diff --git a/.travis.yml b/.travis.yml
index d17c5e546..1db7df73b 100644
--- a/.travis.yml
+++ b/.travis.yml
@@ -41,7 +41,7 @@ env:
     - SBT_CMD="scripted source-dependencies/*1of3"
     - SBT_CMD="scripted source-dependencies/*2of3"
     - SBT_CMD="scripted source-dependencies/*3of3"
-    - SBT_CMD="scripted tests/*"
+    - SBT_CMD="scripted tests/* watch/*"
     - SBT_CMD="repoOverrideTest:scripted dependency-management/*"
 
 notifications:
diff --git a/build.sbt b/build.sbt
index fcc53da8a..41de4a9ee 100644
--- a/build.sbt
+++ b/build.sbt
@@ -507,7 +507,8 @@ lazy val commandProj = (project in file("main-command"))
     addSbtUtilLogging,
     addSbtCompilerInterface,
     addSbtCompilerClasspath,
-    addSbtLmCore
+    addSbtLmCore,
+    addSbtZinc
   )
 
 // The core macro project defines the main logic of the DSL, abstracted
diff --git a/main-command/src/main/scala/sbt/BasicCommandStrings.scala b/main-command/src/main/scala/sbt/BasicCommandStrings.scala
index 6eeb06ee5..7ec8c794c 100644
--- a/main-command/src/main/scala/sbt/BasicCommandStrings.scala
+++ b/main-command/src/main/scala/sbt/BasicCommandStrings.scala
@@ -231,4 +231,8 @@ $AliasCommand name=
   val ContinuousExecutePrefix = "~"
   def continuousDetail = "Executes the specified command whenever source files change."
   def continuousBriefHelp = (ContinuousExecutePrefix + " <command>", continuousDetail)
+  def FlushFileTreeRepository = "flushFileTreeRepository"
+  def FlushDetailed: String =
+    "Resets the global file repository in the event that the repository has become inconsistent " +
+      "with the file system."
 }
diff --git a/main-command/src/main/scala/sbt/BasicCommands.scala b/main-command/src/main/scala/sbt/BasicCommands.scala
index 2351b185b..0e8c51a41 100644
--- a/main-command/src/main/scala/sbt/BasicCommands.scala
+++ b/main-command/src/main/scala/sbt/BasicCommands.scala
@@ -50,7 +50,6 @@ object BasicCommands {
     call,
     early,
     exit,
-    continuous,
     history,
     oldshell,
     client,
@@ -254,6 +253,7 @@ object BasicCommands {
 
   def exit: Command = Command.command(TerminateAction, exitBrief, exitBrief)(_ exit true)
 
+  @deprecated("Replaced by BuiltInCommands.continuous", "1.3.0")
   def continuous: Command =
     Command(ContinuousExecutePrefix, continuousBriefHelp, continuousDetail)(otherCommandParser) {
       (s, arg) =>
diff --git a/main-command/src/main/scala/sbt/BasicKeys.scala b/main-command/src/main/scala/sbt/BasicKeys.scala
index ff466e9e8..66de24ce6 100644
--- a/main-command/src/main/scala/sbt/BasicKeys.scala
+++ b/main-command/src/main/scala/sbt/BasicKeys.scala
@@ -11,6 +11,7 @@ import java.io.File
 import sbt.internal.util.AttributeKey
 import sbt.internal.inc.classpath.ClassLoaderCache
 import sbt.internal.server.ServerHandler
+import sbt.io.FileTreeDataView
 import sbt.librarymanagement.ModuleID
 import sbt.util.Level
 
@@ -100,6 +101,11 @@ object BasicKeys {
     "List of template resolver infos.",
     1000
   )
+  private[sbt] val globalFileTreeView = AttributeKey[FileTreeDataView[StampedFile]](
+    "globalFileTreeView",
+    "provides a view into the file system that may or may not cache the tree in memory",
+    1000
+  )
 }
 
 case class TemplateResolverInfo(module: ModuleID, implementationClass: String)
diff --git a/main-command/src/main/scala/sbt/FileTreeViewConfig.scala b/main-command/src/main/scala/sbt/FileTreeViewConfig.scala
new file mode 100644
index 000000000..c1dd8fa6d
--- /dev/null
+++ b/main-command/src/main/scala/sbt/FileTreeViewConfig.scala
@@ -0,0 +1,172 @@
+/*
+ * sbt
+ * Copyright 2011 - 2018, Lightbend, Inc.
+ * Copyright 2008 - 2010, Mark Harrah
+ * Licensed under Apache License 2.0 (see LICENSE)
+ */
+
+package sbt
+import sbt.Watched.WatchSource
+import sbt.internal.io.{ HybridPollingFileTreeRepository, WatchServiceBackedObservable, WatchState }
+import sbt.io._
+import FileTreeDataView.{ Observable, Observer }
+import sbt.util.Logger
+
+import scala.concurrent.duration._
+
+/**
+ * Configuration for viewing and monitoring the file system.
+ */
+final class FileTreeViewConfig private (
+    val newDataView: () => FileTreeDataView[StampedFile],
+    val newMonitor: (
+        FileTreeDataView[StampedFile],
+        Seq[WatchSource],
+        Logger
+    ) => FileEventMonitor[StampedFile]
+)
+object FileTreeViewConfig {
+  private implicit class RepositoryOps(val repository: FileTreeRepository[StampedFile]) {
+    def register(sources: Seq[WatchSource]): Unit = sources foreach { s =>
+      repository.register(s.base.toPath, if (s.recursive) Integer.MAX_VALUE else 0)
+    }
+  }
+
+  /**
+   * Create a new FileTreeViewConfig. This factory takes a generic parameter, T, that is bounded
+   * by {{{sbt.io.FileTreeDataView[StampedFile]}}}. The reason for this is to ensure that a
+   * sbt.io.FileTreeDataView that is instantiated by [[FileTreeViewConfig.newDataView]] can be
+   * passed into [[FileTreeViewConfig.newMonitor]] without constraining the type of view to be
+   * {{{sbt.io.FileTreeDataView[StampedFile]}}}.
+   * @param newDataView create a new sbt.io.FileTreeDataView. This value may be cached in a global
+   *                    attribute
+   * @param newMonitor create a new sbt.io.FileEventMonitor using the sbt.io.FileTreeDataView
+   *                   created by newDataView
+   * @tparam T the subtype of sbt.io.FileTreeDataView that is returned by [[FileTreeViewConfig.newDataView]]
+   * @return a [[FileTreeViewConfig]] instance.
+   */
+  def apply[T <: FileTreeDataView[StampedFile]](
+      newDataView: () => T,
+      newMonitor: (T, Seq[WatchSource], Logger) => FileEventMonitor[StampedFile]
+  ): FileTreeViewConfig =
+    new FileTreeViewConfig(
+      newDataView,
+      (view: FileTreeDataView[StampedFile], sources: Seq[WatchSource], logger: Logger) =>
+        newMonitor(view.asInstanceOf[T], sources, logger)
+    )
+
+  /**
+   * Provides a [[FileTreeViewConfig]] with semantics as close as possible to sbt 1.2.0. This means
+   * that there is no file tree caching and the sbt.io.FileEventMonitor will use an
+   * sbt.io.WatchService for monitoring the file system.
+   * @param delay the maximum delay for which the background thread will poll the
+   *              sbt.io.WatchService for file system events
+   * @param antiEntropy the duration of the period after a path triggers a build for which it is
+   *                    quarantined from triggering another build
+   * @return a [[FileTreeViewConfig]] instance.
+   */
+  def sbt1_2_compat(
+      delay: FiniteDuration,
+      antiEntropy: FiniteDuration
+  ): FileTreeViewConfig =
+    FileTreeViewConfig(
+      () => FileTreeView.DEFAULT.asDataView(StampedFile.converter),
+      (_: FileTreeDataView[StampedFile], sources, logger) => {
+        val ioLogger: sbt.io.WatchLogger = msg => logger.debug(msg.toString)
+        FileEventMonitor.antiEntropy(
+          new WatchServiceBackedObservable(
+            WatchState.empty(Watched.createWatchService(), sources),
+            delay,
+            StampedFile.converter,
+            closeService = true,
+            ioLogger
+          ),
+          antiEntropy,
+          ioLogger
+        )
+      }
+    )
+
+  /**
+   * Provides a default [[FileTreeViewConfig]]. This view caches entries and solely relies on
+   * file system events from the operating system to update its internal representation of the
+   * file tree.
+   * @param antiEntropy the duration of the period after a path triggers a build for which it is
+   *                    quarantined from triggering another build
+   * @return a [[FileTreeViewConfig]] instance.
+   */
+  def default(antiEntropy: FiniteDuration): FileTreeViewConfig =
+    FileTreeViewConfig(
+      () => FileTreeRepository.default(StampedFile.converter),
+      (repository: FileTreeRepository[StampedFile], sources: Seq[WatchSource], logger: Logger) => {
+        repository.register(sources)
+        val copied = new Observable[StampedFile] {
+          override def addObserver(observer: Observer[StampedFile]): Int =
+            repository.addObserver(observer)
+          override def removeObserver(handle: Int): Unit = repository.removeObserver(handle)
+          override def close(): Unit = {} // Don't close the underlying observable
+        }
+        FileEventMonitor.antiEntropy(copied, antiEntropy, msg => logger.debug(msg.toString))
+      }
+    )
+
+  /**
+   * Provides a default [[FileTreeViewConfig]]. When the pollingSources argument is empty, it
+   * returns the same config as [[sbt.FileTreeViewConfig.default(antiEntropy:scala\.concurrent\.duration\.FiniteDuration)*]].
+   * Otherwise, it returns the same config as [[polling]].
+   * @param antiEntropy the duration of the period after a path triggers a build for which it is
+   *                    quarantined from triggering another build
+   * @param pollingInterval the frequency with which the sbt.io.FileEventMonitor polls the file
+   *                        system for the paths included in pollingSources
+   * @param pollingSources the sources that will not be cached in the sbt.io.FileTreeRepository and that
+   *                       will be periodically polled for changes during continuous builds.
+   * @return
+   */
+  def default(
+      antiEntropy: FiniteDuration,
+      pollingInterval: FiniteDuration,
+      pollingSources: Seq[WatchSource]
+  ): FileTreeViewConfig = {
+    if (pollingSources.isEmpty) default(antiEntropy)
+    else polling(antiEntropy, pollingInterval, pollingSources)
+  }
+
+  /**
+   * Provides a polling [[FileTreeViewConfig]]. Unlike the view returned by newDataView in
+   * [[sbt.FileTreeViewConfig.default(antiEntropy:scala\.concurrent\.duration\.FiniteDuration)*]],
+   * the view returned by newDataView will not cache any portion of the file system tree that is is
+   * covered by the pollingSources parameter. The monitor that is generated by newMonitor, will
+   * poll these directories for changes rather than relying on file system events from the
+   * operating system. Any paths that are registered with the view that are not included in the
+   * pollingSources will be cached and monitored using file system events from the operating system
+   * in the same way that they are in the default view.
+   *
+   * @param antiEntropy the duration of the period after a path triggers a build for which it is
+   *                    quarantined from triggering another build
+   * @param pollingInterval the frequency with which the FileEventMonitor polls the file system
+   *                        for the paths included in pollingSources
+   * @param pollingSources the sources that will not be cached in the sbt.io.FileTreeRepository and that
+   *                       will be periodically polled for changes during continuous builds.
+   * @return a [[FileTreeViewConfig]] instance.
+   */
+  def polling(
+      antiEntropy: FiniteDuration,
+      pollingInterval: FiniteDuration,
+      pollingSources: Seq[WatchSource],
+  ): FileTreeViewConfig = FileTreeViewConfig(
+    () => FileTreeRepository.hybrid(StampedFile.converter, pollingSources: _*),
+    (
+        repository: HybridPollingFileTreeRepository[StampedFile],
+        sources: Seq[WatchSource],
+        logger: Logger
+    ) => {
+      repository.register(sources)
+      FileEventMonitor
+        .antiEntropy(
+          repository.toPollingObservable(pollingInterval, sources, NullWatchLogger),
+          antiEntropy,
+          msg => logger.debug(msg.toString)
+        )
+    }
+  )
+}
diff --git a/main-command/src/main/scala/sbt/Watched.scala b/main-command/src/main/scala/sbt/Watched.scala
index 1331fd97d..0e9bc670e 100644
--- a/main-command/src/main/scala/sbt/Watched.scala
+++ b/main-command/src/main/scala/sbt/Watched.scala
@@ -7,20 +7,32 @@
 
