diff --git a/packages/compiler-core/__tests__/__snapshots__/scopeId.spec.ts.snap b/packages/compiler-core/__tests__/__snapshots__/scopeId.spec.ts.snap
new file mode 100644
index 00000000..ea08f272
--- /dev/null
+++ b/packages/compiler-core/__tests__/__snapshots__/scopeId.spec.ts.snap
@@ -0,0 +1,95 @@
+// Jest Snapshot v1, https://goo.gl/fbAQLP
+
+exports[`scopeId compiler support should push scopeId for hoisted nodes 1`] = `
+"import { createVNode, createBlock, openBlock, withScopeId, pushScopeId, popScopeId } from \\"vue\\"
+const withId = withScopeId(\\"test\\")
+
+pushScopeId(\\"test\\")
+const _hoisted_1 = createVNode(\\"div\\", null, \\"hello\\")
+const _hoisted_2 = createVNode(\\"div\\", null, \\"world\\")
+popScopeId()
+
+export default withId(function render() {
+  const _ctx = this
+  return (openBlock(), createBlock(\\"div\\", null, [
+    _hoisted_1,
+    _hoisted_2
+  ]))
+})"
+`;
+
+exports[`scopeId compiler support should wrap default slot 1`] = `
+"import { createVNode, resolveComponent, createBlock, openBlock, withScopeId } from \\"vue\\"
+const withId = withScopeId(\\"test\\")
+
+export default withId(function render() {
+  const _ctx = this
+  const _component_Child = resolveComponent(\\"Child\\")
+  
+  return (openBlock(), createBlock(_component_Child, null, {
+    default: withId(() => [
+      createVNode(\\"div\\")
+    ]),
+    _compiled: true
+  }))
+})"
+`;
+
+exports[`scopeId compiler support should wrap dynamic slots 1`] = `
+"import { createVNode, resolveComponent, renderList, createSlots, createBlock, openBlock, withScopeId } from \\"vue\\"
+const withId = withScopeId(\\"test\\")
+
+export default withId(function render() {
+  const _ctx = this
+  const _component_Child = resolveComponent(\\"Child\\")
+  
+  return (openBlock(), createBlock(_component_Child, null, createSlots({ _compiled: true }, [
+    (_ctx.ok)
+      ? {
+          name: \\"foo\\",
+          fn: withId(() => [
+            createVNode(\\"div\\")
+          ])
+        }
+      : undefined,
+    renderList(_ctx.list, (i) => {
+      return {
+        name: i,
+        fn: withId(() => [
+          createVNode(\\"div\\")
+        ])
+      }
+    })
+  ]), 512 /* DYNAMIC_SLOTS */))
+})"
+`;
+
+exports[`scopeId compiler support should wrap named slots 1`] = `
+"import { toString, createTextVNode, createVNode, resolveComponent, createBlock, openBlock, withScopeId } from \\"vue\\"
+const withId = withScopeId(\\"test\\")
+
+export default withId(function render() {
+  const _ctx = this
+  const _component_Child = resolveComponent(\\"Child\\")
+  
+  return (openBlock(), createBlock(_component_Child, null, {
+    foo: withId(({ msg }) => [
+      createTextVNode(toString(msg), 1 /* TEXT */)
+    ]),
+    bar: withId(() => [
+      createVNode(\\"div\\")
+    ]),
+    _compiled: true
+  }))
+})"
+`;
+
+exports[`scopeId compiler support should wrap render function 1`] = `
+"import { createVNode, createBlock, openBlock, withScopeId } from \\"vue\\"
+const withId = withScopeId(\\"test\\")
+
+export default withId(function render() {
+  const _ctx = this
+  return (openBlock(), createBlock(\\"div\\"))
+})"
+`;
diff --git a/packages/compiler-core/__tests__/scopeId.spec.ts b/packages/compiler-core/__tests__/scopeId.spec.ts
new file mode 100644
index 00000000..37cde9c2
--- /dev/null
+++ b/packages/compiler-core/__tests__/scopeId.spec.ts
@@ -0,0 +1,91 @@
+import { baseCompile } from '../src/compile'
+import {
+  WITH_SCOPE_ID,
+  PUSH_SCOPE_ID,
+  POP_SCOPE_ID
+} from '../src/runtimeHelpers'
+
+describe('scopeId compiler support', () => {
+  test('should only work in module mode', () => {
+    expect(() => {
+      baseCompile(``, { scopeId: 'test' })
+    }).toThrow(`"scopeId" option is only supported in module mode`)
+  })
+
+  test('should wrap render function', () => {
+    const { ast, code } = baseCompile(`<div/>`, {
+      mode: 'module',
+      scopeId: 'test'
+    })
+    expect(ast.helpers).toContain(WITH_SCOPE_ID)
+    expect(code).toMatch(`const withId = withScopeId("test")`)
+    expect(code).toMatch(`export default withId(function render() {`)
+    expect(code).toMatchSnapshot()
+  })
+
+  test('should wrap default slot', () => {
+    const { code } = baseCompile(`<Child><div/></Child>`, {
+      mode: 'module',
+      scopeId: 'test'
+    })
+    expect(code).toMatch(`default: withId(() => [`)
+    expect(code).toMatchSnapshot()
+  })
+
+  test('should wrap named slots', () => {
+    const { code } = baseCompile(
+      `<Child>
+        <template #foo="{ msg }">{{ msg }}</template>
+        <template #bar><div/></template>
+      </Child>
+      `,
+      {
+        mode: 'module',
+        scopeId: 'test'
+      }
+    )
+    expect(code).toMatch(`foo: withId(({ msg }) => [`)
+    expect(code).toMatch(`bar: withId(() => [`)
+    expect(code).toMatchSnapshot()
+  })
+
+  test('should wrap dynamic slots', () => {
+    const { code } = baseCompile(
+      `<Child>
+        <template #foo v-if="ok"><div/></template>
+        <template v-for="i in list" #[i]><div/></template>
+      </Child>
+      `,
+      {
+        mode: 'module',
+        scopeId: 'test'
+      }
+    )
+    expect(code).toMatch(/name: "foo",\s+fn: withId\(/)
+    expect(code).toMatch(/name: i,\s+fn: withId\(/)
+    expect(code).toMatchSnapshot()
+  })
+
+  test('should push scopeId for hoisted nodes', () => {
+    const { ast, code } = baseCompile(
+      `<div><div>hello</div><div>world</div></div>`,
+      {
+        mode: 'module',
+        scopeId: 'test',
+        hoistStatic: true
+      }
+    )
+    expect(ast.helpers).toContain(PUSH_SCOPE_ID)
+    expect(ast.helpers).toContain(POP_SCOPE_ID)
+    expect(ast.hoists.length).toBe(2)
+    expect(code).toMatch(
+      [
+        `pushScopeId("test")`,
+        `const _hoisted_1 = createVNode("div", null, "hello")`,
+        `const _hoisted_2 = createVNode("div", null, "world")`,
+        `popScopeId()`
+      ].join('\n')
+    )
+    expect(code).toMatchSnapshot()
+  })
+})
diff --git a/packages/compiler-core/src/compile.ts b/packages/compiler-core/src/compile.ts
index 0ff53166..d6214137 100644
--- a/packages/compiler-core/src/compile.ts
+++ b/packages/compiler-core/src/compile.ts
@@ -17,28 +17,33 @@ import { transformOnce } from './transforms/vOnce'
 import { transformModel } from './transforms/vModel'
 import { defaultOnError, createCompilerError, ErrorCodes } from './errors'
 
