diff --git a/packages/runtime-core/__tests__/apiOptions.spec.ts b/packages/runtime-core/__tests__/apiOptions.spec.ts
index 7d915eb0..c55c197e 100644
--- a/packages/runtime-core/__tests__/apiOptions.spec.ts
+++ b/packages/runtime-core/__tests__/apiOptions.spec.ts
@@ -149,30 +149,24 @@ describe('api: options', () => {
 
     function assertCall(spy: jest.Mock, callIndex: number, args: any[]) {
       expect(spy.mock.calls[callIndex].slice(0, 2)).toMatchObject(args)
+      expect(spy).toHaveReturnedWith(ctx)
     }
 
-    assertCall(spyA, 0, [1, undefined])
-    assertCall(spyB, 0, [2, undefined])
-    assertCall(spyC, 0, [{ qux: 3 }, undefined])
-    expect(spyA).toHaveReturnedWith(ctx)
-    expect(spyB).toHaveReturnedWith(ctx)
-    expect(spyC).toHaveReturnedWith(ctx)
-
     ctx.foo++
     await nextTick()
-    expect(spyA).toHaveBeenCalledTimes(2)
-    assertCall(spyA, 1, [2, 1])
+    expect(spyA).toHaveBeenCalledTimes(1)
+    assertCall(spyA, 0, [2, 1])
 
     ctx.bar++
     await nextTick()
-    expect(spyB).toHaveBeenCalledTimes(2)
-    assertCall(spyB, 1, [3, 2])
+    expect(spyB).toHaveBeenCalledTimes(1)
+    assertCall(spyB, 0, [3, 2])
 
     ctx.baz.qux++
     await nextTick()
-    expect(spyC).toHaveBeenCalledTimes(2)
+    expect(spyC).toHaveBeenCalledTimes(1)
     // new and old objects have same identity
-    assertCall(spyC, 1, [{ qux: 4 }, { qux: 4 }])
+    assertCall(spyC, 0, [{ qux: 4 }, { qux: 4 }])
   })
 
   test('watch array', async () => {
@@ -218,30 +212,24 @@ describe('api: options', () => {
 
     function assertCall(spy: jest.Mock, callIndex: number, args: any[]) {
       expect(spy.mock.calls[callIndex].slice(0, 2)).toMatchObject(args)
+      expect(spy).toHaveReturnedWith(ctx)
     }
 
-    assertCall(spyA, 0, [1, undefined])
-    assertCall(spyB, 0, [2, undefined])
-    assertCall(spyC, 0, [{ qux: 3 }, undefined])
-    expect(spyA).toHaveReturnedWith(ctx)
-    expect(spyB).toHaveReturnedWith(ctx)
-    expect(spyC).toHaveReturnedWith(ctx)
-
     ctx.foo++
     await nextTick()
-    expect(spyA).toHaveBeenCalledTimes(2)
-    assertCall(spyA, 1, [2, 1])
+    expect(spyA).toHaveBeenCalledTimes(1)
+    assertCall(spyA, 0, [2, 1])
 
     ctx.bar++
     await nextTick()
-    expect(spyB).toHaveBeenCalledTimes(2)
-    assertCall(spyB, 1, [3, 2])
+    expect(spyB).toHaveBeenCalledTimes(1)
+    assertCall(spyB, 0, [3, 2])
 
     ctx.baz.qux++
     await nextTick()
-    expect(spyC).toHaveBeenCalledTimes(2)
+    expect(spyC).toHaveBeenCalledTimes(1)
     // new and old objects have same identity
-    assertCall(spyC, 1, [{ qux: 4 }, { qux: 4 }])
+    assertCall(spyC, 0, [{ qux: 4 }, { qux: 4 }])
   })
 
   test('provide/inject', () => {
diff --git a/packages/runtime-core/__tests__/apiWatch.spec.ts b/packages/runtime-core/__tests__/apiWatch.spec.ts
index 9b1d35a2..ef05452f 100644
--- a/packages/runtime-core/__tests__/apiWatch.spec.ts
+++ b/packages/runtime-core/__tests__/apiWatch.spec.ts
@@ -13,13 +13,12 @@ import { mockWarn } from '@vue/shared'
 describe('api: watch', () => {
   mockWarn()
 
