '',
-    });
+    generateFiles(
+      tree,
+      join(__dirname, 'files', 'explicit-target'),
+      projectRoot,
+      {
+        tpl: '',
+      }
+    );
   }
 }
 
@@ -140,7 +208,7 @@ function updateAngularJsonBuilder(
   }
 ) {
   const project = readProjectConfiguration(tree, opts.e2eProjectName);
-  const e2eTarget = project.targets.e2e;
+  const e2eTarget = project.targets.e2e ?? {};
   project.targets.e2e = {
     ...e2eTarget,
     options: <any>{
diff --git a/packages/storybook/src/generators/cypress-project/files/cypress.config.ts__tpl__ b/packages/storybook/src/generators/cypress-project/files/explicit-target/cypress.config.ts__tpl__
similarity index 100%
rename from packages/storybook/src/generators/cypress-project/files/cypress.config.ts__tpl__
rename to packages/storybook/src/generators/cypress-project/files/explicit-target/cypress.config.ts__tpl__
diff --git a/packages/storybook/src/generators/cypress-project/files/inferred-target/cypress.config.ts__tpl__ b/packages/storybook/src/generators/cypress-project/files/inferred-target/cypress.config.ts__tpl__
new file mode 100644
index 0000000000..2a709f2653
--- /dev/null
+++ b/packages/storybook/src/generators/cypress-project/files/inferred-target/cypress.config.ts__tpl__
@@ -0,0 +1,13 @@
+import { defineConfig } from 'cypress';
+import { nxE2EStorybookPreset } from '@nx/storybook/presets/cypress';
+
+export default defineConfig({
+  e2e: nxE2EStorybookPreset(__dirname, {
+    cypressDir: 'src',
+    webServerCommands: {
+        default: "<%= defaultWebServerCommand %>",
+        ci: "<%= ciWebServerCommand %>"
+    },
+    ciWebServerCommand: "<%= ciWebServerCommand %>"
+  }),
+});
diff --git a/packages/storybook/src/generators/cypress-project/schema.json b/packages/storybook/src/generators/cypress-project/schema.json
index b9255fa84e..36c49ecc35 100644
--- a/packages/storybook/src/generators/cypress-project/schema.json
+++ b/packages/storybook/src/generators/cypress-project/schema.json
@@ -4,6 +4,7 @@
   "$id": "cypress-configure",
   "title": "Cypress Configuration",
   "description": "Add cypress E2E app to test a ui library that is set up for Storybook.",
+  "x-deprecated": "Use 'interactionTests' instead when running '@nx/storybook:configuration'. This generator will be removed in v21.",
   "type": "object",
   "properties": {
     "name": {