diff --git a/packages/nx/bin/init-local.ts b/packages/nx/bin/init-local.ts
index f9cfcf9e40..0d015ba4d8 100644
--- a/packages/nx/bin/init-local.ts
+++ b/packages/nx/bin/init-local.ts
@@ -13,10 +13,32 @@ import * as Mod from 'module';
  */
 
 export function initLocal(workspace: WorkspaceTypeAndRoot) {
+  // If module.register is not available, we need to restart the process with the experimental ESM loader.
+  // Otherwise, usage of `registerTsProject` will not work for `.ts` files using ESM.
+  // TODO: Remove this once Node 18 is out of LTS (March 2024).
+  if (shouldRestartWithExperimentalTsEsmLoader()) {
+    const child = require('child_process').fork(
+      require.resolve('./nx'),
+      process.argv.slice(2),
+      {
+        env: {
+          ...process.env,
+          RESTARTED_WITH_EXPERIMENTAL_TS_ESM_LOADER: '1',
+        },
+        execArgv: execArgvWithExperimentalLoaderOptions(),
+      }
+    );
+    child.on('close', (code: number | null) => {
+      if (code !== 0 && code !== null) process.exit(code);
+    });
+    return;
+  }
+
   process.env.NX_CLI_SET = 'true';
 
   try {
     performance.mark('init-local');
+
     monkeyPatchRequire();
 
     if (workspace.type !== 'nx' && shouldDelegateToAngularCLI()) {
@@ -229,3 +251,36 @@ function monkeyPatchRequire() {
     // do some side-effect of your own
   };
 }
+
+function shouldRestartWithExperimentalTsEsmLoader(): boolean {
+  // Already restarted with experimental loader
+  if (process.env.RESTARTED_WITH_EXPERIMENTAL_TS_ESM_LOADER === '1')
+    return false;
+  const nodeVersion = parseInt(process.versions.node.split('.')[0]);
+  // `--experimental-loader` is only supported in Nodejs >= 16 so there is no point restarting for older versions
+  if (nodeVersion < 16) return false;
+  // Node 20.6.0 adds `module.register`, otherwise we need to restart process with "--experimental-loader ts-node/esm".
+  return (
+    !require('node:module').register &&
+    moduleResolves('ts-node/esm') &&
+    moduleResolves('typescript')
+  );
+}
+
+function execArgvWithExperimentalLoaderOptions() {
+  return [
+    ...process.execArgv,
+    '--no-warnings',
+    '--experimental-loader',
+    'ts-node/esm',
+  ];
+}
+
+function moduleResolves(packageName: string) {
+  try {
+    require.resolve(packageName);
+    return true;
+  } catch {
+    return false;
+  }
+}
diff --git a/packages/nx/src/plugins/js/utils/register.ts b/packages/nx/src/plugins/js/utils/register.ts
index 0a8cfb764d..67109d6d2c 100644
--- a/packages/nx/src/plugins/js/utils/register.ts
+++ b/packages/nx/src/plugins/js/utils/register.ts
@@ -8,6 +8,8 @@ const swcNodeInstalled = packageIsInstalled('@swc-node/register');
 const tsNodeInstalled = packageIsInstalled('ts-node/register');
 let ts: typeof import('typescript');
 
+let isTsEsmLoaderRegistered = false;
+
 /**
  * Optionally, if swc-node and tsconfig-paths are available in the current workspace, apply the require
  * register hooks so that .ts files can be used for writing custom workspace projects.
@@ -43,6 +45,19 @@ export function registerTsProject(
     registerTranspiler(compilerOptions),
   ];
 
+  // Add ESM support for `.ts` files.
+  // NOTE: There is no cleanup function for this, as it's not possible to unregister the loader.
+  //       Based on limited testing, it doesn't seem to matter if we register it multiple times, but just in
+  //       case let's keep a flag to prevent it.
+  if (!isTsEsmLoaderRegistered) {
+    const module = require('node:module');
+    if (module.register && packageIsInstalled('ts-node/esm')) {
+      const url = require('node:url');
+      module.register(url.pathToFileURL(require.resolve('ts-node/esm')));
+    }
+    isTsEsmLoaderRegistered = true;
+  }
+
   return () => {
     for (const fn of cleanupFunctions) {
       fn();
diff --git a/packages/playwright/src/plugins/plugin.spec.ts b/packages/playwright/src/plugins/plugin.spec.ts
index 7353f5f86a..98739fb3b5 100644
--- a/packages/playwright/src/plugins/plugin.spec.ts
+++ b/packages/playwright/src/plugins/plugin.spec.ts
@@ -8,7 +8,7 @@ import { PlaywrightTestConfig } from '@playwright/test';
 // we overwrite the dynamic import function to use the regular syntax, which
 // jest does handle.
 import * as lcf from '../utils/load-config-file';
-(lcf as any).dynamicImport = (m) => import(m);
+(lcf as any).dynamicImport = (m) => require(m.split('?')[0]);
 
 describe('@nx/playwright/plugin', () => {
   let createNodesFunction = createNodes[1];
@@ -34,7 +34,7 @@ describe('@nx/playwright/plugin', () => {
   });
 
   afterEach(() => {
-    tempFs.cleanup();
+    // tempFs.cleanup();
     jest.resetModules();
   });
 
diff --git a/packages/playwright/src/utils/load-config-file.ts b/packages/playwright/src/utils/load-config-file.ts
index 37a02dd917..b9ecaca793 100644
--- a/packages/playwright/src/utils/load-config-file.ts
+++ b/packages/playwright/src/utils/load-config-file.ts
@@ -14,43 +14,25 @@ export async function loadPlaywrightConfig(
 ): Promise<PlaywrightTestConfig> {
   {
     let module: any;
+    const configPathWithTimestamp = `${configFilePath}?t=${Date.now()}`;
     if (extname(configFilePath) === '.ts') {
       const tsConfigPath = getRootTsConfigPath();
 
       if (tsConfigPath) {
         const unregisterTsProject = registerTsProject(tsConfigPath);
         try {
-          // Require's cache doesn't notice when the file is updated, and
-          // this function is ran during daemon operation. If the config file
-          // is updated, we need to read its new contents, so we need to clear the cache.
-          // We can't just delete the cache entry for the config file, because
-          // it might have imports that need to be updated as well.
-          clearRequireCache();
-          // ts-node doesn't support dynamic import, so we need to use require
-          module = require(configFilePath);
+          module = await dynamicImport(configPathWithTimestamp);
         } finally {
           unregisterTsProject();
         }
       } else {
-        module = await dynamicImport(configFilePath);
+        module = await dynamicImport(configPathWithTimestamp);
       }
     } else {
-      module = await dynamicImport(configFilePath);
+      module = await dynamicImport(configPathWithTimestamp);
     }
     return module.default ?? module;
   }
 }
 
 const packageInstallationDirectories = ['node_modules', '.yarn'];
-
-function clearRequireCache() {
-  Object.keys(require.cache).forEach((key: string) => {
-    // We don't want to clear the require cache of installed packages.
-    // Clearing them can cause some issues when running Nx without the daemon
-    // and may cause issues for other packages that use the module state
-    // in some to store cached information.
-    if (!packageInstallationDirectories.some((dir) => key.includes(dir))) {
-      delete require.cache[key];
-    }
-  });
-}