-  it('basic usage', async () => {
+  it('watch(effect)', async () => {
     const state = reactive({ count: 0 })
     let dummy
     watch(() => {
       dummy = state.count
     })
-    await nextTick()
     expect(dummy).toBe(0)
 
     state.count++
@@ -27,33 +26,6 @@ describe('api: watch', () => {
     expect(dummy).toBe(1)
   })
 
-  it('triggers when initial value is null', async () => {
-    const state = ref(null)
-    const spy = jest.fn()
-    watch(() => state.value, spy)
-    await nextTick()
-    expect(spy).toHaveBeenCalled()
-  })
-
-  it('triggers when initial value is undefined', async () => {
-    const state = ref()
-    const spy = jest.fn()
-    watch(() => state.value, spy)
-    await nextTick()
-    expect(spy).toHaveBeenCalled()
-    state.value = 3
-    await nextTick()
-    expect(spy).toHaveBeenCalledTimes(2)
-    // testing if undefined can trigger the watcher
-    state.value = undefined
-    await nextTick()
-    expect(spy).toHaveBeenCalledTimes(3)
-    // it shouldn't trigger if the same value is set
-    state.value = undefined
-    await nextTick()
-    expect(spy).toHaveBeenCalledTimes(3)
-  })
-
   it('watching single source: getter', async () => {
     const state = reactive({ count: 0 })
     let dummy
@@ -68,9 +40,6 @@ describe('api: watch', () => {
         }
       }
     )
-    await nextTick()
-    expect(dummy).toMatchObject([0, undefined])
-
     state.count++
     await nextTick()
     expect(dummy).toMatchObject([1, 0])
@@ -87,9 +56,6 @@ describe('api: watch', () => {
         prevCount + 1
       }
     })
-    await nextTick()
-    expect(dummy).toMatchObject([0, undefined])
-
     count.value++
     await nextTick()
     expect(dummy).toMatchObject([1, 0])
@@ -107,9 +73,6 @@ describe('api: watch', () => {
         prevCount + 1
       }
     })
-    await nextTick()
-    expect(dummy).toMatchObject([1, undefined])
-
     count.value++
     await nextTick()
     expect(dummy).toMatchObject([2, 1])
@@ -127,8 +90,6 @@ describe('api: watch', () => {
       vals.concat(1)
       oldVals.concat(1)
     })
-    await nextTick()
-    expect(dummy).toMatchObject([[1, 1, 2], []])
 
     state.count++
     count.value++
@@ -149,8 +110,6 @@ describe('api: watch', () => {
       count + 1
       oldStatus === true
     })
-    await nextTick()
-    expect(dummy).toMatchObject([[1, false], []])
 
     state.count++
     status.value = true
@@ -164,7 +123,6 @@ describe('api: watch', () => {
     const stop = watch(() => {
       dummy = state.count
     })
-    await nextTick()
     expect(dummy).toBe(0)
 
     stop()
@@ -174,7 +132,7 @@ describe('api: watch', () => {
     expect(dummy).toBe(0)
   })
 
-  it('cleanup registration (basic)', async () => {
+  it('cleanup registration (effect)', async () => {
     const state = reactive({ count: 0 })
     const cleanup = jest.fn()
     let dummy
@@ -182,7 +140,6 @@ describe('api: watch', () => {
       onCleanup(cleanup)
       dummy = state.count
     })
-    await nextTick()
     expect(dummy).toBe(0)
 
     state.count++
@@ -202,22 +159,30 @@ describe('api: watch', () => {
       onCleanup(cleanup)
       dummy = count
     })
+
+    count.value++
     await nextTick()
-    expect(dummy).toBe(0)
+    expect(cleanup).toHaveBeenCalledTimes(0)
+    expect(dummy).toBe(1)
 
     count.value++
     await nextTick()
     expect(cleanup).toHaveBeenCalledTimes(1)
-    expect(dummy).toBe(1)
+    expect(dummy).toBe(2)
 
     stop()
     expect(cleanup).toHaveBeenCalledTimes(2)
   })
 
