diff --git a/packages/schema/src/config/common.ts b/packages/schema/src/config/common.ts
index ad8e5f20b0..07e3af834d 100644
--- a/packages/schema/src/config/common.ts
+++ b/packages/schema/src/config/common.ts
@@ -175,7 +175,29 @@ export default defineUntypedSchema({
    * ```
    */
   buildDir: {
-    $resolve: async (val: string | undefined, get): Promise<string> => resolve(await get('rootDir') as string, val || '.nuxt'),
+    $resolve: async (val: string | undefined, get): Promise<string> => {
+      const rootDir = await get('rootDir') as string
+
+      if (val) {
+        return resolve(rootDir, val)
+      }
+
+      const defaultBuildDir = resolve(rootDir, '.nuxt')
+
+      const isDev = await get('dev') as boolean
+      if (isDev) {
+        return defaultBuildDir
+      }
+
+      // TODO: nuxi CLI should ensure .nuxt dir exists
+      if (!existsSync(defaultBuildDir)) {
+        // This is to ensure that types continue to work for CI builds
+        return defaultBuildDir
+      }
+
+      // TODO: handle build caching + using buildId in directory
+      return resolve(rootDir, 'node_modules/.cache/nuxt/builds', 'production')
+    },
   },
 
   /**
diff --git a/test/fixtures/basic-types/nuxt.config.ts b/test/fixtures/basic-types/nuxt.config.ts
index 2a573895d0..ffa2356e3a 100644
--- a/test/fixtures/basic-types/nuxt.config.ts
+++ b/test/fixtures/basic-types/nuxt.config.ts
@@ -9,7 +9,6 @@ export default defineNuxtConfig({
   future: {
     typescriptBundlerResolution: process.env.MODULE_RESOLUTION === 'bundler',
   },
-  buildDir: process.env.NITRO_BUILD_DIR,
   builder: process.env.TEST_BUILDER as 'webpack' | 'vite' ?? 'vite',
   theme: './extends/bar',
   extends: [
diff --git a/test/fixtures/basic/nuxt.config.ts b/test/fixtures/basic/nuxt.config.ts
index 340185b78a..767f3008b2 100644
--- a/test/fixtures/basic/nuxt.config.ts
+++ b/test/fixtures/basic/nuxt.config.ts
@@ -31,7 +31,6 @@ export default defineNuxtConfig({
       include: ['keepalive-in-config', 'not-keepalive-in-nuxtpage'],
     },
   },
-  buildDir: process.env.NITRO_BUILD_DIR,
   builder: process.env.TEST_BUILDER as 'webpack' | 'vite' ?? 'vite',
   appId: 'nuxt-app-basic',
   build: {
@@ -68,7 +67,6 @@ export default defineNuxtConfig({
       '/hydration/spa-redirection/**': { ssr: false },
       '/no-scripts': { experimentalNoScripts: true },
     },
-    output: { dir: process.env.NITRO_OUTPUT_DIR },
     prerender: {
       routes: [
         '/random/a',
diff --git a/test/hmr.test.ts b/test/hmr.test.ts
index d1f44edd46..1789c37ed9 100644
--- a/test/hmr.test.ts
+++ b/test/hmr.test.ts
@@ -23,8 +23,6 @@ if (process.env.TEST_ENV !== 'built' && !isWindows) {
     setupTimeout: (isWindows ? 360 : 120) * 1000,
     nuxtConfig: {
       builder: isWebpack ? 'webpack' : 'vite',
-      buildDir: process.env.NITRO_BUILD_DIR,
-      nitro: { output: { dir: process.env.NITRO_OUTPUT_DIR } },
     },
   })
 
diff --git a/test/suspense.test.ts b/test/suspense.test.ts
index 53d48c852f..859a934817 100644
--- a/test/suspense.test.ts
+++ b/test/suspense.test.ts
@@ -14,8 +14,6 @@ await setup({
   setupTimeout: (isWindows ? 360 : 120) * 1000,
   nuxtConfig: {
     builder: isWebpack ? 'webpack' : 'vite',
-    buildDir: process.env.NITRO_BUILD_DIR,
-    nitro: { output: { dir: process.env.NITRO_OUTPUT_DIR } },
   },
 })