diff --git a/packages/nuxi/src/commands/dev.ts b/packages/nuxi/src/commands/dev.ts
index a656a873c9..4ce09b36bc 100644
--- a/packages/nuxi/src/commands/dev.ts
+++ b/packages/nuxi/src/commands/dev.ts
@@ -46,14 +46,14 @@ export default defineNuxtCommand({
 
     const { loadNuxt, loadNuxtConfig, buildNuxt } = await loadKit(rootDir)
 
-    console.log('overrides', ...(process.env.NUXT_CONFIG_OVERRIDES ? JSON.parse(process.env.NUXT_CONFIG_OVERRIDES) : {}))
+    const overrides = {
+      dev: true,
+      // used for testing
+      ...(process.env.NUXT_CONFIG_OVERRIDES ? JSON.parse(process.env.NUXT_CONFIG_OVERRIDES) : {})
+    }
     const config = await loadNuxtConfig({
       cwd: rootDir,
-      overrides: {
-        dev: true,
-        // used for testing
-        ...(process.env.NUXT_CONFIG_OVERRIDES ? JSON.parse(process.env.NUXT_CONFIG_OVERRIDES) : {})
-      }
+      overrides
     })
 
     const listener = await listen(serverHandler, {
@@ -93,7 +93,7 @@ export default defineNuxtCommand({
           await distWatcher.close()
         }
 
-        currentNuxt = await loadNuxt({ rootDir, dev: true, ready: false })
+        currentNuxt = await loadNuxt({ rootDir, overrides, dev: true, ready: false })
 
         currentNuxt.hooks.hookOnce('restart', async (options) => {
           if (options?.hard && process.send) {
diff --git a/packages/test-utils/src/nuxt.ts b/packages/test-utils/src/nuxt.ts
index f6d267afd1..71cac5a147 100644
--- a/packages/test-utils/src/nuxt.ts
+++ b/packages/test-utils/src/nuxt.ts
@@ -16,7 +16,7 @@ const isNuxtApp = (dir: string) => {
   )
 }
 
-const resolveRootDir = () => {
+export const resolveRootDir = () => {
   const { options } = useTestContext()
 
   const dirs = [
@@ -37,20 +37,16 @@ const resolveRootDir = () => {
 export async function loadFixture () {
   const ctx = useTestContext()
 
-  ctx.options.rootDir = resolveRootDir()
-
-  if (!ctx.options.dev) {
-    const randomId = Math.random().toString(36).slice(2, 8)
-    const buildDir = resolve(ctx.options.rootDir, '.nuxt', randomId)
-    Object.assign(ctx.options.nuxtConfig, {
-      buildDir,
-      nitro: {
-        output: {
-          dir: resolve(buildDir, 'output')
-        }
+  const randomId = Math.random().toString(36).slice(2, 8)
+  const buildDir = resolve(ctx.options.rootDir, '.nuxt', randomId)
+  Object.assign(ctx.options.nuxtConfig, {
+    buildDir,
+    nitro: {
+      output: {
+        dir: resolve(buildDir, 'output')
       }
-    })
-  }
+    }
+  })
 
   ctx.nuxt = await kit.loadNuxt({
     cwd: ctx.options.rootDir,
diff --git a/packages/test-utils/src/server.ts b/packages/test-utils/src/server.ts
index 7857553232..05067c467d 100644
--- a/packages/test-utils/src/server.ts
+++ b/packages/test-utils/src/server.ts
@@ -15,7 +15,7 @@ export async function startDevServer () {
   const port = await getRandomPort()
   const nuxiCLI = await kit.resolvePath('nuxi/cli')
   ctx.serverProcess = execa(nuxiCLI, ['dev'], {
-    cwd: ctx.nuxt!.options.rootDir,
+    cwd: ctx.options.rootDir,
     env: {
       ...process.env,
       PORT: String(port),
@@ -24,6 +24,7 @@ export async function startDevServer () {
       NUXT_CONFIG_OVERRIDES: JSON.stringify(ctx.options.nuxtConfig)
     }
   })
+  console.log('boot dev server', ctx.options.rootDir, JSON.stringify(ctx.options.nuxtConfig))
   // wait until the server process displays the listening path
   ctx.url = await new Promise<string>(resolve => {
     // @ts-expect-error untyoed
diff --git a/packages/test-utils/src/setup/index.ts b/packages/test-utils/src/setup/index.ts
index 8d22436a33..5c63178883 100644
--- a/packages/test-utils/src/setup/index.ts
+++ b/packages/test-utils/src/setup/index.ts
@@ -1,5 +1,5 @@
-import { createTestContext, setTestContext } from '../context'
-import { loadFixture, buildFixture } from '../nuxt'
+import {createTestContext, setTestContext, useTestContext} from '../context'
+import {loadFixture, buildFixture, resolveRootDir} from '../nuxt'
 import {startDevServer, startServer, stopServer} from '../server'
 import { createBrowser } from '../browser'
 import type { TestHooks, TestOptions } from '../types'
@@ -37,13 +37,16 @@ export function createTest (options: Partial<TestOptions>): TestHooks {
   }
 