-  it('flush timing: post', async () => {
+  it('flush timing: post (default)', async () => {
     const count = ref(0)
+    let callCount = 0
     const assertion = jest.fn(count => {
-      expect(serializeInner(root)).toBe(`${count}`)
+      callCount++
+      // on mount, the watcher callback should be called before DOM render
+      // on update, should be called after the count is updated
+      const expectedDOM = callCount === 1 ? `` : `${count}`
+      expect(serializeInner(root)).toBe(expectedDOM)
     })
 
     const Comp = {
@@ -230,7 +195,6 @@ describe('api: watch', () => {
     }
     const root = nodeOps.createElement('div')
     render(h(Comp), root)
-    await nextTick()
     expect(assertion).toHaveBeenCalledTimes(1)
 
     count.value++
@@ -270,7 +234,6 @@ describe('api: watch', () => {
     }
     const root = nodeOps.createElement('div')
     render(h(Comp), root)
-    await nextTick()
     expect(assertion).toHaveBeenCalledTimes(1)
 
     count.value++
@@ -313,7 +276,6 @@ describe('api: watch', () => {
     }
     const root = nodeOps.createElement('div')
     render(h(Comp), root)
-    await nextTick()
     expect(assertion).toHaveBeenCalledTimes(1)
 
     count.value++
@@ -346,9 +308,6 @@ describe('api: watch', () => {
       { deep: true }
     )
 
-    await nextTick()
-    expect(dummy).toEqual([0, 1, 1, true])
-
     state.nested.count++
     await nextTick()
     expect(dummy).toEqual([1, 1, 1, true])
@@ -369,18 +328,42 @@ describe('api: watch', () => {
     expect(dummy).toEqual([1, 2, 2, false])
   })
 
-  it('lazy', async () => {
+  it('immediate', async () => {
     const count = ref(0)
     const cb = jest.fn()
-    watch(count, cb, { lazy: true })
-    await nextTick()
-    expect(cb).not.toHaveBeenCalled()
+    watch(count, cb, { immediate: true })
+    expect(cb).toHaveBeenCalledTimes(1)
     count.value++
     await nextTick()
-    expect(cb).toHaveBeenCalled()
+    expect(cb).toHaveBeenCalledTimes(2)
   })
 
-  it('ignore lazy option when using simple callback', async () => {
+  it('immediate: triggers when initial value is null', async () => {
+    const state = ref(null)
+    const spy = jest.fn()
+    watch(() => state.value, spy, { immediate: true })
+    expect(spy).toHaveBeenCalled()
+  })
+
+  it('immediate: triggers when initial value is undefined', async () => {
+    const state = ref()
+    const spy = jest.fn()
+    watch(() => state.value, spy, { immediate: true })
+    expect(spy).toHaveBeenCalled()
+    state.value = 3
+    await nextTick()
+    expect(spy).toHaveBeenCalledTimes(2)
+    // testing if undefined can trigger the watcher
+    state.value = undefined
+    await nextTick()
+    expect(spy).toHaveBeenCalledTimes(3)
+    // it shouldn't trigger if the same value is set
+    state.value = undefined
+    await nextTick()
+    expect(spy).toHaveBeenCalledTimes(3)
+  })
+
+  it('warn immediate option when using effect signature', async () => {
     const count = ref(0)
     let dummy
     // @ts-ignore
@@ -388,13 +371,10 @@ describe('api: watch', () => {
       () => {
         dummy = count.value
       },
-      { lazy: true }
+      { immediate: false }
     )
-    expect(dummy).toBeUndefined()
-    expect(`lazy option is only respected`).toHaveBeenWarned()
-
-    await nextTick()
     expect(dummy).toBe(0)
+    expect(`"immediate" option is only respected`).toHaveBeenWarned()
 
     count.value++
     await nextTick()
diff --git a/packages/runtime-core/__tests__/components/Suspense.spec.ts b/packages/runtime-core/__tests__/components/Suspense.spec.ts
index 264bd7ca..a530532f 100644
--- a/packages/runtime-core/__tests__/components/Suspense.spec.ts
+++ b/packages/runtime-core/__tests__/components/Suspense.spec.ts
@@ -164,8 +164,14 @@ describe('Suspense', () => {
         deps.push(p.then(() => Promise.resolve()))
 
         watch(() => {
+          calls.push('immediate effect')
+        })
+
+        const count = ref(0)
+        watch(count, v => {
           calls.push('watch callback')
         })
+        count.value++ // trigger the watcher now
 
