diff --git a/packages/angular/build/src/builders/application/setup-bundling.ts b/packages/angular/build/src/builders/application/setup-bundling.ts
index 498d72ffa5b5..45bac12e6466 100644
--- a/packages/angular/build/src/builders/application/setup-bundling.ts
+++ b/packages/angular/build/src/builders/application/setup-bundling.ts
@@ -93,16 +93,7 @@ export function setupBundlerContexts(
       new BundlerContext(
         workspaceRoot,
         !!options.watch,
-        createServerCodeBundleOptions(
-          {
-            ...options,
-            // Disable external deps for server bundles.
-            // This is because it breaks Vite 'optimizeDeps' for SSR.
-            externalPackages: false,
-          },
-          nodeTargets,
-          codeBundleCache,
-        ),
+        createServerCodeBundleOptions(options, nodeTargets, codeBundleCache),
       ),
     );
 
diff --git a/packages/angular/build/src/builders/dev-server/vite-server.ts b/packages/angular/build/src/builders/dev-server/vite-server.ts
index d0f87c736793..e4b4e655f66d 100644
--- a/packages/angular/build/src/builders/dev-server/vite-server.ts
+++ b/packages/angular/build/src/builders/dev-server/vite-server.ts
@@ -10,6 +10,7 @@ import type { BuilderContext } from '@angular-devkit/architect';
 import type { Plugin } from 'esbuild';
 import assert from 'node:assert';
 import { readFile } from 'node:fs/promises';
+import { builtinModules } from 'node:module';
 import { basename, join } from 'node:path';
 import type { Connect, DepOptimizationConfig, InlineConfig, ViteDevServer } from 'vite';
 import { createAngularMemoryPlugin } from '../../tools/vite/angular-memory-plugin';
@@ -205,21 +206,31 @@ export async function* serveWithVite(
     }
 
     // To avoid disconnecting the array objects from the option, these arrays need to be mutated instead of replaced.
+    let requiresServerRestart = false;
     if (result.externalMetadata) {
       const { implicitBrowser, implicitServer, explicit } = result.externalMetadata;
+      const implicitServerFiltered = (implicitServer as string[]).filter(
+        (m) => removeNodeJsBuiltinModules(m) && removeAbsoluteUrls(m),
+      );
+      const implicitBrowserFiltered = (implicitBrowser as string[]).filter(removeAbsoluteUrls);
+
+      if (browserOptions.ssr && serverOptions.prebundle !== false) {
+        const previousImplicitServer = new Set(externalMetadata.implicitServer);
+        // Restart the server to force SSR dep re-optimization when a dependency has been added.
+        // This is a workaround for: https://github.com/vitejs/vite/issues/14896
+        requiresServerRestart = implicitServerFiltered.some(
+          (dep) => !previousImplicitServer.has(dep),
+        );
+      }
+
       // Empty Arrays to avoid growing unlimited with every re-build.
       externalMetadata.explicit.length = 0;
       externalMetadata.implicitServer.length = 0;
       externalMetadata.implicitBrowser.length = 0;
 
       externalMetadata.explicit.push(...explicit);
-      // Remove any absolute URLs (http://, https://, //) to avoid Vite's prebundling from processing them as files
-      externalMetadata.implicitServer.push(
-        ...(implicitServer as string[]).filter((value) => !/^(?:https?:)?\/\//.test(value)),
-      );
-      externalMetadata.implicitBrowser.push(
-        ...(implicitBrowser as string[]).filter((value) => !/^(?:https?:)?\/\//.test(value)),
-      );
+      externalMetadata.implicitServer.push(...implicitServerFiltered);
+      externalMetadata.implicitBrowser.push(...implicitBrowserFiltered);
 
       // The below needs to be sorted as Vite uses these options are part of the hashing invalidation algorithm.
       // See: https://github.com/vitejs/vite/blob/0873bae0cfe0f0718ad2f5743dd34a17e4ab563d/packages/vite/src/node/optimizer/index.ts#L1203-L1239
@@ -234,7 +245,13 @@ export async function* serveWithVite(
         ...new Set([...server.config.server.fs.allow, ...assetFiles.values()]),
       ];
 