   const setup = async () => {
-    if (ctx.options.fixture) {
-      await loadFixture()
-    }
+    const ctx = useTestContext()
+    ctx.options.rootDir = resolveRootDir()
 
     if (ctx.options.dev) {
       await startDevServer()
     } else {
+      if (ctx.options.fixture) {
+        await loadFixture()
+      }
+
       if (ctx.options.build) {
         await buildFixture()
       }
diff --git a/test/dev.test.ts b/test/dev.test.ts
index 804f8eba25..57f6eb1b8d 100644
--- a/test/dev.test.ts
+++ b/test/dev.test.ts
@@ -4,25 +4,29 @@ import { setup, $fetch } from '@nuxt/test-utils'
 import { describe, it, expect } from 'vitest'
 
 await setup({
-  rootDir: fileURLToPath(new URL('./fixtures/basic', import.meta.url)),
+  rootDir: fileURLToPath(new URL('./fixtures/minimal', import.meta.url)),
   dev: true,
   nuxtConfig: {
     app: {
       baseURL: '/test'
+    },
+    runtimeConfig: {
+      public: {
+        foo: 'bar',
+      }
     }
   }
 })
 describe('dev tests', () => {
-  it('should just work', async () => {
-    expect(await $fetch('/')).toMatchInlineSnapshot(`
-      "<!DOCTYPE html>
-      <html >
-      <head><meta charset=\\"utf-8\\">
-      <meta name=\\"viewport\\" content=\\"width=1024, initial-scale=1\\">
-      <title>- Fixture</title><link rel=\\"preload\\" as=\\"style\\" href=\\"/_nuxt/assets/global.css\\"><link rel=\\"preload\\" as=\\"style\\" href=\\"/_nuxt/virtual.css\\"><link rel=\\"preload\\" as=\\"style\\" href=\\"/_nuxt/assets/plugin.css\\"><link rel=\\"modulepreload\\" as=\\"script\\" crossorigin href=\\"/_nuxt/home/harlan/forks/nuxt3/packages/nuxt/src/app/entry.ts\\"><link rel=\\"stylesheet\\" href=\\"/_nuxt/assets/global.css\\"><link rel=\\"stylesheet\\" href=\\"/_nuxt/virtual.css\\"><link rel=\\"stylesheet\\" href=\\"/_nuxt/assets/plugin.css\\"></head>
-      <body ><div id=\\"__nuxt\\"><div><div>Extended layout from foo</div><div><h1>[...slug].vue</h1><div>catchall at    &gt; Network:  http:</div><div>Middleware ran: true</div></div></div></div><script>window.__NUXT__=(function(a){return {data:{hey:{foo:\\"bar\\",baz:\\"qux\\"}},state:{},_errors:{},serverRendered:true,config:{public:{ids:[1,2,3],needsFallback:a,testConfig:123},app:{baseURL:\\"\\\\u002F\\",buildAssetsDir:\\"\\\\u002F_nuxt\\\\u002F\\",cdnURL:a}},prerenderedAt:1678028804677}}(\\"\\"))</script><script type=\\"module\\" src=\\"/_nuxt/@vite/client\\" crossorigin></script><script type=\\"module\\" src=\\"/_nuxt/home/harlan/forks/nuxt3/packages/nuxt/src/app/entry.ts\\" crossorigin></script></body>
-      </html>"
-    `)
+  it('config is overriden', async () => {
+    const html = await $fetch('/')
+    const expr = /window.__NUXT__=({.*})<\/script>/.exec(html)![1]
+    expect(expr).toMatchInlineSnapshot('"{data:{},state:{},_errors:{},serverRendered:true,config:{public:{foo:\\"bar\\"},app:{baseURL:\\"\\\\u002Ftest\\",buildAssetsDir:\\"\\\\u002F_nuxt\\\\u002F\\",cdnURL:\\"\\"}}}"')
+
+    // expr is a javascript object string, but not valid JSON, we need to turn it a real object
+    const obj = JSON.parse(expr.replace(/(\w+):/g, '"$1":'))
+    expect(obj.config.public.foo).toBe('bar')
+    expect(obj.config.app.baseURL).toBe('/test')
   })
 })