         onMounted(() => {
           calls.push('mounted')
@@ -193,18 +199,24 @@ describe('Suspense', () => {
     const root = nodeOps.createElement('div')
     render(h(Comp), root)
     expect(serializeInner(root)).toBe(`<div>fallback</div>`)
-    expect(calls).toEqual([])
+    expect(calls).toEqual([`immediate effect`])
 
     await Promise.all(deps)
     await nextTick()
     expect(serializeInner(root)).toBe(`<div>async</div>`)
-    expect(calls).toEqual([`watch callback`, `mounted`])
+    expect(calls).toEqual([`immediate effect`, `watch callback`, `mounted`])
 
     // effects inside an already resolved suspense should happen at normal timing
     toggle.value = false
     await nextTick()
+    await nextTick()
     expect(serializeInner(root)).toBe(`<!---->`)
-    expect(calls).toEqual([`watch callback`, `mounted`, 'unmounted'])
+    expect(calls).toEqual([
+      `immediate effect`,
+      `watch callback`,
+      `mounted`,
+      'unmounted'
+    ])
   })
 
   test('content update before suspense resolve', async () => {
@@ -254,8 +266,14 @@ describe('Suspense', () => {
         deps.push(p)
 
         watch(() => {
+          calls.push('immediate effect')
+        })
+
+        const count = ref(0)
+        watch(count, () => {
           calls.push('watch callback')
         })
+        count.value++ // trigger the watcher now
 
         onMounted(() => {
           calls.push('mounted')
@@ -283,7 +301,7 @@ describe('Suspense', () => {
     const root = nodeOps.createElement('div')
     render(h(Comp), root)
     expect(serializeInner(root)).toBe(`<div>fallback</div>`)
-    expect(calls).toEqual([])
+    expect(calls).toEqual(['immediate effect'])
 
     // remove the async dep before it's resolved
     toggle.value = false
@@ -294,8 +312,8 @@ describe('Suspense', () => {
     await Promise.all(deps)
     await nextTick()
     expect(serializeInner(root)).toBe(`<!---->`)
-    // should discard effects
-    expect(calls).toEqual([])
+    // should discard effects (except for immediate ones)
+    expect(calls).toEqual(['immediate effect'])
   })
 
   test('unmount suspense after resolve', async () => {
diff --git a/packages/runtime-core/__tests__/errorHandling.spec.ts b/packages/runtime-core/__tests__/errorHandling.spec.ts
index d9f753f9..6396c6b3 100644
--- a/packages/runtime-core/__tests__/errorHandling.spec.ts
+++ b/packages/runtime-core/__tests__/errorHandling.spec.ts
@@ -241,7 +241,7 @@ describe('error handling', () => {
     expect(fn).toHaveBeenCalledWith(err, 'ref function')
   })
 
-  test('in watch (simple usage)', () => {
+  test('in watch (effect)', () => {
     const err = new Error('foo')
     const fn = jest.fn()
 
@@ -268,7 +268,7 @@ describe('error handling', () => {
     expect(fn).toHaveBeenCalledWith(err, 'watcher callback')
   })
 
-  test('in watch getter', () => {
+  test('in watch (getter)', () => {
     const err = new Error('foo')
     const fn = jest.fn()
 
@@ -298,7 +298,7 @@ describe('error handling', () => {
     expect(fn).toHaveBeenCalledWith(err, 'watcher getter')
   })
 
-  test('in watch callback', () => {
+  test('in watch (callback)', async () => {
     const err = new Error('foo')
     const fn = jest.fn()
 
@@ -312,10 +312,11 @@ describe('error handling', () => {
       }
     }
 
+    const count = ref(0)
     const Child = {
       setup() {
         watch(
-          () => 1,
+          () => count.value,
           () => {
             throw err
           }
@@ -325,6 +326,9 @@ describe('error handling', () => {
     }
 
     render(h(Comp), nodeOps.createElement('div'))
+
+    count.value++
+    await nextTick()
     expect(fn).toHaveBeenCalledWith(err, 'watcher callback')
   })
 
diff --git a/packages/runtime-core/src/apiWatch.ts b/packages/runtime-core/src/apiWatch.ts
index b44fbfc6..b3c92239 100644
--- a/packages/runtime-core/src/apiWatch.ts
+++ b/packages/runtime-core/src/apiWatch.ts
@@ -47,22 +47,25 @@ type MapSources<T> = {
   [K in keyof T]: T[K] extends WatchSource<infer V> ? V : never
 }
 