 package sbt
 
-import java.io.File
+import java.io.{ File, InputStream }
 import java.nio.file.FileSystems
 
-import sbt.BasicCommandStrings.ClearOnFailure
-import sbt.State.FailureWall
+import sbt.BasicCommandStrings.{
+  ContinuousExecutePrefix,
+  FailureWall,
+  continuousBriefHelp,
+  continuousDetail
+}
+import sbt.BasicCommands.otherCommandParser
+import sbt.internal.LegacyWatched
+import sbt.internal.inc.Stamper
 import sbt.internal.io.{ EventMonitor, Source, WatchState }
-import sbt.internal.util.AttributeKey
 import sbt.internal.util.Types.const
+import sbt.internal.util.complete.DefaultParsers
+import sbt.internal.util.{ AttributeKey, JLine }
+import sbt.io.FileEventMonitor.Event
 import sbt.io._
+import sbt.util.{ Level, Logger }
+import xsbti.compile.analysis.Stamp
 
 import scala.annotation.tailrec
 import scala.concurrent.duration._
 import scala.util.Properties
 
+@deprecated("Watched is no longer used to implement continuous execution", "1.3.0")
 trait Watched {
 
   /** The files watched when an action is run with a proceeding ~ */
@@ -50,18 +62,102 @@ trait Watched {
 }
 
 object Watched {
-  val defaultWatchingMessage: WatchState => String = ws =>
-    s"${ws.count}. Waiting for source changes... (press enter to interrupt)"
 
+  /**
+   * This trait is used to communicate what the watch should do next at various points in time. It
+   * is heavily linked to a number of callbacks in [[WatchConfig]]. For example, when the
+   * sbt.io.FileEventMonitor created by [[FileTreeViewConfig.newMonitor]] detects a changed source
+   * file, then we expect [[WatchConfig.onWatchEvent]] to return [[Trigger]].
+   */
+  sealed trait Action
+
+  /**
+   * Action that indicates that the watch should stop.
+   */
+  case object CancelWatch extends Action
+
+  /**
+   * Action that indicates that an error has occurred. The watch will be terminated when this action
+   * is produced.
+   */
+  case object HandleError extends Action
+
+  /**
+   * Action that indicates that the watch should continue as though nothing happened. This may be
+   * because, for example, no user input was yet available in [[WatchConfig.handleInput]].
+   */
+  case object Ignore extends Action
+
+  /**
+   * Action that indicates that the watch should pause while the build is reloaded. This is used to
+   * automatically reload the project when the build files (e.g. build.sbt) are changed.
+   */
+  case object Reload extends Action
+
+  /**
+   * Action that indicates that the watch process should re-run the command.
+   */
+  case object Trigger extends Action
+
+  /**
+   * A user defined Action. It is not sealed so that the user can create custom instances. If any
+   * of the [[WatchConfig]] callbacks, e.g. [[WatchConfig.onWatchEvent]], return an instance of
+   * [[Custom]], the watch will terminate.
+   */
+  trait Custom extends Action
+
+  type WatchSource = Source
+  def terminateWatch(key: Int): Boolean = Watched.isEnter(key)
+
+  private def withCharBufferedStdIn[R](f: InputStream => R): R = JLine.usingTerminal { terminal =>
+    val in = terminal.wrapInIfNeeded(System.in)
+    try {
+      while (in.available > 0) in.read()
+      terminal.init()
+      f(in)
+    } finally {
+      while (in.available > 0) in.read()
+      terminal.reset()
+    }
+  }
+
+  private[sbt] final val handleInput: InputStream => Action = in => {
+    @tailrec
+    def scanInput(): Action = {
+      if (in.available > 0) {
+        in.read() match {
+          case key if isEnter(key) => CancelWatch
+          case key if isR(key)     => Trigger
+          case key if key >= 0     => scanInput()
+          case _                   => Ignore
+        }
+      } else {
+        Ignore
+      }
+    }
+    scanInput()
+  }
+  private def waitMessage(project: String): String =
+    s"Waiting for source changes$project... (press enter to interrupt or 'r' to re-run the command)"
+  val defaultStartWatch: Int => Option[String] = count => Some(s"$count. ${waitMessage("")}")
+  @deprecated("Use defaultStartWatch in conjunction with the watchStartMessage key", "1.3.0")
+  val defaultWatchingMessage: WatchState => String = ws => defaultStartWatch(ws.count).get
   def projectWatchingMessage(projectId: String): WatchState => String =
-    ws =>
-      s"${ws.count}. Waiting for source changes in project $projectId... (press enter to interrupt)"
+    ws => projectOnWatchMessage(projectId)(ws.count).get
+  def projectOnWatchMessage(project: String): Int => Option[String] =
+    count => Some(s"$count. ${waitMessage(s" in project $project")}")
 
+  val defaultOnTriggerMessage: Int => Option[String] = _ => None
+  @deprecated(
+    "Use defaultOnTriggerMessage in conjunction with the watchTriggeredMessage key",
+    "1.3.0"
+  )
   val defaultTriggeredMessage: WatchState => String = const("")
+  val clearOnTrigger: Int => Option[String] = _ => Some(clearScreen)
+  @deprecated("Use clearOnTrigger in conjunction with the watchTriggeredMessage key", "1.3.0")
   val clearWhenTriggered: WatchState => String = const(clearScreen)
   def clearScreen: String = "\u001b[2J\u001b[0;0H"
 
-  type WatchSource = Source
   object WatchSource {
 
     /**
@@ -85,67 +181,209 @@ object Watched {
 
   }
 
+  @deprecated("This method is not used and may be removed in a future version of sbt", "1.3.0")
   private[this] class AWatched extends Watched
 
+  @deprecated("This method is not used and may be removed in a future version of sbt", "1.3.0")
   def multi(base: Watched, paths: Seq[Watched]): Watched =
     new AWatched {
-      override def watchSources(s: State) = (base.watchSources(s) /: paths)(_ ++ _.watchSources(s))
+      override def watchSources(s: State): Seq[Watched.WatchSource] =
+        (base.watchSources(s) /: paths)(_ ++ _.watchSources(s))
       override def terminateWatch(key: Int): Boolean = base.terminateWatch(key)
-      override val pollInterval = (base +: paths).map(_.pollInterval).min
-      override val antiEntropy = (base +: paths).map(_.antiEntropy).min
-      override def watchingMessage(s: WatchState) = base.watchingMessage(s)
-      override def triggeredMessage(s: WatchState) = base.triggeredMessage(s)
+      override val pollInterval: FiniteDuration = (base +: paths).map(_.pollInterval).min
+      override val antiEntropy: FiniteDuration = (base +: paths).map(_.antiEntropy).min
+      override def watchingMessage(s: WatchState): String = base.watchingMessage(s)
+      override def triggeredMessage(s: WatchState): String = base.triggeredMessage(s)
     }
+  @deprecated("This method is not used and may be removed in a future version of sbt", "1.3.0")
   def empty: Watched = new AWatched
 
   val PollDelay: FiniteDuration = 500.milliseconds
   val AntiEntropy: FiniteDuration = 40.milliseconds
   def isEnter(key: Int): Boolean = key == 10 || key == 13
-  def printIfDefined(msg: String) = if (!msg.isEmpty) System.out.println(msg)
+  def isR(key: Int): Boolean = key == 82 || key == 114
+  def printIfDefined(msg: String): Unit = if (!msg.isEmpty) System.out.println(msg)
 
