diff --git a/packages/nuxt/src/components/islandsTransform.ts b/packages/nuxt/src/components/islandsTransform.ts
index a76a54089a..150de76fa0 100644
--- a/packages/nuxt/src/components/islandsTransform.ts
+++ b/packages/nuxt/src/components/islandsTransform.ts
@@ -25,7 +25,7 @@ interface ComponentChunkOptions {
 }
 
 const SCRIPT_RE = /<script[^>]*>/g
-const HAS_SLOT_RE = /<slot[ /]/
+const HAS_SLOT_OR_CLIENT_RE = /(<slot[ /])|(nuxt-client)/
 const TEMPLATE_RE = /<template>([\s\S]*)<\/template>/
 const NUXTCLIENT_ATTR_RE = /\snuxt-client(="[^"]*")?/g
 
@@ -46,7 +46,7 @@ export const islandsTransform = createUnplugin((options: ServerOnlyComponentTran
       return islands.some(c => c.filePath === pathname)
     },
     async transform (code, id) {
-      if (!HAS_SLOT_RE.test(code)) { return }
+      if (!HAS_SLOT_OR_CLIENT_RE.test(code)) { return }
       const template = code.match(TEMPLATE_RE)
       if (!template) { return }
       const startingIndex = template.index || 0
diff --git a/packages/nuxt/test/islandTransform.test.ts b/packages/nuxt/test/islandTransform.test.ts
new file mode 100644
index 0000000000..75c80d3c60
--- /dev/null
+++ b/packages/nuxt/test/islandTransform.test.ts
@@ -0,0 +1,183 @@
+import { describe, expect, it, vi } from 'vitest'
+import type { Plugin } from 'vite'
+import type { Component } from '@nuxt/schema'
+import type { UnpluginOptions } from 'unplugin'
+import { islandsTransform } from '../src/components/islandsTransform'
+import { normalizeLineEndings } from './utils'
+
+const getComponents = () => [{
+  filePath: 'hello.server.vue',
+  mode: 'server',
+  pascalName: 'HelloWorld',
+  island: true,
+  kebabName: 'hello-world',
+  chunkName: 'components/hello-world',
+  export: 'default',
+  shortPath: '',
+  prefetch: false,
+  preload: false
+}] as Component[]
+
+const pluginVite = islandsTransform.raw({
+  getComponents,
+  rootDir: ''
+}, { framework: 'vite' }) as Plugin
+
+const pluginWebpack = islandsTransform.raw({
+  getComponents,
+  rootDir: ''
+}, { framework: 'webpack', webpack: { compiler: {} as any } })
+
+const viteTransform = async (source: string, id: string) => {
+  const result = await (pluginVite.transform! as Function).call({ error: null, warn: null } as any, source, id)
+  return typeof result === 'string' ? result : result?.code
+}
+
+const webpackTransform = async (source: string, id: string) => {
+  const result = await ((pluginWebpack as UnpluginOptions).transform! as Function).call({ error: null, warn: null } as any, source, id)
+  return typeof result === 'string' ? result : result?.code
+}
+
+describe('islandTransform - server and island components', () => {
+  describe('slots', () => {
+    it('expect slot transform to match inline snapshot', async () => {
+      const result = await viteTransform(`<template>
+      <div>
+        <slot />
+
+        <slot name="named" :some-data="someData" />
+      </div>
+      </template>
+      <script setup lang="ts">
+      const someData = 'some data'
+      
+      </script>`
+      , 'hello.server.vue')
+
+      expect(normalizeLineEndings(result)).toMatchInlineSnapshot(`
+        "<template>
+              <div>
+                <div style=\\"display: contents;\\" nuxt-ssr-slot-name=\\"default\\" />
+
+                <div style=\\"display: contents;\\" nuxt-ssr-slot-name=\\"named\\" :nuxt-ssr-slot-data=\\"JSON.stringify([{ some-data: someData }])\\"/>
+              </div>
+              </template>
+              <script setup lang=\\"ts\\">
+        import { vforToArray as __vforToArray } from '#app/components/utils'
+        import TeleportIfClient from '#app/components/TeleportIfClient'
+              const someData = 'some data'
+              
+              </script>"
+      `)
+    })
+
+    it('expect slot fallback transform to match inline snapshot', async () => {