-type MapOldSources<T, Lazy> = {
+type MapOldSources<T, Immediate> = {
   [K in keyof T]: T[K] extends WatchSource<infer V>
-    ? Lazy extends true ? V : (V | undefined)
+    ? Immediate extends true ? (V | undefined) : V
     : never
 }
 
 export type CleanupRegistrator = (invalidate: () => void) => void
 
-export interface WatchOptions<Lazy = boolean> {
-  lazy?: Lazy
+export interface BaseWatchOptions {
   flush?: 'pre' | 'post' | 'sync'
-  deep?: boolean
   onTrack?: ReactiveEffectOptions['onTrack']
   onTrigger?: ReactiveEffectOptions['onTrigger']
 }
 
+export interface WatchOptions<Immediate = boolean> extends BaseWatchOptions {
+  immediate?: Immediate
+  deep?: boolean
+}
+
 export type StopHandle = () => void
 
 const invoke = (fn: Function) => fn()
@@ -73,14 +76,14 @@ const INITIAL_WATCHER_VALUE = {}
 // overload #1: simple effect
 export function watch(
   effect: WatchEffect,
-  options?: WatchOptions<false>
+  options?: BaseWatchOptions
 ): StopHandle
 
 // overload #2: single source + cb
-export function watch<T, Lazy extends Readonly<boolean> = false>(
+export function watch<T, Immediate extends Readonly<boolean> = false>(
   source: WatchSource<T>,
-  cb: WatchCallback<T, Lazy extends true ? T : (T | undefined)>,
-  options?: WatchOptions<Lazy>
+  cb: WatchCallback<T, Immediate extends true ? (T | undefined) : T>,
+  options?: WatchOptions<Immediate>
 ): StopHandle
 
 // overload #3: array of multiple sources + cb
@@ -89,11 +92,11 @@ export function watch<T, Lazy extends Readonly<boolean> = false>(
 // of all possible value types.
 export function watch<
   T extends Readonly<WatchSource<unknown>[]>,
-  Lazy extends Readonly<boolean> = false
+  Immediate extends Readonly<boolean> = false
 >(
   sources: T,
-  cb: WatchCallback<MapSources<T>, MapOldSources<T, Lazy>>,
-  options?: WatchOptions<Lazy>
+  cb: WatchCallback<MapSources<T>, MapOldSources<T, Immediate>>,
+  options?: WatchOptions<Immediate>
 ): StopHandle
 
 // implementation
@@ -102,15 +105,11 @@ export function watch<T = any>(
   cbOrOptions?: WatchCallback<T> | WatchOptions,
   options?: WatchOptions
 ): StopHandle {
-  if (isInSSRComponentSetup && !(options && options.flush === 'sync')) {
-    // component watchers during SSR are no-op
-    return NOOP
-  } else if (isFunction(cbOrOptions)) {
-    // effect callback as 2nd argument - this is a source watcher
+  if (isFunction(cbOrOptions)) {
+    // watch(source, cb)
     return doWatch(effectOrSource, cbOrOptions, options)
   } else {
-    // 2nd argument is either missing or an options object
-    // - this is a simple effect watcher
+    // watch(effect)
     return doWatch(effectOrSource, null, cbOrOptions)
   }
 }
@@ -118,8 +117,23 @@ export function watch<T = any>(
 function doWatch(
   source: WatchSource | WatchSource[] | WatchEffect,
   cb: WatchCallback | null,
-  { lazy, deep, flush, onTrack, onTrigger }: WatchOptions = EMPTY_OBJ
+  { immediate, deep, flush, onTrack, onTrigger }: WatchOptions = EMPTY_OBJ
 ): StopHandle {
+  if (__DEV__ && !cb) {
+    if (immediate !== undefined) {
+      warn(
+        `watch() "immediate" option is only respected when using the ` +
+          `watch(source, callback) signature.`
+      )
+    }
+    if (deep !== undefined) {
+      warn(
+        `watch() "deep" option is only respected when using the ` +
+          `watch(source, callback) signature.`
+      )
+    }
+  }
+
   const instance = currentInstance
   const suspense = currentSuspense
 