-  def executeContinuously(watched: Watched, s: State, next: String, repeat: String): State = {
-    @tailrec def shouldTerminate: Boolean =
-      (System.in.available > 0) && (watched.terminateWatch(System.in.read()) || shouldTerminate)
-    val log = s.log
-    val logger = new EventMonitor.Logger {
-      override def debug(msg: => Any): Unit = log.debug(msg.toString)
+  private type RunCommand = () => State
+  private type WatchSetup = (State, String) => (State, WatchConfig, RunCommand => State)
+
+  /**
+   * Provides the '~' continuous execution command.
+   * @param setup a function that provides a logger and a function from (() => State) => State.
+   * @return the '~' command.
+   */
+  def continuous(setup: WatchSetup): Command =
+    Command(ContinuousExecutePrefix, continuousBriefHelp, continuousDetail)(otherCommandParser) {
+      (state, command) =>
+        Watched.executeContinuously(state, command, setup)
     }
-    s get ContinuousEventMonitor match {
-      case None =>
-        // This is the first iteration, so run the task and create a new EventMonitor
-        (ClearOnFailure :: next :: FailureWall :: repeat :: s)
-          .put(
-            ContinuousEventMonitor,
-            EventMonitor(
-              WatchState.empty(watched.watchService(), watched.watchSources(s)),
-              watched.pollInterval,
-              watched.antiEntropy,
-              shouldTerminate,
-              logger
-            )
-          )
-      case Some(eventMonitor) =>
-        printIfDefined(watched watchingMessage eventMonitor.state)
-        val triggered = try eventMonitor.awaitEvent()
-        catch {
-          case e: Exception =>
-            log.error(
-              "Error occurred obtaining files to watch.  Terminating continuous execution..."
-            )
-            s.handleError(e)
-            false
-        }
-        if (triggered) {
-          printIfDefined(watched triggeredMessage eventMonitor.state)
-          ClearOnFailure :: next :: FailureWall :: repeat :: s
-        } else {
-          while (System.in.available() > 0) System.in.read()
-          eventMonitor.close()
-          s.remove(ContinuousEventMonitor)
-        }
+
+  /**
+   * Default handler to transform the state when the watch terminates. When the [[Watched.Action]] is
+   * [[Reload]], the handler will prepend the original command (prefixed by ~) to the
+   * [[State.remainingCommands]] and then invoke the [[StateOps.reload]] method. When the
+   * [[Watched.Action]] is [[HandleError]], the handler returns the result of [[StateOps.fail]]. Otherwise
+   * the original state is returned.
+   */
+  private[sbt] val onTermination: (Action, String, State) => State = (action, command, state) =>
+    action match {
+      case Reload =>
+        val continuousCommand = Exec(ContinuousExecutePrefix + command, None)
+        state.copy(remainingCommands = continuousCommand +: state.remainingCommands).reload
+      case HandleError => state.fail
+      case _           => state
+  }
+
+  /**
+   * Implements continuous execution. It works by first parsing the command and generating a task to
+   * run with each build. It can run multiple commands that are separated by ";" in the command
+   * input. If any of these commands are invalid, the watch will immediately exit.
+   * @param state the initial state
+   * @param command the command(s) to repeatedly apply
+   * @param setup function to generate a logger and a transformation of the resultant state. The
+   *              purpose of the transformation is to preserve the logging semantics that existed
+   *              in the legacy version of this function in which the task would be run through
+   *              MainLoop.processCommand, which is unavailable in the main-command project
+   * @return the initial state if all of the input commands are valid. Otherwise, returns the
+   *         initial state with the failure transformation.
+   */
+  private[sbt] def executeContinuously(
+      state: State,
+      command: String,
+      setup: WatchSetup,
+  ): State = withCharBufferedStdIn { in =>
+    val (s0, config, newState) = setup(state, command)
+    val failureCommandName = "SbtContinuousWatchOnFail"
+    val onFail = Command.command(failureCommandName)(identity)
+    val s = (FailureWall :: s0).copy(
+      onFailure = Some(Exec(failureCommandName, None)),
+      definedCommands = s0.definedCommands :+ onFail
+    )
+    val commands = command.split(";") match {
+      case Array("", rest @ _*) => rest
+      case Array(cmd)           => Seq(cmd)
+    }
+    val parser = Command.combine(s.definedCommands)(s)
+    val tasks = commands.foldLeft(Nil: Seq[Either[String, () => Either[Exception, Boolean]]]) {
+      (t, cmd) =>
+        t :+ (DefaultParsers.parse(cmd, parser) match {
+          case Right(task) =>
+            Right { () =>
+              try {
+                Right(newState(task).remainingCommands.forall(_.commandLine != failureCommandName))
+              } catch { case e: Exception => Left(e) }
+            }
+          case Left(_) => Left(cmd)
+        })
+    }
+    val (valid, invalid) = tasks.partition(_.isRight)
+    if (invalid.isEmpty) {
+      val task = () =>
+        valid.foldLeft(Right(true): Either[Exception, Boolean]) {
+          case (status, Right(t)) => if (status.getOrElse(true)) t() else status
+          case _                  => throw new IllegalStateException("Should be unreachable")
+      }
+      val terminationAction = watch(in, task, config)
+      config.onWatchTerminated(terminationAction, command, state)
+    } else {
+      config.logger.error(
+        s"Terminating watch due to invalid command(s): ${invalid.mkString("'", "', '", "'")}"
+      )
+      state.fail
     }
   }
 