+      const result = await viteTransform(`<template>
+      <div>
+        <slot :some-data="someData">
+          <div>fallback</div>
+        </slot>
+      </div>
+      </template>
+      <script setup lang="ts">
+      const someData = 'some data'
+      
+      </script>`
+      , 'hello.server.vue')
+
+      expect(normalizeLineEndings(result)).toMatchInlineSnapshot(`
+        "<template>
+              <div>
+                <div style=\\"display: contents;\\" nuxt-ssr-slot-name=\\"default\\" :nuxt-ssr-slot-data=\\"JSON.stringify([{ some-data: someData }])\\"><div nuxt-slot-fallback-start=\\"default\\"/><div  style=\\"display: contents;\\">
+                  <div>fallback</div>
+                </div><div nuxt-slot-fallback-end/></div>
+              </div>
+              </template>
+              <script setup lang=\\"ts\\">
+        import { vforToArray as __vforToArray } from '#app/components/utils'
+        import TeleportIfClient from '#app/components/TeleportIfClient'
+              const someData = 'some data'
+              
+              </script>"
+      `)
+    })
+  })
+
+  describe('nuxt-client', () => {
+    it('test transform with vite', async () => {
+      const result = await viteTransform(`<template>
+      <div>
+        <!-- should not be wrapped by TeleportIfClient -->
+        <HelloWorld />
+        <!-- should be wrapped by TeleportIfClient -->
+        <HelloWorld nuxt-client />
+      </div>
+    </template>
+    
+    <script setup lang="ts">
+    import HelloWorld from './HelloWorld.vue'
+    </script>
+    `, 'hello.server.vue')
+
+      expect(normalizeLineEndings(result)).toMatchInlineSnapshot(`
+        "<template>
+              <div>
+                <!-- should not be wrapped by TeleportIfClient -->
+                <HelloWorld />
+                <!-- should be wrapped by TeleportIfClient -->
+                <TeleportIfClient to=\\"HelloWorld-5tg8bjdS1w\\"  :nuxt-client=\\"true\\"><HelloWorld /></TeleportIfClient>
+              </div>
+            </template>
+            
+            <script setup lang=\\"ts\\">
+        import { vforToArray as __vforToArray } from '#app/components/utils'
+        import TeleportIfClient from '#app/components/TeleportIfClient'
+            import HelloWorld from './HelloWorld.vue'
+            </script>
+            "
+      `)
+    })
+
+    it('test transform with webpack', async () => {
+      const spyOnWarn = vi.spyOn(console, 'warn')
+      const result = await webpackTransform(`<template>
+      <div>
+        <!-- should not be wrapped by TeleportIfClient -->
+        <HelloWorld />
+    
+        <!-- should be not wrapped by TeleportIfClient for now -->
+        <HelloWorld nuxt-client />
+      </div>
+    </template>
+    
+    <script setup lang="ts">
+    import HelloWorld from './HelloWorld.vue'
+    
+    const someData = 'some data'
+    </script>
+    `, 'hello.server.vue')
+      expect(normalizeLineEndings(result)).toMatchInlineSnapshot(`
+        "<template>
+              <div>
+                <!-- should not be wrapped by TeleportIfClient -->
+                <HelloWorld />
+            
+                <!-- should be not wrapped by TeleportIfClient for now -->
+                <HelloWorld nuxt-client />
+              </div>
+            </template>
+            
+            <script setup lang=\\"ts\\">
+        import { vforToArray as __vforToArray } from '#app/components/utils'
+        import TeleportIfClient from '#app/components/TeleportIfClient'
+            import HelloWorld from './HelloWorld.vue'
+            
+            const someData = 'some data'
+            </script>
+            "
+      `)
+
+      expect(spyOnWarn).toHaveBeenCalledWith('nuxt-client attribute and client components within islands is only supported in vite mode. file: hello.server.vue')
+    })
+  })
+})