@@ -168,6 +182,21 @@ function doWatch(
     }
   }
 
+  // in SSR there is no need to setup an actual effect, and it should be noop
+  // unless it's eager
+  if (__NODE_JS__ && isInSSRComponentSetup) {
+    if (!cb) {
+      getter()
+    } else if (immediate) {
+      callWithAsyncErrorHandling(cb, instance, ErrorCodes.WATCH_CALLBACK, [
+        getter(),
+        undefined,
+        registerCleanup
+      ])
+    }
+    return NOOP
+  }
+
   let oldValue = isArray(source) ? [] : INITIAL_WATCHER_VALUE
   const applyCb = cb
     ? () => {
@@ -219,23 +248,19 @@ function doWatch(
     scheduler: applyCb ? () => scheduler(applyCb) : scheduler
   })
 
-  if (lazy && cb) {
-    oldValue = runner()
-  } else {
-    if (__DEV__ && lazy && !cb) {
-      warn(
-        `watch() lazy option is only respected when using the ` +
-          `watch(getter, callback) signature.`
-      )
-    }
-    if (applyCb) {
-      scheduler(applyCb)
+  recordInstanceBoundEffect(runner)
+
+  // initial run
+  if (applyCb) {
+    if (immediate) {
+      applyCb()
     } else {
-      scheduler(runner)
+      oldValue = runner()
     }
+  } else {
+    runner()
   }
 
-  recordInstanceBoundEffect(runner)
   return () => {
     stop(runner)
     if (instance) {
diff --git a/packages/runtime-core/src/components/KeepAlive.ts b/packages/runtime-core/src/components/KeepAlive.ts
index 6587e911..d5750d5a 100644
--- a/packages/runtime-core/src/components/KeepAlive.ts
+++ b/packages/runtime-core/src/components/KeepAlive.ts
@@ -135,8 +135,7 @@ const KeepAliveImpl = {
       ([include, exclude]) => {
         include && pruneCache(name => matches(include, name))
         exclude && pruneCache(name => matches(exclude, name))
-      },
-      { lazy: true }
+      }
     )
 
     onBeforeUnmount(() => {
diff --git a/test-dts/watch.test-d.ts b/test-dts/watch.test-d.ts
index d32313cc..72a38e8d 100644
--- a/test-dts/watch.test-d.ts
+++ b/test-dts/watch.test-d.ts
@@ -25,22 +25,39 @@ watch([source, source2, source3] as const, (values, oldValues) => {
 })
 
 // lazy watcher will have consistent types for oldValue.
+watch(source, (value, oldValue) => {
+  expectType<string>(value)
+  expectType<string>(oldValue)
+})
+
+watch([source, source2, source3], (values, oldValues) => {
+  expectType<(string | number)[]>(values)
+  expectType<(string | number)[]>(oldValues)
+})
+
+// const array
+watch([source, source2, source3] as const, (values, oldValues) => {
+  expectType<Readonly<[string, string, number]>>(values)
+  expectType<Readonly<[string, string, number]>>(oldValues)
+})
+
+// source + immediate: true
 watch(
   source,
   (value, oldValue) => {
     expectType<string>(value)
-    expectType<string>(oldValue)
+    expectType<string | undefined>(oldValue)
   },
-  { lazy: true }
+  { immediate: true }
 )
 
 watch(
   [source, source2, source3],
   (values, oldValues) => {
     expectType<(string | number)[]>(values)
-    expectType<(string | number)[]>(oldValues)
+    expectType<(string | number | undefined)[]>(oldValues)
   },
-  { lazy: true }
+  { immediate: true }
 )
 
 // const array
@@ -48,7 +65,9 @@ watch(
   [source, source2, source3] as const,
   (values, oldValues) => {
     expectType<Readonly<[string, string, number]>>(values)
-    expectType<Readonly<[string, string, number]>>(oldValues)
+    expectType<
+      Readonly<[string | undefined, string | undefined, number | undefined]>
+    >(oldValues)
   },
-  { lazy: true }
+  { immediate: true }
 )