diff --git a/readme.md b/readme.md
index 51a3711e..86464a6c 100644
--- a/readme.md
+++ b/readme.md
@@ -85,7 +85,8 @@ When `watch: true` is set, the build object is not a promise, but has the follow
 ```js
 {
   // handler re-run on each build completion
-  handler (({ code, map, assets }) => { ... })
+  // watch errors are reported on "err"
+  handler (({ err, code, map, assets }) => { ... })
   // handler re-run on each rebuild start
   rebuild (() => {})
   // close the watcher
diff --git a/src/cli.js b/src/cli.js
index a2ca0688..1a5da204 100755
--- a/src/cli.js
+++ b/src/cli.js
@@ -164,6 +164,7 @@ switch (args._[0]) {
       errTooManyArguments("build");
 
     let startTime = Date.now();
+    let ps;
     const ncc = require("./index.js")(
       eval("require.resolve")(resolve(args._[1] || ".")),
       {
@@ -175,7 +176,14 @@ switch (args._[0]) {
       }
     );
 
-    async function handler ({ code, map, assets }) {
+    async function handler ({ err, code, map, assets }) {
+      // handle watch errors
+      if (err) {
+        console.error(err);
+        console.log('Watching for changes...');
+        return;
+      }
+
       outDir = outDir || resolve("dist");
       mkdirp.sync(outDir);
       // remove all existing ".js" files in the out directory
@@ -210,7 +218,7 @@ switch (args._[0]) {
       }
 
       if (run) {
-        const ps = require("child_process").fork(outDir + "/index.js", {
+        ps = require("child_process").fork(outDir + "/index.js", {
           execArgv: map
             ? ["-r", resolve(__dirname, "sourcemap-register")]
             : []
@@ -221,6 +229,8 @@ switch (args._[0]) {
     if (args["--watch"]) {
       ncc.handler(handler);
       ncc.rebuild(() => {
+        if (ps)
+          ps.kill();
         startTime = Date.now();
         console.log('File change, rebuilding...');
       });
diff --git a/src/index.js b/src/index.js
index 04085398..565eafe4 100644
--- a/src/index.js
+++ b/src/index.js
@@ -226,9 +226,8 @@ module.exports = (
     return new Promise((resolve, reject) => {
       compiler.run((err, stats) => {
         if (err) return reject(err);
-        if (stats.hasErrors()) {
+        if (stats.hasErrors())
           return reject(new Error(stats.toString()));
-        }
         resolve();
       });
     })
@@ -238,14 +237,15 @@ module.exports = (
     let cachedResult;
     watcher = compiler.watch({}, (err, stats) => {
       if (err) return reject(err);
-      if (stats.hasErrors()) {
-        return reject(new Error(stats.toString()));
-      }
+      if (err)
+        return watchHandler({ err });
+      if (stats.hasErrors())
+        return watchHandler({ err: stats.toString() });
       const { code, map, assets } = finalizeHandler();
       // clear output file system
       mfs.data = {};
       if (watchHandler)
-        watchHandler({ code, map, assets });
+        watchHandler({ code, map, assets, err: null });
       else
         cachedResult = { code, map, assets};
     });