+  private[sbt] def watch(
+      in: InputStream,
+      task: () => Either[Exception, Boolean],
+      config: WatchConfig
+  ): Action = {
+    val logger = config.logger
+    def info(msg: String): Unit = if (msg.nonEmpty) logger.info(msg)
+
+    @tailrec
+    def impl(count: Int): Action = {
+      @tailrec
+      def nextAction(): Action = {
+        config.handleInput(in) match {
+          case action @ (CancelWatch | HandleError | Reload | _: Custom) => action
+          case Trigger                                                   => Trigger
+          case _ =>
+            val events = config.fileEventMonitor.poll(10.millis)
+            val next = events match {
+              case Seq()                => (Ignore, None)
+              case Seq(head, tail @ _*) =>
+                /*
+                 * We traverse all of the events and find the one for which we give the highest
+                 * weight.
+                 * Custom > HandleError > CancelWatch > Reload > Trigger > Ignore
+                 */
+                tail.foldLeft((config.onWatchEvent(head), Some(head))) {
+                  case (current @ (_: Custom, _), _) => current
+                  case (current @ (action, _), event) =>
+                    config.onWatchEvent(event) match {
+                      case HandleError                          => (HandleError, Some(event))
+                      case CancelWatch if action != HandleError => (CancelWatch, Some(event))
+                      case Reload if action != HandleError && action != CancelWatch =>
+                        (Reload, Some(event))
+                      case Trigger if action == Ignore => (Trigger, Some(event))
+                      case _                           => current
+                    }
+                }
+            }
+            // Note that nextAction should never return Ignore.
+            next match {
+              case (action @ (HandleError | CancelWatch | _: Custom), Some(event)) =>
+                val cause =
+                  if (action == HandleError) "error"
+                  else if (action.isInstanceOf[Custom]) action.toString
+                  else "cancellation"
+                logger.debug(s"Stopping watch due to $cause from ${event.entry.typedPath.getPath}")
+                action
+              case (Trigger, Some(event)) =>
+                logger.debug(s"Triggered by ${event.entry.typedPath.getPath}")
+                config.triggeredMessage(event.entry.typedPath, count).foreach(info)
+                Trigger
+              case (Reload, Some(event)) =>
+                logger.info(s"Reload triggered by ${event.entry.typedPath.getPath}")
+                Reload
+              case _ =>
+                nextAction()
+            }
+        }
+      }
+      task() match {
+        case Right(status) =>
+          config.preWatch(count, status) match {
+            case Ignore =>
+              config.watchingMessage(count).foreach(info)
+              nextAction() match {
+                case action @ (CancelWatch | HandleError | Reload | _: Custom) => action
+                case _                                                         => impl(count + 1)
+              }
+            case Trigger                                                   => impl(count + 1)
+            case action @ (CancelWatch | HandleError | Reload | _: Custom) => action
+          }
+        case Left(e) =>
+          logger.error(s"Terminating watch due to Unexpected error: $e")
+          HandleError
+      }
+    }
+    try impl(count = 1)
+    finally config.fileEventMonitor.close()
+  }
+
+  @deprecated("Replaced by Watched.command", "1.3.0")
+  def executeContinuously(watched: Watched, s: State, next: String, repeat: String): State =
+    LegacyWatched.executeContinuously(watched, s, next, repeat)
+
+  private[sbt] object NullLogger extends Logger {
+    override def trace(t: => Throwable): Unit = {}
+    override def success(message: => String): Unit = {}
+    override def log(level: Level.Value, message: => String): Unit = {}
+  }
+
+  @deprecated("ContinuousEventMonitor attribute is not used by Watched.command", "1.3.0")
   val ContinuousEventMonitor =
     AttributeKey[EventMonitor](
       "watch event monitor",
@@ -178,3 +416,155 @@ object Watched {
     }
   }
 }
+
+/**
+ * Provides a number of configuration options for continuous execution.
+ */
+trait WatchConfig {
+
+  /**
+   * A logger.
+   * @return a logger
+   */
+  def logger: Logger
+
+  /**
+   * The sbt.io.FileEventMonitor that is used to monitor the file system.
+   *
+   * @return an sbt.io.FileEventMonitor instance.
+   */
+  def fileEventMonitor: FileEventMonitor[StampedFile]
+
+  /**
+   * A function that is periodically invoked to determine whether the watch should stop or
+   * trigger. Usually this will read from System.in to react to user input.
+   * @return an [[Watched.Action Action]] that will determine the next step in the watch.
+   */
+  def handleInput(inputStream: InputStream): Watched.Action
+
+  /**
+   * This is run before each watch iteration and if it returns true, the watch is terminated.
+   * @param count The current number of watch iterations.
+   * @param lastStatus true if the previous task execution completed successfully
+   * @return the Action to apply
+   */
+  def preWatch(count: Int, lastStatus: Boolean): Watched.Action
+
+  /**
+   * Callback that is invoked whenever a file system vent is detected. The next step of the watch
+   * is determined by the [[Watched.Action Action]] returned by the callback.
+   * @param event the detected sbt.io.FileEventMonitor.Event.
+   * @return the next [[Watched.Action Action]] to run.
+   */
+  def onWatchEvent(event: Event[StampedFile]): Watched.Action
+
+  /**
+   * Transforms the state after the watch terminates.
+   * @param action the [[Watched.Action Action]] that caused the build to terminate
+   * @param command the command that the watch was repeating
+   * @param state the initial state prior to the start of continuous execution
+   * @return the updated state.
+   */
+  def onWatchTerminated(action: Watched.Action, command: String, state: State): State
+
+  /**
+   * The optional message to log when a build is triggered.
+   * @param typedPath the path that triggered the build
+   * @param count the current iteration
+   * @return an optional log message.
+   */
+  def triggeredMessage(typedPath: TypedPath, count: Int): Option[String]
+
+  /**
+   * The optional message to log before each watch iteration.
+   * @param count the current iteration
+   * @return an optional log message.
+   */
+  def watchingMessage(count: Int): Option[String]
+}
+
+/**
+ * Provides a default implementation of [[WatchConfig]].
+ */
+object WatchConfig {
+
+  /**
+   *  Create an instance of [[WatchConfig]].
+   * @param logger logger for watch events
+   * @param fileEventMonitor the monitor for file system events.
+   * @param handleInput callback that is periodically invoked to check whether to continue or
+   *                    terminate the watch based on user input. It is also possible to, for
+   *                    example time out the watch using this callback.
+   * @param preWatch callback to invoke before waiting for updates from the sbt.io.FileEventMonitor.
+   *                 The input parameters are the current iteration count and whether or not
+   *                 the last invocation of the command was successful. Typical uses would be to
+   *                 terminate the watch after a fixed number of iterations or to terminate the
+   *                 watch if the command was unsuccessful.
+   * @param onWatchEvent callback that is invoked when
+   * @param onWatchTerminated callback that is invoked to update the state after the watch
+   *                          terminates.
+   * @param triggeredMessage optional message that will be logged when a new build is triggered.
+   *                         The input parameters are the sbt.io.TypedPath that triggered the new
+   *                         build and the current iteration count.
+   * @param watchingMessage optional message that is printed before each watch iteration begins.
+   *                        The input parameter is the current iteration count.
+   * @return a [[WatchConfig]] instance.
+   */
+  def default(
+      logger: Logger,
+      fileEventMonitor: FileEventMonitor[StampedFile],
+      handleInput: InputStream => Watched.Action,
+      preWatch: (Int, Boolean) => Watched.Action,
+      onWatchEvent: Event[StampedFile] => Watched.Action,
+      onWatchTerminated: (Watched.Action, String, State) => State,
+      triggeredMessage: (TypedPath, Int) => Option[String],
+      watchingMessage: Int => Option[String]
+  ): WatchConfig = {
+    val l = logger
+    val fem = fileEventMonitor
+    val hi = handleInput
+    val pw = preWatch
+    val owe = onWatchEvent
+    val owt = onWatchTerminated
+    val tm = triggeredMessage
+    val wm = watchingMessage
+    new WatchConfig {
+      override def logger: Logger = l
+      override def fileEventMonitor: FileEventMonitor[StampedFile] = fem
+      override def handleInput(inputStream: InputStream): Watched.Action = hi(inputStream)
+      override def preWatch(count: Int, lastResult: Boolean): Watched.Action =
+        pw(count, lastResult)
+      override def onWatchEvent(event: Event[StampedFile]): Watched.Action = owe(event)
+      override def onWatchTerminated(action: Watched.Action, command: String, state: State): State =
+        owt(action, command, state)
+      override def triggeredMessage(typedPath: TypedPath, count: Int): Option[String] =
+        tm(typedPath, count)
+      override def watchingMessage(count: Int): Option[String] = wm(count)
+    }
+  }
+}
+
+trait StampedFile extends File {
+  def stamp: Stamp
+}
+object StampedFile {
+  val sourceConverter: TypedPath => StampedFile =
+    new StampedFileImpl(_: TypedPath, forceLastModified = false)
+  val binaryConverter: TypedPath => StampedFile =
+    new StampedFileImpl(_: TypedPath, forceLastModified = true)
+  val converter: TypedPath => StampedFile = (tp: TypedPath) =>
+    tp.getPath.toString match {
+      case s if s.endsWith(".jar")   => binaryConverter(tp)
+      case s if s.endsWith(".class") => binaryConverter(tp)
+      case _                         => sourceConverter(tp)
+  }
+
+  private class StampedFileImpl(typedPath: TypedPath, forceLastModified: Boolean)
+      extends java.io.File(typedPath.getPath.toString)
+      with StampedFile {
+    override val stamp: Stamp =
+      if (forceLastModified || typedPath.isDirectory)
+        Stamper.forLastModified(typedPath.getPath.toFile)
+      else Stamper.forHash(typedPath.getPath.toFile)
+  }
+}
diff --git a/main-command/src/main/scala/sbt/internal/LegacyWatched.scala b/main-command/src/main/scala/sbt/internal/LegacyWatched.scala
new file mode 100644
index 000000000..624372efc
--- /dev/null
+++ b/main-command/src/main/scala/sbt/internal/LegacyWatched.scala
@@ -0,0 +1,64 @@
+/*
+ * sbt
+ * Copyright 2011 - 2018, Lightbend, Inc.
+ * Copyright 2008 - 2010, Mark Harrah
+ * Licensed under Apache License 2.0 (see LICENSE)
+ */
+
+package sbt.internal
+
+import sbt.BasicCommandStrings.{ ClearOnFailure, FailureWall }
+import sbt.internal.io.{ EventMonitor, WatchState }
+import sbt.{ State, Watched }
+
+import scala.annotation.tailrec
+import Watched.ContinuousEventMonitor
+
+import scala.util.control.NonFatal
+
+private[sbt] object LegacyWatched {
+  @deprecated("Replaced by Watched.command", "1.3.0")
+  def executeContinuously(watched: Watched, s: State, next: String, repeat: String): State = {
+    @tailrec def shouldTerminate: Boolean =
+      (System.in.available > 0) && (watched.terminateWatch(System.in.read()) || shouldTerminate)
+    val log = s.log
+    val logger = new EventMonitor.Logger {
+      override def debug(msg: => Any): Unit = log.debug(msg.toString)
+    }
+    s get ContinuousEventMonitor match {
+      case None =>
+        // This is the first iteration, so run the task and create a new EventMonitor
+        (ClearOnFailure :: next :: FailureWall :: repeat :: s)
+          .put(
+            ContinuousEventMonitor,
+            EventMonitor(
+              WatchState.empty(watched.watchService(), watched.watchSources(s)),
+              watched.pollInterval,
+              watched.antiEntropy,
+              shouldTerminate,
+              logger
+            )
+          )
+      case Some(eventMonitor) =>
+        Watched.printIfDefined(watched watchingMessage eventMonitor.state)
+        val triggered = try eventMonitor.awaitEvent()
+        catch {
+          case NonFatal(e) =>
+            log.error(
+              "Error occurred obtaining files to watch.  Terminating continuous execution..."
+            )
+            s.handleError(e)
+            false
+        }
+        if (triggered) {
+          Watched.printIfDefined(watched triggeredMessage eventMonitor.state)
+          ClearOnFailure :: next :: FailureWall :: repeat :: s
+        } else {
+          while (System.in.available() > 0) System.in.read()
+          eventMonitor.close()
+          s.remove(ContinuousEventMonitor)
+        }
+    }
+  }
+
+}
diff --git a/main-command/src/test/scala/sbt/WatchedSpec.scala b/main-command/src/test/scala/sbt/WatchedSpec.scala
new file mode 100644
index 000000000..70d386cab
--- /dev/null
+++ b/main-command/src/test/scala/sbt/WatchedSpec.scala
@@ -0,0 +1,136 @@
+/*
+ * sbt
+ * Copyright 2011 - 2018, Lightbend, Inc.
+ * Copyright 2008 - 2010, Mark Harrah
+ * Licensed under Apache License 2.0 (see LICENSE)
+ */
+
+package sbt
+
+import java.io.{ File, InputStream }
+import java.nio.file.Files
+import java.util.concurrent.atomic.AtomicBoolean
+
+import org.scalatest.{ FlatSpec, Matchers }
+import sbt.Watched._
+import sbt.WatchedSpec._
+import sbt.io.FileEventMonitor.Event
+import sbt.io.{ FileEventMonitor, IO, TypedPath }
+import sbt.util.Logger
+
+import scala.collection.mutable
+import scala.concurrent.duration._
+
+class WatchedSpec extends FlatSpec with Matchers {
+  object Defaults {
+    private val fileTreeViewConfig = FileTreeViewConfig.default(50.millis)
+    def config(
+        sources: Seq[WatchSource],
+        fileEventMonitor: Option[FileEventMonitor[StampedFile]] = None,
+        logger: Logger = NullLogger,
+        handleInput: InputStream => Action = _ => Ignore,
+        preWatch: (Int, Boolean) => Action = (_, _) => CancelWatch,
+        onWatchEvent: Event[StampedFile] => Action = _ => Ignore,
+        triggeredMessage: (TypedPath, Int) => Option[String] = (_, _) => None,
+        watchingMessage: Int => Option[String] = _ => None
+    ): WatchConfig = {
+      val monitor = fileEventMonitor.getOrElse(
+        fileTreeViewConfig.newMonitor(fileTreeViewConfig.newDataView(), sources, logger)
+      )
+      WatchConfig.default(
+        logger = logger,
+        monitor,
+        handleInput,
+        preWatch,
+        onWatchEvent,
+        (_, _, state) => state,
+        triggeredMessage,
+        watchingMessage
+      )
+    }
+  }
+  object NullInputStream extends InputStream {
+    override def available(): Int = 0
+    override def read(): Int = -1
+  }
+  "Watched.watch" should "stop" in IO.withTemporaryDirectory { dir =>
+    val config = Defaults.config(sources = Seq(WatchSource(dir.toRealPath)))
+    Watched.watch(NullInputStream, () => Right(true), config) shouldBe CancelWatch
+  }
+  it should "trigger" in IO.withTemporaryDirectory { dir =>
+    val triggered = new AtomicBoolean(false)
+    val config = Defaults.config(
+      sources = Seq(WatchSource(dir.toRealPath)),
+      preWatch = (count, _) => if (count == 2) CancelWatch else Ignore,
+      onWatchEvent = _ => { triggered.set(true); Trigger },
+      watchingMessage = _ => {
+        new File(dir, "file").createNewFile; None
+      }
+    )
+    Watched.watch(NullInputStream, () => Right(true), config) shouldBe CancelWatch
+    assert(triggered.get())
+  }
+  it should "filter events" in IO.withTemporaryDirectory { dir =>
+    val realDir = dir.toRealPath
+    val queue = new mutable.Queue[TypedPath]
+    val foo = realDir.toPath.resolve("foo")
+    val bar = realDir.toPath.resolve("bar")
+    val config = Defaults.config(
+      sources = Seq(WatchSource(realDir)),
+      preWatch = (count, _) => if (count == 2) CancelWatch else Ignore,
+      onWatchEvent = e => if (e.entry.typedPath.getPath == foo) Trigger else Ignore,
+      triggeredMessage = (tp, _) => { queue += tp; None },
+      watchingMessage = _ => { Files.createFile(bar); Thread.sleep(5); Files.createFile(foo); None }
+    )
+    Watched.watch(NullInputStream, () => Right(true), config) shouldBe CancelWatch
+    queue.toIndexedSeq.map(_.getPath) shouldBe Seq(foo)
+  }
+  it should "enforce anti-entropy" in IO.withTemporaryDirectory { dir =>
+    val realDir = dir.toRealPath
+    val queue = new mutable.Queue[TypedPath]
+    val foo = realDir.toPath.resolve("foo")
+    val bar = realDir.toPath.resolve("bar")
+    val config = Defaults.config(
+      sources = Seq(WatchSource(realDir)),
+      preWatch = (count, _) => if (count == 3) CancelWatch else Ignore,
+      onWatchEvent = _ => Trigger,
+      triggeredMessage = (tp, _) => { queue += tp; None },
+      watchingMessage = count => {
+        count match {
+          case 1 => Files.createFile(bar)
+          case 2 =>
+            bar.toFile.setLastModified(5000)
+            Files.createFile(foo)
+          case _ =>
+        }
+        None
+      }
+    )
+    Watched.watch(NullInputStream, () => Right(true), config) shouldBe CancelWatch
+    queue.toIndexedSeq.map(_.getPath) shouldBe Seq(bar, foo)
+  }
+  it should "halt on error" in IO.withTemporaryDirectory { dir =>
+    val halted = new AtomicBoolean(false)
+    val config = Defaults.config(
+      sources = Seq(WatchSource(dir.toRealPath)),
+      preWatch = (_, lastStatus) => if (lastStatus) Ignore else { halted.set(true); HandleError }
+    )
+    Watched.watch(NullInputStream, () => Right(false), config) shouldBe HandleError
+    assert(halted.get())
+  }
+  it should "reload" in IO.withTemporaryDirectory { dir =>
+    val config = Defaults.config(
+      sources = Seq(WatchSource(dir.toRealPath)),
+      preWatch = (_, _) => Ignore,
+      onWatchEvent = _ => Reload,
+      watchingMessage = _ => { new File(dir, "file").createNewFile(); None }
+    )
+    Watched.watch(NullInputStream, () => Right(true), config) shouldBe Reload
+  }
+}
+
+object WatchedSpec {
+  implicit class FileOps(val f: File) {
+    def toRealPath: File = f.toPath.toRealPath().toFile
+  }
+}
diff --git a/main/src/main/scala/sbt/Defaults.scala b/main/src/main/scala/sbt/Defaults.scala
index 8d721792d..3c54cadf2 100755
--- a/main/src/main/scala/sbt/Defaults.scala
+++ b/main/src/main/scala/sbt/Defaults.scala
@@ -40,16 +40,18 @@ import sbt.internal.util.Types._
 import sbt.io.syntax._
 import sbt.io.{
   AllPassFilter,
+  DirectoryFilter,
   FileFilter,
+  FileTreeView,
   GlobFilter,
+  Hash,
   HiddenFileFilter,
   IO,
   NameFilter,
   NothingFilter,
   Path,
   PathFinder,
-  DirectoryFilter,
-  Hash
+  TypedPath
 }, Path._
 import sbt.librarymanagement.Artifact.{ DocClassifier, SourceClassifier }
 import sbt.librarymanagement.Configurations.{
@@ -248,7 +250,9 @@ object Defaults extends BuildCommon {
       extraLoggers :== { _ =>
         Nil
       },
+      pollingDirectories :== Nil,
       watchSources :== Nil,
+      watchProjectSources :== Nil,
       skip :== false,
       taskTemporaryDirectory := { val dir = IO.createTemporaryDirectory; dir.deleteOnExit(); dir },
       onComplete := {
@@ -264,7 +268,21 @@ object Defaults extends BuildCommon {
       concurrentRestrictions := defaultRestrictions.value,
       parallelExecution :== true,
       pollInterval :== new FiniteDuration(500, TimeUnit.MILLISECONDS),
-      watchAntiEntropy :== new FiniteDuration(40, TimeUnit.MILLISECONDS),
+      watchTriggeredMessage := { (_, _) =>
+        None
+      },
+      watchStartMessage := Watched.defaultStartWatch,
+      fileTreeViewConfig := FileManagement.defaultFileTreeView.value,
+      fileTreeView := state.value
+        .get(BasicKeys.globalFileTreeView)
+        .getOrElse(FileTreeView.DEFAULT.asDataView(StampedFile.converter)),
+      externalHooks := {
+        val view = fileTreeView.value
+        compileOptions =>
+          Some(ExternalHooks(compileOptions, view))
+      },
+      watchAntiEntropy :== new FiniteDuration(500, TimeUnit.MILLISECONDS),
+      watchLogger := streams.value.log,
       watchService :== { () =>
         Watched.createWatchService()
       },
@@ -351,12 +369,14 @@ object Defaults extends BuildCommon {
           crossPaths.value
         )
     },
-    unmanagedSources := collectFiles(
-      unmanagedSourceDirectories,
-      includeFilter in unmanagedSources,
-      excludeFilter in unmanagedSources
-    ).value,
-    watchSources in ConfigGlobal ++= {
+    unmanagedSources := FileManagement
+      .collectFiles(
+        unmanagedSourceDirectories,
+        includeFilter in unmanagedSources,
+        excludeFilter in unmanagedSources
+      )
+      .value,
+    watchSources in ConfigGlobal := (watchSources in ConfigGlobal).value ++ {
       val baseDir = baseDirectory.value
       val bases = unmanagedSourceDirectories.value
       val include = (includeFilter in unmanagedSources).value
@@ -377,6 +397,13 @@ object Defaults extends BuildCommon {
         else Nil
       bases.map(b => new Source(b, include, exclude)) ++ baseSources
     },
+    watchProjectSources in ConfigGlobal := (watchProjectSources in ConfigGlobal).value ++ {
+      val baseDir = baseDirectory.value
+      Seq(
+        new Source(baseDir, "*.sbt", HiddenFileFilter, recursive = false),
+        new Source(baseDir / "project", "*.sbt" || "*.scala", HiddenFileFilter, recursive = true)
+      )
+    },
     managedSourceDirectories := Seq(sourceManaged.value),
     managedSources := generate(sourceGenerators).value,
     sourceGenerators :== Nil,
@@ -393,12 +420,14 @@ object Defaults extends BuildCommon {
     resourceDirectories := Classpaths
       .concatSettings(unmanagedResourceDirectories, managedResourceDirectories)
       .value,
-    unmanagedResources := collectFiles(
-      unmanagedResourceDirectories,
-      includeFilter in unmanagedResources,
-      excludeFilter in unmanagedResources
-    ).value,
-    watchSources in ConfigGlobal ++= {
+    unmanagedResources := FileManagement
+      .collectFiles(
+        unmanagedResourceDirectories,
+        includeFilter in unmanagedResources,
+        excludeFilter in unmanagedResources
+      )
+      .value,
+    watchSources in ConfigGlobal := (watchSources in ConfigGlobal).value ++ {
       val bases = unmanagedResourceDirectories.value
       val include = (includeFilter in unmanagedResources).value
       val exclude = (excludeFilter in unmanagedResources).value
@@ -411,19 +440,11 @@ object Defaults extends BuildCommon {
     managedResources := generate(resourceGenerators).value,
     resources := Classpaths.concat(managedResources, unmanagedResources).value
   )
+  def addBaseSources = FileManagement.appendBaseSources
   lazy val outputConfigPaths = Seq(
     classDirectory := crossTarget.value / (prefix(configuration.value.name) + "classes"),
     target in doc := crossTarget.value / (prefix(configuration.value.name) + "api")
   )
-  def addBaseSources = Seq(
-    unmanagedSources := {
-      val srcs = unmanagedSources.value
-      val f = (includeFilter in unmanagedSources).value
-      val excl = (excludeFilter in unmanagedSources).value
-      val baseDir = baseDirectory.value
-      if (sourcesInBase.value) (srcs +++ baseDir * (f -- excl)).get else srcs
-    }
-  )
 
