diff --git a/.babelrc.js b/.babelrc.js
index 9a6311a2c5..4a6d9dc764 100644
--- a/.babelrc.js
+++ b/.babelrc.js
@@ -46,7 +46,9 @@ module.exports = function(api) {
       "@babel/proposal-export-namespace-from",
       "@babel/proposal-numeric-separator",
       ["@babel/proposal-object-rest-spread", { useBuiltIns: true }],
-      convertESM ? "@babel/transform-modules-commonjs" : null,
+
+      // Explicitly use the lazy version of CommonJS modules.
+      convertESM ? ["@babel/transform-modules-commonjs", { lazy: true }] : null,
     ].filter(Boolean),
     overrides: [
       {
@@ -56,6 +58,15 @@ module.exports = function(api) {
           ["@babel/transform-for-of", { assumeArray: true }],
         ],
       },
+      {
+        test: "./packages/babel-register",
+        plugins: [
+          // Override the root options to disable lazy imports for babel-register
+          // because otherwise the require hook will try to lazy-import things
+          // leading to dependency cycles.
+          convertESM ? "@babel/transform-modules-commonjs" : null,
+        ].filter(Boolean),
+      },
     ],
   };
 
diff --git a/packages/babel-node/test/index.js b/packages/babel-node/test/index.js
index 4643475255..eea0fbc410 100644
--- a/packages/babel-node/test/index.js
+++ b/packages/babel-node/test/index.js
@@ -64,7 +64,7 @@ const assertTest = function(stdout, stderr, opts) {
       chai.expect(stderr).to.equal(expectStderr, "stderr didn't match");
     }
   } else if (stderr) {
-    throw new Error("stderr:\n" + stderr);
+    throw new Error("stderr:\n" + stderr + "\n\nstdout:\n" + stdout);
   }
 
   const expectStdout = opts.stdout.trim();
diff --git a/packages/babel-register/README.md b/packages/babel-register/README.md
index a72e2fb003..dc8a475ef5 100644
--- a/packages/babel-register/README.md
+++ b/packages/babel-register/README.md
@@ -100,3 +100,34 @@ Disable the cache.
 ```sh
 BABEL_DISABLE_CACHE=1 babel-node script.js
 ```
+
+## Compiling plugins and presets on the fly
+
+`@babel/register` uses Node's `require()` hook system to compile files
+on the fly when they are loaded. While this is quite helpful overall, it means
+that there can be confusing cases where code within a `require()` hook causes
+_more_ calls to `require`, causing a dependency cycle. In Babel's case for
+instance, this could mean that in the process of Babel trying to compile a
+user's file, Babel could end up trying to compile itself _as it is loading_.
+
+To avoid this problem, this module explicitly disallows re-entrant compilation,
+e.g. Babel's own compilation logic explicitly cannot trigger further compilation
+of any other files on the fly. The downside of this is that if you want to 
+define a plugin or preset that is itself live-compiled, the process is 
+complicated.
+
+The crux of it is that your own code needs to load the plugin/preset first. 
+Assuming the plugin/preset loads all of its dependencies up front, what you'll 
+want to do is:
+
+```
+require("@babel/register")({
+  // ...
+});
+
+require("./my-plugin");
+```
+
+Because it is your own code that triggered the load, and not the logic within
+`@babel/register` itself, this should successfully compile any plugin/preset
+that that loads synchronously.
diff --git a/packages/babel-register/src/node.js b/packages/babel-register/src/node.js
index 9dbdf5d659..c3db5104cb 100644
--- a/packages/babel-register/src/node.js
+++ b/packages/babel-register/src/node.js
@@ -55,37 +55,47 @@ function compile(code, filename) {
 
   if (env) cacheKey += `:${env}`;
 
-  if (cache) {
-    const cached = cache[cacheKey];
-    if (cached && cached.mtime === mtime(filename)) {
-      return cached.code;
+  let cached = cache && cache[cacheKey];
+
+  if (!cached || cached.mtime !== mtime(filename)) {
+    cached = babel.transform(code, {
+      ...opts,
+      sourceMaps: opts.sourceMaps === undefined ? "both" : opts.sourceMaps,
+      ast: false,
+    });
+
+    if (cache) {
+      cache[cacheKey] = cached;
+      cached.mtime = mtime(filename);
     }
   }
 
-  const result = babel.transform(code, {
-    ...opts,
-    sourceMaps: opts.sourceMaps === undefined ? "both" : opts.sourceMaps,
-    ast: false,
-  });
-
-  if (cache) {
-    cache[cacheKey] = result;
-    result.mtime = mtime(filename);
-  }
-
-  if (result.map) {
+  if (cached.map) {
     if (Object.keys(maps).length === 0) {
       installSourceMapSupport();
     }
-    maps[filename] = result.map;
+    maps[filename] = cached.map;
   }
 
-  return result.code;
+  return cached.code;
+}
+
+let compiling = false;
+
+function compileHook(code, filename) {
+  if (compiling) return code;
+
+  try {
+    compiling = true;
+    return compile(code, filename);
+  } finally {
+    compiling = false;
+  }
 }
 
 function hookExtensions(exts) {
   if (piratesRevert) piratesRevert();
-  piratesRevert = addHook(compile, { exts, ignoreNodeModules: false });
+  piratesRevert = addHook(compileHook, { exts, ignoreNodeModules: false });
 }
 
 export function revert() {