diff --git a/packages/nuxt/src/app/components/client-only.mjs b/packages/nuxt/src/app/components/client-only.mjs
index f6a679710c..cedbda6763 100644
--- a/packages/nuxt/src/app/components/client-only.mjs
+++ b/packages/nuxt/src/app/components/client-only.mjs
@@ -1,4 +1,4 @@
-import { ref, onMounted, defineComponent, createElementBlock, h } from 'vue'
+import { ref, onMounted, defineComponent, createElementBlock, h, Fragment } from 'vue'
 
 export default defineComponent({
   name: 'ClientOnly',
@@ -19,18 +19,38 @@ export default defineComponent({
 })
 
 export function createClientOnly (component) {
+  const { setup, render: _render, template: _template } = component
+  if (_render) {
+    // override the component render (non <script setup> component)
+    component.render = (ctx, ...args) => {
+      return ctx.mounted$
+        ? h(Fragment, null, [h(_render(ctx, ...args), ctx.$attrs ?? ctx._.attrs)])
+        : h('div', ctx.$attrs ?? ctx._.attrs)
+    }
+  } else if (_template) {
+    // handle runtime-compiler template
+    component.template = `
+      <template v-if="mounted$">${_template}</template>
+      <template v-else><div></div></template>
+    `
+  }
   return defineComponent({
-    name: 'ClientOnlyWrapper',
-    inheritAttrs: false,
-    setup (_props, { attrs, slots }) {
-      const mounted = ref(false)
-      onMounted(() => { mounted.value = true })
-      return () => {
-        if (mounted.value) {
-          return h(component, attrs, slots)
-        }
-        return h('div', { class: attrs.class, style: attrs.style })
-      }
+    ...component,
+    setup (props, ctx) {
+      const mounted$ = ref(false)
+      onMounted(() => { mounted$.value = true })
+
+      return Promise.resolve(setup?.(props, ctx) || {})
+        .then((setupState) => {
+          return typeof setupState !== 'function'
+            ? { ...setupState, mounted$ }
+            : () => {
+                return mounted$.value
+                // use Fragment to avoid oldChildren is null issue
+                  ? h(Fragment, null, [h(setupState(props, ctx), ctx.attrs)])
+                  : h('div', ctx.attrs)
+              }
+        })
     }
   })
 }
diff --git a/test/basic.test.ts b/test/basic.test.ts
index 98ea1156a6..104330aa00 100644
--- a/test/basic.test.ts
+++ b/test/basic.test.ts
@@ -44,6 +44,9 @@ describe('pages', () => {
     expect(html).toContain('Composable | template: auto imported from ~/components/template.ts')
     // should import components
     expect(html).toContain('This is a custom component with a named export.')
+    // should apply attributes to client-only components
+    expect(html).toContain('<div style="color:red;" class="client-only"></div>')
+    // should register global components automatically
     expect(html).toContain('global component registered automatically')
     expect(html).toContain('global component via suffix')
 
diff --git a/test/fixtures/basic/components/ClientWrapped.client.vue b/test/fixtures/basic/components/ClientWrapped.client.vue
new file mode 100644
index 0000000000..74b1084bcb
--- /dev/null
+++ b/test/fixtures/basic/components/ClientWrapped.client.vue
@@ -0,0 +1,17 @@
+<script setup lang="ts">
+function exposedFunc () {
+  console.log('ok')
+}
+
+defineExpose({ exposedFunc })
+
+await new Promise(resolve => setTimeout(resolve, 300))
+
+onMounted(() => { console.log('mounted') })
+</script>
+
+<template>
+  <div>
+    client-only component
+  </div>
+</template>
diff --git a/test/fixtures/basic/pages/index.vue b/test/fixtures/basic/pages/index.vue
index d9c54e2254..092ca160c3 100644
--- a/test/fixtures/basic/pages/index.vue
+++ b/test/fixtures/basic/pages/index.vue
@@ -16,6 +16,7 @@
     <CustomComponent />
     <component :is="`test${'-'.toString()}global`" />
     <component :is="`with${'-'.toString()}suffix`" />
+    <ClientWrapped ref="clientRef" style="color: red;" class="client-only" />
   </div>
 </template>
 
@@ -31,4 +32,9 @@ useHead({
 
 const foo = useFoo()
 const bar = useBar()
+const clientRef = ref()
+
+onMounted(() => {
+  clientRef.value.exposedFunc()
+})
 </script>