   // This is included into JvmPlugin.projectSettings
   def compileBase = inTask(console)(compilersSetting :: Nil) ++ compileBaseGlobal ++ Seq(
@@ -599,17 +620,62 @@ object Defaults extends BuildCommon {
     clean := (Def.task { IO.delete(cleanFiles.value) } tag (Tags.Clean)).value,
     consoleProject := consoleProjectTask.value,
     watchTransitiveSources := watchTransitiveSourcesTask.value,
-    watchingMessage := Watched.projectWatchingMessage(thisProjectRef.value.project),
-    watch := watchSetting.value
+    watchProjectTransitiveSources := watchTransitiveSourcesTaskImpl(watchProjectSources).value,
+    watchOnEvent := {
+      val sources = watchTransitiveSources.value
+      val projectSources = watchProjectTransitiveSources.value
+      e =>
+        if (sources.exists(_.accept(e.entry.typedPath.getPath))) Watched.Trigger
+        else if (projectSources.exists(_.accept(e.entry.typedPath.getPath))) Watched.Reload
+        else Watched.Ignore
+    },
+    watchHandleInput := Watched.handleInput,
+    watchPreWatch := { (_, _) =>
+      Watched.Ignore
+    },
+    watchOnTermination := Watched.onTermination,
+    watchConfig := {
+      val sources = watchTransitiveSources.value ++ watchProjectTransitiveSources.value
+      val extracted = Project.extract(state.value)
+      val wm = extracted
+        .getOpt(watchingMessage)
+        .map(w => (count: Int) => Some(w(WatchState.empty(sources).withCount(count))))
+        .getOrElse(watchStartMessage.value)
+      val tm = extracted
+        .getOpt(triggeredMessage)
+        .map(
+          tm => (_: TypedPath, count: Int) => Some(tm(WatchState.empty(sources).withCount(count)))
+        )
+        .getOrElse(watchTriggeredMessage.value)
+      val logger = watchLogger.value
+      WatchConfig.default(
+        logger,
+        fileTreeViewConfig.value.newMonitor(fileTreeView.value, sources, logger),
+        watchHandleInput.value,
+        watchPreWatch.value,
+        watchOnEvent.value,
+        watchOnTermination.value,
+        tm,
+        wm
+      )
+    },
+    watchStartMessage := Watched.projectOnWatchMessage(thisProjectRef.value.project),
+    watch := watchSetting.value,
+    fileTreeViewConfig := FileManagement.defaultFileTreeView.value
   )
 
