diff --git a/packages/gatsby/src/utils/parcel/__tests__/compile-gatsby-files.ts b/packages/gatsby/src/utils/parcel/__tests__/compile-gatsby-files.ts
index 76ec8a9fabaf2..e5e6cb92da849 100644
--- a/packages/gatsby/src/utils/parcel/__tests__/compile-gatsby-files.ts
+++ b/packages/gatsby/src/utils/parcel/__tests__/compile-gatsby-files.ts
@@ -18,6 +18,7 @@ const dir = {
   misnamedJS: `${__dirname}/fixtures/misnamed-js`,
   misnamedTS: `${__dirname}/fixtures/misnamed-ts`,
   gatsbyNodeAsDirectory: `${__dirname}/fixtures/gatsby-node-as-directory`,
+  errorInCode: `${__dirname}/fixtures/error-in-code-ts`,
 }
 
 jest.setTimeout(15000)
@@ -175,6 +176,37 @@ describe(`gatsby file compilation`, () => {
       })
     })
   })
+
+  it(`handles errors in TS code`, async () => {
+    process.chdir(dir.errorInCode)
+    await remove(`${dir.errorInCode}/.cache`)
+    await compileGatsbyFiles(dir.errorInCode)
+
+    expect(reporterPanicMock).toMatchInlineSnapshot(`
+      [MockFunction] {
+        "calls": Array [
+          Array [
+            Object {
+              "context": Object {
+                "filePath": "<PROJECT_ROOT>/gatsby-node.ts",
+                "generalMessage": "Expected ';', '}' or <eof>",
+                "hints": null,
+                "origin": "@parcel/transformer-js",
+                "specificMessage": "This is the expression part of an expression statement",
+              },
+              "id": "11901",
+            },
+          ],
+        ],
+        "results": Array [
+          Object {
+            "type": "return",
+            "value": undefined,
+          },
+        ],
+      }
+    `)
+  })
 })
 
 describe(`gatsby-node directory is allowed`, () => {
diff --git a/packages/gatsby/src/utils/parcel/__tests__/fixtures/error-in-code-ts/gatsby-node.ts b/packages/gatsby/src/utils/parcel/__tests__/fixtures/error-in-code-ts/gatsby-node.ts
new file mode 100644
index 0000000000000..a72e769a773d8
--- /dev/null
+++ b/packages/gatsby/src/utils/parcel/__tests__/fixtures/error-in-code-ts/gatsby-node.ts
@@ -0,0 +1,47 @@
+import { GatsbyNode } from "gatsby"
+import { working } from "../utils/say-what-ts"
+import { createPages } from "../utils/create-pages-ts"
+
+this is wrong syntax that should't compile
+
+export const onPreInit: GatsbyNode["onPreInit"] = ({ reporter }) => {
+  reporter.info(working)
+}
+
+type Character = {
+  id: string
+  name: string
+}
+
+export const sourceNodes: GatsbyNode["sourceNodes"] = async ({ actions, createNodeId, createContentDigest }) => {
+  const { createNode } = actions
+
+  let characters: Array<Character> = [
+    {
+      id: `0`,
+      name: `A`
+    },
+    {
+      id: `1`,
+      name: `B`
+    }
+  ]
+
+  characters.forEach((character: Character) => {
+    const node = {
+      ...character,
+      id: createNodeId(`characters-${character.id}`),
+      parent: null,
+      children: [],
+      internal: {
+        type: 'Character',
+        content: JSON.stringify(character),
+        contentDigest: createContentDigest(character),
+      },
+    }
+
+    createNode(node)
+  })
+}
+
+export { createPages }
diff --git a/packages/gatsby/src/utils/parcel/compile-gatsby-files.ts b/packages/gatsby/src/utils/parcel/compile-gatsby-files.ts
index eed6bb9106ea9..2136d1c85b13d 100644
--- a/packages/gatsby/src/utils/parcel/compile-gatsby-files.ts
+++ b/packages/gatsby/src/utils/parcel/compile-gatsby-files.ts
@@ -152,15 +152,18 @@ export async function compileGatsbyFiles(
       // entire .cache for users, which is not ideal either especially when we can just delete parcel's cache
       // and to recover automatically
       bundles = await worker.single.runParcel(siteRoot)
-    } catch (e) {
-      if (retry >= RETRY_COUNT) {
+    } catch (error) {
+      if (error.diagnostics) {
+        handleErrors(error.diagnostics)
+        return
+      } else if (retry >= RETRY_COUNT) {
         reporter.panic({
           id: `11904`,
-          error: e,
+          error,
           context: {
             siteRoot,
             retries: RETRY_COUNT,
-            sourceMessage: e.message,
+            sourceMessage: error.message,
           },
         })
       } else {