diff --git a/CHANGELOG.md b/CHANGELOG.md
index 79f9547..aeada58 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,6 +4,12 @@ All notable changes to this project will be documented in this file.
 
 The format is based on [Keep a Changelog](https://keepachangelog.com/en/1.0.0/), and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0.html).
 
+## [Unreleased]
+
+### Fixed
+
+- Watch local dependency source files in dev/watch mode — changes now trigger webpack rebuilds ([#70](https://github.com/studiometa/playground/pull/70), [0c08ef0](https://github.com/studiometa/playground/commit/0c08ef0))
+
 ## v0.3.7 - 2026.04.01
 
 ### Added
diff --git a/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.test.ts b/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.test.ts
index 65226fe..d4f74f7 100644
--- a/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.test.ts
+++ b/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.test.ts
@@ -100,6 +100,7 @@ describe('PlaygroundDependenciesPlugin', () => {
 
       // Trigger the compilation hook with a minimal fake compilation
       compilationCallback?.({
+        fileDependencies: new Set(),
         hooks: {
           processAssets: { tapAsync() {} },
         },
@@ -203,6 +204,7 @@ describe('PlaygroundDependenciesPlugin', () => {
 
       // Should not throw
       compilationCallback?.({
+        fileDependencies: new Set(),
         hooks: {
           processAssets: { tapAsync() {} },
         },
@@ -211,4 +213,78 @@ describe('PlaygroundDependenciesPlugin', () => {
       expect(p.importMap).toBeUndefined();
     });
   });
+
+  describe('file watching for local sources', () => {
+    function applyAndGetFileDependencies(
+      deps: ResolvedDependency[],
+      configDir: string,
+    ): Set<string> {
+      const p = new PlaygroundDependenciesPlugin(deps, configDir);
+      let compilationCallback: ((compilation: unknown) => void) | undefined;
+      const fakeCompiler = {
+        options: { output: { publicPath: 'auto' } },
+        webpack: { Compilation: { PROCESS_ASSETS_STAGE_ADDITIONAL: 0 } },
+        hooks: {
+          thisCompilation: {
+            tap(_name: string, cb: (compilation: unknown) => void) {
+              compilationCallback = cb;
+            },
+          },
+        },
+      };
+
+      p.apply(fakeCompiler as any);
+
+      const fileDependencies = new Set<string>();
+      compilationCallback?.({
+        fileDependencies,
+        hooks: {
+          processAssets: { tapAsync() {} },
+        },
+      });
+
+      return fileDependencies;
+    }
+
+    it('adds local source files to compilation fileDependencies', () => {
+      const deps: ResolvedDependency[] = [
+        {
+          specifier: 'my-lib',
+          importMapValue: '/static/deps/my-lib/index.js',
+          type: 'bundle',
+          source: './src/index.ts',
+        },
+      ];
+
+      const fileDeps = applyAndGetFileDependencies(deps, '/project');
+      expect(fileDeps.size).toBe(1);
+      expect([...fileDeps][0]).toContain('src/index.ts');
+    });
+
+    it('does not add esm-sh dependencies to fileDependencies', () => {
+      const deps: ResolvedDependency[] = [
+        {
+          specifier: 'deepmerge',
+          importMapValue: 'https://esm.sh/deepmerge',
+          type: 'esm-sh',
+        },
+      ];
+
+      const fileDeps = applyAndGetFileDependencies(deps, '/project');
+      expect(fileDeps.size).toBe(0);
+    });
+
+    it('does not add bundle deps without source to fileDependencies', () => {
+      const deps: ResolvedDependency[] = [
+        {
+          specifier: 'my-lib',
+          importMapValue: '/static/deps/my-lib/index.js',
+          type: 'bundle',
+        },
+      ];
+
+      const fileDeps = applyAndGetFileDependencies(deps, '/project');
+      expect(fileDeps.size).toBe(0);
+    });
+  });
 });
diff --git a/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.ts b/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.ts
index 7283cbc..20d15f3 100644
--- a/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.ts
+++ b/packages/playground/src/lib/plugins/PlaygroundDependenciesPlugin.ts
@@ -61,6 +61,18 @@ export class PlaygroundDependenciesPlugin {
         }
       }
 
+      // Watch local source files so webpack rebuilds when they change
+      for (const dep of this.dependencies) {
+        if (dep.type === 'bundle' && dep.source && this.isLocalSource(dep.source)) {
+          const resolvedPattern = resolve(this.configDir, dep.source);
+          const isGlob = dep.source.includes('*');
+          const sourceFiles = isGlob ? glob.globSync(resolvedPattern) : [resolvedPattern];
+          for (const file of sourceFiles) {
+            compilation.fileDependencies.add(file);
+          }
+        }
+      }
+
       compilation.hooks.processAssets.tapAsync(
         {
           name: pluginName,