   def generate(generators: SettingKey[Seq[Task[Seq[File]]]]): Initialize[Task[Seq[File]]] =
     generators { _.join.map(_.flatten) }
 
-  def watchTransitiveSourcesTask: Initialize[Task[Seq[Source]]] = {
+  def watchTransitiveSourcesTask: Initialize[Task[Seq[Source]]] =
+    watchTransitiveSourcesTaskImpl(watchSources)
+
+  private def watchTransitiveSourcesTaskImpl(
+      key: TaskKey[Seq[Source]]
+  ): Initialize[Task[Seq[Source]]] = {
     import ScopeFilter.Make.{ inDependencies => inDeps, _ }
     val selectDeps = ScopeFilter(inAggregates(ThisProject) || inDeps(ThisProject))
-    val allWatched = (watchSources ?? Nil).all(selectDeps)
+    val allWatched = (key ?? Nil).all(selectDeps)
     Def.task { allWatched.value.flatten }
   }
 
@@ -621,6 +687,7 @@ object Defaults extends BuildCommon {
     Def.task { allUpdates.value.flatten ++ globalPluginUpdate.?.value }
   }
 
+  @deprecated("This is no longer used to implement continuous execution", "1.3.0")
   def watchSetting: Initialize[Watched] =
     Def.setting {
       val getService = watchService.value
@@ -1127,10 +1194,7 @@ object Defaults extends BuildCommon {
       dirs: ScopedTaskable[Seq[File]],
       filter: ScopedTaskable[FileFilter],
       excludes: ScopedTaskable[FileFilter]
-  ): Initialize[Task[Seq[File]]] =
-    Def.task {
-      dirs.toTask.value.descendantsExcept(filter.toTask.value, excludes.toTask.value).get
-    }
+  ): Initialize[Task[Seq[File]]] = FileManagement.collectFiles(dirs, filter, excludes)
   def artifactPathSetting(art: SettingKey[Artifact]): Initialize[File] =
     Def.setting {
       val f = artifactName.value
@@ -1587,12 +1651,22 @@ object Defaults extends BuildCommon {
           foldMappers(sourcePositionMappers.value)
         )
       },
-      compileInputs := Inputs.of(
-        compilers.value,
-        compileOptions.value,
-        compileIncSetup.value,
-        previousCompile.value
-      )
+      compileInputs := {
+        val options = compileOptions.value
+        val setup = compileIncSetup.value
+        Inputs.of(
+          compilers.value,
+          options,
+          externalHooks
+            .value(options)
+            .map { hooks =>
+              val newOptions = setup.incrementalCompilerOptions.withExternalHooks(hooks)
+              setup.withIncrementalCompilerOptions(newOptions)
+            }
+            .getOrElse(setup),
+          previousCompile.value
+        )
+      }
     )
   }
 
@@ -1702,7 +1776,7 @@ object Defaults extends BuildCommon {
 
   lazy val compileSettings: Seq[Setting[_]] =
     configSettings ++
-      (mainBgRunMainTask +: mainBgRunTask +: addBaseSources) ++
+      (mainBgRunMainTask +: mainBgRunTask +: FileManagement.appendBaseSources) ++
       Classpaths.addUnmanagedLibrary
 
   lazy val testSettings: Seq[Setting[_]] = configSettings ++ testTasks
diff --git a/main/src/main/scala/sbt/Keys.scala b/main/src/main/scala/sbt/Keys.scala
index b8e5ff33e..fcd817bc3 100644
--- a/main/src/main/scala/sbt/Keys.scala
+++ b/main/src/main/scala/sbt/Keys.scala
@@ -7,7 +7,7 @@
 
 package sbt
 
-import java.io.File
+import java.io.{ File, InputStream }
 import java.net.URL
 import scala.concurrent.duration.{ FiniteDuration, Duration }
 import Def.ScopedKey
@@ -20,6 +20,7 @@ import xsbti.compile.{
   CompileOrder,
   Compilers,
   CompileResult,
+  ExternalHooks,
   GlobalsCache,
   IncOptions,
   Inputs,
@@ -40,7 +41,8 @@ import sbt.internal.{
   SessionSettings,
   LogManager
 }
-import sbt.io.{ FileFilter, WatchService }
+import sbt.io.{ FileFilter, FileTreeDataView, TypedPath, WatchService }
+import sbt.io.FileEventMonitor.Event
 import sbt.internal.io.WatchState
 import sbt.internal.server.ServerHandler
 import sbt.internal.util.{ AttributeKey, SourcePosition }
@@ -141,15 +143,31 @@ object Keys {
   val serverHandlers = settingKey[Seq[ServerHandler]]("User-defined server handlers.")
 
   val analysis = AttributeKey[CompileAnalysis]("analysis", "Analysis of compilation, including dependencies and generated outputs.", DSetting)
+  @deprecated("This is no longer used for continuous execution", "1.3.0")
   val watch = SettingKey(BasicKeys.watch)
   val suppressSbtShellNotification = settingKey[Boolean]("""True to suppress the "Executing in batch mode.." message.""").withRank(CSetting)
-  val watchAntiEntropy = settingKey[FiniteDuration]("Duration for which the watch EventMonitor will ignore events for a file after that file has triggered a build.").withRank(BMinusSetting)
+  val fileTreeView = taskKey[FileTreeDataView[StampedFile]]("A view of the file system")
   val pollInterval = settingKey[FiniteDuration]("Interval between checks for modified sources by the continuous execution command.").withRank(BMinusSetting)
+  val pollingDirectories = settingKey[Seq[Watched.WatchSource]]("Directories that cannot be cached and must always be rescanned. Typically these will be NFS mounted or something similar.").withRank(DSetting)
+  val watchAntiEntropy = settingKey[FiniteDuration]("Duration for which the watch EventMonitor will ignore events for a file after that file has triggered a build.").withRank(BMinusSetting)
+  val watchConfig = taskKey[WatchConfig]("The configuration for continuous execution.").withRank(BMinusSetting)
+  val watchLogger = taskKey[Logger]("A logger that reports watch events.").withRank(DSetting)
+  val watchHandleInput = settingKey[InputStream => Watched.Action]("Function that is periodically invoked to determine if the continous build should be stopped or if a build should be triggered. It will usually read from stdin to respond to user commands.").withRank(BMinusSetting)
+  val watchOnEvent = taskKey[Event[StampedFile] => Watched.Action]("Determines how to handle a file event").withRank(BMinusSetting)
+  val watchOnTermination = taskKey[(Watched.Action, String, State) => State]("Transforms the input state after the continuous build completes.").withRank(BMinusSetting)
   val watchService = settingKey[() => WatchService]("Service to use to monitor file system changes.").withRank(BMinusSetting)
+  val watchProjectSources = taskKey[Seq[Watched.WatchSource]]("Defines the sources for the sbt meta project to watch to trigger a reload.").withRank(CSetting)
+  val watchProjectTransitiveSources = taskKey[Seq[Watched.WatchSource]]("Defines the sources in all projects for the sbt meta project to watch to trigger a reload.").withRank(CSetting)
+  val watchPreWatch = settingKey[(Int, Boolean) => Watched.Action]("Function that may terminate a continuous build based on the number of iterations and the last result").withRank(BMinusSetting)
   val watchSources = taskKey[Seq[Watched.WatchSource]]("Defines the sources in this project for continuous execution to watch for changes.").withRank(BMinusSetting)
+  val watchStartMessage = settingKey[Int => Option[String]]("The message to show when triggered execution waits for sources to change. The parameter is the current watch iteration count.").withRank(DSetting)
   val watchTransitiveSources = taskKey[Seq[Watched.WatchSource]]("Defines the sources in all projects for continuous execution to watch.").withRank(CSetting)
+  val watchTriggeredMessage = settingKey[(TypedPath, Int) => Option[String]]("The message to show before triggered execution executes an action after sources change. The parameters are the path that triggered the build and the current watch iteration count.").withRank(DSetting)
+  @deprecated("Use watchStartMessage instead", "1.3.0")
   val watchingMessage = settingKey[WatchState => String]("The message to show when triggered execution waits for sources to change.").withRank(DSetting)
+  @deprecated("Use watchTriggeredMessage instead", "1.3.0")
   val triggeredMessage = settingKey[WatchState => String]("The message to show before triggered execution executes an action after sources change.").withRank(DSetting)
+  val fileTreeViewConfig = taskKey[FileTreeViewConfig]("Configures how sbt will traverse and monitor the file system.").withRank(BMinusSetting)
 