-      handleUpdate(normalizePath, generatedFiles, server, serverOptions, context.logger);
+      await handleUpdate(normalizePath, generatedFiles, server, serverOptions, context.logger);
+
+      if (requiresServerRestart) {
+        // Restart the server to force SSR dep re-optimization when a dependency has been added.
+        // This is a workaround for: https://github.com/vitejs/vite/issues/14896
+        await server.restart();
+      }
     } else {
       const projectName = context.target?.project;
       if (!projectName) {
@@ -275,16 +292,10 @@ export async function* serveWithVite(
       server = await createServer(serverConfiguration);
       await server.listen();
 
-      if (serverConfiguration.ssr?.optimizeDeps?.disabled === false) {
-        /**
-         * Vite will only start dependency optimization of SSR modules when the first request comes in.
-         * In some cases, this causes a long waiting time. To mitigate this, we call `ssrLoadModule` to
-         * initiate this process before the first request.
-         *
-         * NOTE: This will intentionally fail from the unknown module, but currently there is no other way
-         * to initiate the SSR dep optimizer.
-         */
-        void server.ssrLoadModule('<deps-caller>').catch(() => {});
+      if (browserOptions.ssr && serverOptions.prebundle !== false) {
+        // Warm up the SSR request and begin optimizing dependencies.
+        // Without this, Vite will only start optimizing SSR modules when the first request is made.
+        void server.warmupRequest('./main.server.mjs', { ssr: true });
       }
 
       const urls = server.resolvedUrls;
@@ -469,11 +480,6 @@ export async function setupServer(
     join(serverOptions.workspaceRoot, `.angular/vite-root`, serverOptions.buildTarget.project),
   );
 
-  const serverExplicitExternal = [
-    ...(await import('node:module')).builtinModules,
-    ...externalMetadata.explicit,
-  ];
-
   const cacheDir = join(serverOptions.cacheOptions.path, 'vite');
   const configuration: InlineConfig = {
     configFile: false,
@@ -536,23 +542,12 @@ export async function setupServer(
       // Note: `true` and `/.*/` have different sematics. When true, the `external` option is ignored.
       noExternal: /.*/,
       // Exclude any Node.js built in module and provided dependencies (currently build defined externals)
-      external: serverExplicitExternal,
+      external: externalMetadata.explicit,
       optimizeDeps: getDepOptimizationConfig({
-        /**
-         * *********************************************
-         * NOTE: Temporary disable 'optimizeDeps' for SSR.
-         * *********************************************
-         *
-         * Currently this causes a number of issues.
-         * - Deps are re-optimized everytime the server is started.
-         * - Added deps after a rebuild are not optimized.
-         * - Breaks RxJs (Unless it is added as external). See: https://github.com/angular/angular-cli/issues/26235
-         */
-
         // Only enable with caching since it causes prebundle dependencies to be cached
-        disabled: true, // serverOptions.prebundle === false,
+        disabled: serverOptions.prebundle === false,
         // Exclude any explicitly defined dependencies (currently build defined externals and node.js built-ins)
-        exclude: serverExplicitExternal,
+        exclude: externalMetadata.explicit,
         // Include all implict dependencies from the external packages internal option
         include: externalMetadata.implicitServer,
         ssr: true,
@@ -678,3 +673,14 @@ function getDepOptimizationConfig({
     },
   };
 }
+
+const nodeJsBuiltinModules = new Set(builtinModules);
+/** Remove any Node.js builtin modules to avoid Vite's prebundling from processing them as files. */
+function removeNodeJsBuiltinModules(value: string): boolean {
+  return !nodeJsBuiltinModules.has(value);
+}
+
+/** Remove any absolute URLs (http://, https://, //) to avoid Vite's prebundling from processing them as files. */
+function removeAbsoluteUrls(value: string): boolean {
+  return !/^(?:https?:)?\/\//.test(value);
+}