   // Path Keys
   val baseDirectory = settingKey[File]("The base directory.  Depending on the scope, this is the base directory for the build, project, configuration, or task.").withRank(AMinusSetting)
@@ -244,6 +262,7 @@ object Keys {
   val copyResources = taskKey[Seq[(File, File)]]("Copies resources to the output directory.").withRank(AMinusTask)
   val aggregate = settingKey[Boolean]("Configures task aggregation.").withRank(BMinusSetting)
   val sourcePositionMappers = taskKey[Seq[xsbti.Position => Option[xsbti.Position]]]("Maps positions in generated source files to the original source it was generated from").withRank(DTask)
+  val externalHooks = taskKey[CompileOptions => Option[ExternalHooks]]("External hooks for modifying the internal behavior of the incremental compiler.").withRank(BMinusSetting)
 
   // package keys
   val packageBin = taskKey[File]("Produces a main artifact, such as a binary jar.").withRank(ATask)
diff --git a/main/src/main/scala/sbt/Main.scala b/main/src/main/scala/sbt/Main.scala
index ed669cb75..358ee2c62 100644
--- a/main/src/main/scala/sbt/Main.scala
+++ b/main/src/main/scala/sbt/Main.scala
@@ -49,7 +49,7 @@ import Project.LoadAction
 import xsbti.compile.CompilerCache
 
 import scala.annotation.tailrec
-import sbt.io.IO
+import sbt.io.{ FileTreeDataView, IO }
 import sbt.io.syntax._
 import java.io.{ File, IOException }
 import java.net.URI
@@ -241,7 +241,9 @@ object BuiltinCommands {
       export,
       boot,
       initialize,
-      act
+      act,
+      continuous,
+      flushFileTreeRepository
     ) ++ allBasicCommands
 
   def DefaultBootCommands: Seq[String] =
@@ -446,6 +448,14 @@ object BuiltinCommands {
       s
   }
 
+  def continuous: Command = Watched.continuous { (state: State, command: String) =>
+    val extracted = Project.extract(state)
+    val (s, watchConfig) = extracted.runTask(Keys.watchConfig, state)
+    val updateState =
+      (runCommand: () => State) => MainLoop.processCommand(Exec(command, None), s, runCommand)
+    (s, watchConfig, updateState)
+  }
+
   private[this] def loadedEval(s: State, arg: String): Unit = {
     val extracted = Project extract s
     import extracted._
@@ -849,7 +859,7 @@ object BuiltinCommands {
 
     val session = Load.initialSession(structure, eval, s0)
     SessionSettings.checkSession(session, s)
-    Project.setProject(session, structure, s)
+    registerGlobalFileRepository(Project.setProject(session, structure, s))
   }
 
   def registerCompilerCache(s: State): State = {
@@ -867,6 +877,27 @@ object BuiltinCommands {
       }
     s.put(Keys.stateCompilerCache, cache)
   }
+  def registerGlobalFileRepository(s: State): State = {
+    val extracted = Project.extract(s)
+    try {
+      val (_, config: FileTreeViewConfig) = extracted.runTask(Keys.fileTreeViewConfig, s)
+      val view: FileTreeDataView[StampedFile] = config.newDataView()
+      val newState = s.addExitHook {
+        view.close()
+        s.attributes.remove(BasicKeys.globalFileTreeView)
+        ()
+      }
+      newState.get(BasicKeys.globalFileTreeView).foreach(_.close())
+      newState.put(BasicKeys.globalFileTreeView, view)
+    } catch {
+      case NonFatal(_) => s
+    }
+  }
+
+  def flushFileTreeRepository: Command = {
+    val help = Help.more(FlushFileTreeRepository, FlushDetailed)
+    Command.command(FlushFileTreeRepository, help)(registerGlobalFileRepository)
+  }
 
   def shell: Command = Command.command(Shell, Help.more(Shell, ShellDetailed)) { s0 =>
     import sbt.internal.{ ConsolePromptEvent, ConsoleUnpromptEvent }
diff --git a/main/src/main/scala/sbt/MainLoop.scala b/main/src/main/scala/sbt/MainLoop.scala
index c9f4d171c..eb32d333f 100644
--- a/main/src/main/scala/sbt/MainLoop.scala
+++ b/main/src/main/scala/sbt/MainLoop.scala
@@ -144,13 +144,20 @@ object MainLoop {
     }
 
   /** This is the main function State transfer function of the sbt command processing. */
-  def processCommand(exec: Exec, state: State): State = {
+  def processCommand(exec: Exec, state: State): State =
+    processCommand(exec, state, () => Command.process(exec.commandLine, state))
+
+  private[sbt] def processCommand(
+      exec: Exec,
+      state: State,
+      runCommand: () => State
+  ): State = {
     val channelName = exec.source map (_.channelName)
     StandardMain.exchange publishEventMessage
       ExecStatusEvent("Processing", channelName, exec.execId, Vector())
 
     try {
-      val newState = Command.process(exec.commandLine, state)
+      val newState = runCommand()
       val doneEvent = ExecStatusEvent(
         "Done",
         channelName,
diff --git a/main/src/main/scala/sbt/internal/ExternalHooks.scala b/main/src/main/scala/sbt/internal/ExternalHooks.scala
new file mode 100644
index 000000000..08d7e0538
--- /dev/null
+++ b/main/src/main/scala/sbt/internal/ExternalHooks.scala
@@ -0,0 +1,125 @@
+/*
+ * sbt
+ * Copyright 2011 - 2018, Lightbend, Inc.
+ * Copyright 2008 - 2010, Mark Harrah
+ * Licensed under Apache License 2.0 (see LICENSE)
+ */
+
+package sbt.internal
+import java.nio.file.Paths
+import java.util.Optional
+
+import sbt.StampedFile
+import sbt.internal.inc.ExternalLookup
+import sbt.io.syntax.File
+import sbt.io.{ FileTreeRepository, FileTreeDataView, TypedPath }
+import xsbti.compile._
+import xsbti.compile.analysis.Stamp
+
+import scala.collection.mutable
+
+private[sbt] object ExternalHooks {
+  private val javaHome = Option(System.getProperty("java.home")).map(Paths.get(_))
+  def apply(options: CompileOptions, view: FileTreeDataView[StampedFile]): DefaultExternalHooks = {
+    import scala.collection.JavaConverters._
+    val sources = options.sources()
+    val cachedSources = new java.util.HashMap[File, Stamp]
+    val converter: File => Stamp = f => StampedFile.sourceConverter(TypedPath(f.toPath)).stamp
+    sources.foreach {
+      case sf: StampedFile => cachedSources.put(sf, sf.stamp)
+      case f: File         => cachedSources.put(f, converter(f))
+    }
+    view match {
+      case r: FileTreeRepository[StampedFile] =>
+        r.register(options.classesDirectory.toPath, Integer.MAX_VALUE)
+        options.classpath.foreach { f =>
+          r.register(f.toPath, Integer.MAX_VALUE)
+        }
+      case _ =>
+    }
+    val allBinaries = new java.util.HashMap[File, Stamp]
+    options.classpath.foreach { f =>
+      view.listEntries(f.toPath, Integer.MAX_VALUE, _ => true) foreach { e =>
+        e.value match {
+          case Right(value) => allBinaries.put(e.typedPath.getPath.toFile, value.stamp)
+          case _            =>
+        }
+      }
+      // This gives us the entry for the path itself, which is necessary if the path is a jar file
+      // rather than a directory.
+      view.listEntries(f.toPath, -1, _ => true) foreach { e =>
+        e.value match {
+          case Right(value) => allBinaries.put(e.typedPath.getPath.toFile, value.stamp)
+          case _            =>
+        }
+      }
+    }
+
+    val lookup = new ExternalLookup {
+      override def changedSources(previousAnalysis: CompileAnalysis): Option[Changes[File]] = Some {
+        new Changes[File] {
+          val getAdded: java.util.Set[File] = new java.util.HashSet[File]
+          val getRemoved: java.util.Set[File] = new java.util.HashSet[File]
+          val getChanged: java.util.Set[File] = new java.util.HashSet[File]
+          val getUnmodified: java.util.Set[File] = new java.util.HashSet[File]
+          override def isEmpty: java.lang.Boolean =
+            getAdded.isEmpty && getRemoved.isEmpty && getChanged.isEmpty
+          val prevSources: mutable.Map[File, Stamp] =
+            previousAnalysis.readStamps().getAllSourceStamps.asScala
+          prevSources.foreach {
+            case (file: File, s: Stamp) =>
+              cachedSources.get(file) match {
+                case null =>
+                  getRemoved.add(file)
+                case stamp =>
+                  if ((stamp.getHash.orElse("") == s.getHash.orElse("")) && (stamp.getLastModified
+                        .orElse(-1L) == s.getLastModified.orElse(-1L))) {
+                    getUnmodified.add(file)
+                  } else {
+                    getChanged.add(file)
+                  }
+              }
+          }
+          sources.foreach(file => if (!prevSources.contains(file)) getAdded.add(file))
+        }
+      }
+
+      override def shouldDoIncrementalCompilation(
+          set: Set[String],
+          compileAnalysis: CompileAnalysis
+      ): Boolean = true
+
+      // This could use the cache as well, but it would complicate the cache implementation.
+      override def hashClasspath(files: Array[File]): Optional[Array[FileHash]] =
+        Optional.empty[Array[FileHash]]
+
+      override def changedBinaries(previousAnalysis: CompileAnalysis): Option[Set[File]] = {
+        Some(previousAnalysis.readStamps.getAllBinaryStamps.asScala.flatMap {
+          case (file, stamp) =>
+            allBinaries.get(file) match {
+              case null =>
+                javaHome match {
+                  case Some(h) if file.toPath.startsWith(h) => None
+                  case _                                    => Some(file)
+                }
+              case cachedStamp if stamp == cachedStamp => None
+              case _                                   => Some(file)
+            }
+        }.toSet)
+      }
+
+      override def removedProducts(previousAnalysis: CompileAnalysis): Option[Set[File]] = {
+        Some(previousAnalysis.readStamps.getAllProductStamps.asScala.flatMap {
+          case (file, s) =>
+            allBinaries get file match {
+              case null => Some(file)
+              case stamp if stamp.getLastModified.orElse(0L) != s.getLastModified.orElse(0L) =>
+                Some(file)
+              case _ => None
+            }
+        }.toSet)
+      }
+    }
+    new DefaultExternalHooks(Optional.of(lookup), Optional.empty[ClassFileManager])
+  }
+}
diff --git a/main/src/main/scala/sbt/internal/FileManagement.scala b/main/src/main/scala/sbt/internal/FileManagement.scala
new file mode 100644
index 000000000..15a17461a
--- /dev/null
+++ b/main/src/main/scala/sbt/internal/FileManagement.scala
@@ -0,0 +1,98 @@
+/*
+ * sbt
+ * Copyright 2011 - 2018, Lightbend, Inc.
+ * Copyright 2008 - 2010, Mark Harrah
+ * Licensed under Apache License 2.0 (see LICENSE)
+ */
+
+package sbt.internal
+
+import java.io.IOException
+import java.nio.file.Path
+
+import sbt.Keys._
+import sbt.io.FileTreeDataView.Entry
+import sbt.io.syntax.File
+import sbt.io.{ FileFilter, FileTreeDataView, FileTreeRepository }
+import sbt._
+import BasicCommandStrings.ContinuousExecutePrefix
+
+private[sbt] object FileManagement {
+  private[sbt] def defaultFileTreeView: Def.Initialize[Task[FileTreeViewConfig]] = Def.task {
+    val remaining = state.value.remainingCommands.map(_.commandLine.trim)
+    // If the session is interactive or if the commands include a continuous build, then use
+    // the default configuration. Otherwise, use the sbt1_2_compat config, which does not cache
+    // anything, which makes it less likely to cause issues with CI.
+    val interactive = remaining.contains("shell") && !remaining.contains("setUpScripted")
+    val continuous = remaining.exists(_.startsWith(ContinuousExecutePrefix))
+    if (interactive || continuous) {
+      FileTreeViewConfig
+        .default(watchAntiEntropy.value, pollInterval.value, pollingDirectories.value)
+    } else FileTreeViewConfig.sbt1_2_compat(pollInterval.value, watchAntiEntropy.value)
+  }
+  private[sbt] implicit class FileTreeDataViewOps[+T](val fileTreeDataView: FileTreeDataView[T]) {
+    def register(path: Path, maxDepth: Int): Either[IOException, Boolean] = {
+      fileTreeDataView match {
+        case r: FileTreeRepository[T] => r.register(path, maxDepth)
+        case _                        => Right(false)
+      }
+    }
+  }
+
+  private[sbt] def collectFiles(
+      dirs: ScopedTaskable[Seq[File]],
+      filter: ScopedTaskable[FileFilter],
+      excludes: ScopedTaskable[FileFilter]
+  ): Def.Initialize[Task[Seq[File]]] =
+    Def.task {
+      val sourceDirs = dirs.toTask.value
+      val view = fileTreeView.value
+      val include = filter.toTask.value
+      val ex = excludes.toTask.value
+      val sourceFilter: Entry[StampedFile] => Boolean = (entry: Entry[StampedFile]) => {
+        entry.value match {
+          case Right(sf) => include.accept(sf) && !ex.accept(sf)
+          case _         => false
+        }
+      }
+      sourceDirs.flatMap { dir =>
+        view.register(dir.toPath, maxDepth = Integer.MAX_VALUE)
+        view
+          .listEntries(dir.toPath, maxDepth = Integer.MAX_VALUE, sourceFilter)
+          .map(e => e.value.getOrElse(e.typedPath.getPath.toFile))
+      }
+    }
+
+  private[sbt] def appendBaseSources: Seq[Def.Setting[Task[Seq[File]]]] = Seq(
+    unmanagedSources := {
+      val sources = unmanagedSources.value
+      val f = (includeFilter in unmanagedSources).value
+      val excl = (excludeFilter in unmanagedSources).value
+      val baseDir = baseDirectory.value
+      val view = fileTreeView.value
+      if (sourcesInBase.value) {
+        view.register(baseDir.toPath, maxDepth = 0)
+        sources ++
+          view
+            .listEntries(
+              baseDir.toPath,
+              maxDepth = 0,
+              e => {
+                val tp = e.typedPath
+                /*
+                 * The TypedPath has the isDirectory and isFile properties embedded. By overriding
+                 * these methods in java.io.File, FileFilters may be applied without needing to
+                 * stat the file (which is expensive) for isDirectory and isFile checks.
+                 */
+                val file = new java.io.File(tp.getPath.toString) {
+                  override def isDirectory: Boolean = tp.isDirectory
+                  override def isFile: Boolean = tp.isFile
+                }
+                f.accept(file) && !excl.accept(file)
+              }
+            )
+            .flatMap(_.value.toOption)
+      } else sources
+    }
+  )
+}
diff --git a/main/src/main/scala/sbt/internal/Load.scala b/main/src/main/scala/sbt/internal/Load.scala
index afa0125f4..cf62b1fc6 100755
--- a/main/src/main/scala/sbt/internal/Load.scala
+++ b/main/src/main/scala/sbt/internal/Load.scala
@@ -113,6 +113,7 @@ private[sbt] object Load {
     val delegates = defaultDelegates
     val pluginMgmt = PluginManagement(loader)
     val inject = InjectSettings(injectGlobal(state), Nil, const(Nil))
+    System.setProperty("swoval.tmpdir", System.getProperty("swoval.tmpdir", globalBase.toString))
     LoadBuildConfiguration(
       stagingDirectory,
       classpath,
diff --git a/sbt/src/sbt-test/watch/on-start-watch/build.sbt b/sbt/src/sbt-test/watch/on-start-watch/build.sbt
new file mode 100644
index 000000000..1c6dab6c1
--- /dev/null
+++ b/sbt/src/sbt-test/watch/on-start-watch/build.sbt
@@ -0,0 +1,53 @@
+import scala.util.Try
+
+val checkCount = inputKey[Unit]("check that compile has run a specified number of times")
+val checkReloadCount = inputKey[Unit]("check whether the project was reloaded")
+val failingTask = taskKey[Unit]("should always fail")
+val maybeReload = settingKey[(Int, Boolean) => Watched.Action]("possibly reload")
+val resetCount = taskKey[Unit]("reset compile count")
+val reloadFile = settingKey[File]("get the current reload file")
+
+checkCount := {
+  val expected = Def.spaceDelimited().parsed.head.toInt
+  if (Count.get != expected)
+    throw new IllegalStateException(s"Expected ${expected} compilation runs, got ${Count.get}")
+}
+
+maybeReload := { (_, _) =>
+  if (Count.reloadCount(reloadFile.value) == 0) Watched.Reload else Watched.CancelWatch
+}
+
+reloadFile := baseDirectory.value / "reload-count"
+
+resetCount := {
+  Count.reset()
+}
+
+failingTask := {
+  throw new IllegalStateException("failed")
+}
+
+watchPreWatch := maybeReload.value
+
+checkReloadCount := {
+  val expected = Def.spaceDelimited().parsed.head.toInt
+  assert(Count.reloadCount(reloadFile.value) == expected)
+}
+
+val addReloadShutdownHook = Command.command("addReloadShutdownHook") { state =>
+  state.addExitHook {
+    val base = Project.extract(state).get(baseDirectory)
+    val file = base / "reload-count"
+    val currentCount = Try(Count.reloadCount(file)).getOrElse(0)
+    IO.write(file, s"${currentCount + 1}".getBytes)
+  }
+}
+
+commands += addReloadShutdownHook
+
+Compile / compile := {
+  Count.increment()
+  // Trigger a new build by updating the last modified time
+  ((Compile / scalaSource).value / "A.scala").setLastModified(5000)
+  (Compile / compile).value
+}
diff --git a/sbt/src/sbt-test/watch/on-start-watch/project/Count.scala b/sbt/src/sbt-test/watch/on-start-watch/project/Count.scala
new file mode 100644
index 000000000..67d3bf940
--- /dev/null
+++ b/sbt/src/sbt-test/watch/on-start-watch/project/Count.scala
@@ -0,0 +1,10 @@
+import sbt._
+import scala.util.Try
+
+object Count {
+  private var count = 0
+  def get: Int = count
+  def increment(): Unit = count += 1
+  def reset(): Unit = count = 0
+  def reloadCount(file: File): Int = Try(IO.read(file).toInt).getOrElse(0)
+}
diff --git a/sbt/src/sbt-test/watch/on-start-watch/src/main/scala/A.scala b/sbt/src/sbt-test/watch/on-start-watch/src/main/scala/A.scala
new file mode 100644
index 000000000..df9e4d3d5
--- /dev/null
+++ b/sbt/src/sbt-test/watch/on-start-watch/src/main/scala/A.scala
@@ -0,0 +1,3 @@
+package a
+
+class A
\ No newline at end of file
diff --git a/sbt/src/sbt-test/watch/on-start-watch/test b/sbt/src/sbt-test/watch/on-start-watch/test
new file mode 100644
index 000000000..37781fce3
--- /dev/null
+++ b/sbt/src/sbt-test/watch/on-start-watch/test
@@ -0,0 +1,28 @@
+# verify that reloading occurs if watchPreWatch returns Watched.Reload
+> addReloadShutdownHook
+> checkReloadCount 0
+> ~compile
+> checkReloadCount 1
+
+# verify that the watch terminates when we reach the specified count
+> resetCount
+> set watchPreWatch := { (count: Int, _) => if (count == 2) Watched.CancelWatch else Watched.Ignore }
+> ~compile
+> checkCount 2
+
+# verify that the watch terminates and returns an error when we reach the specified count
+> resetCount
+> set watchPreWatch := { (count: Int, _) => if (count == 2) Watched.HandleError else Watched.Ignore }
+# Returning Watched.HandleError causes the '~' command to fail
+-> ~compile
+> checkCount 2
+
+# verify that a re-build is triggered when we reach the specified count
+> resetCount
+> set watchPreWatch := { (count: Int, _) => if (count == 2) Watched.Trigger else if (count == 3) Watched.CancelWatch else Watched.Ignore }
+> ~compile
+> checkCount 3
+
+# verify that the watch exits and returns an error if the task fails
+> set watchPreWatch := { (_, lastStatus: Boolean) => if (lastStatus) Watched.Ignore else Watched.HandleError }
+-> ~failingTask