-// we name it `baseCompile` so that higher order compilers like @vue/compiler-dom
-// can export `compile` while re-exporting everything else.
+// we name it `baseCompile` so that higher order compilers like
+// @vue/compiler-dom can export `compile` while re-exporting everything else.
 export function baseCompile(
   template: string | RootNode,
   options: CompilerOptions = {}
 ): CodegenResult {
+  const onError = options.onError || defaultOnError
+  const isModuleMode = options.mode === 'module'
   /* istanbul ignore if */
   if (__BROWSER__) {
-    const onError = options.onError || defaultOnError
     if (options.prefixIdentifiers === true) {
       onError(createCompilerError(ErrorCodes.X_PREFIX_ID_NOT_SUPPORTED))
-    } else if (options.mode === 'module') {
+    } else if (isModuleMode) {
       onError(createCompilerError(ErrorCodes.X_MODULE_MODE_NOT_SUPPORTED))
     }
   }
 
-  const ast = isString(template) ? parse(template, options) : template
-
   const prefixIdentifiers =
-    !__BROWSER__ &&
-    (options.prefixIdentifiers === true || options.mode === 'module')
+    !__BROWSER__ && (options.prefixIdentifiers === true || isModuleMode)
+  if (!prefixIdentifiers && options.cacheHandlers) {
+    onError(createCompilerError(ErrorCodes.X_CACHE_HANDLER_NOT_SUPPORTED))
+  }
+  if (options.scopeId && !isModuleMode) {
+    onError(createCompilerError(ErrorCodes.X_SCOPE_ID_NOT_SUPPORTED))
+  }
 
+  const ast = isString(template) ? parse(template, options) : template
   transform(ast, {
     ...options,
     prefixIdentifiers,
diff --git a/packages/compiler-core/src/errors.ts b/packages/compiler-core/src/errors.ts
index b507a416..71c19e26 100644
--- a/packages/compiler-core/src/errors.ts
+++ b/packages/compiler-core/src/errors.ts
@@ -86,6 +86,8 @@ export const enum ErrorCodes {
   // generic errors
   X_PREFIX_ID_NOT_SUPPORTED,
   X_MODULE_MODE_NOT_SUPPORTED,
+  X_CACHE_HANDLER_NOT_SUPPORTED,
+  X_SCOPE_ID_NOT_SUPPORTED,
 
   // Special value for higher-order compilers to pick up the last code
   // to avoid collision of error codes. This should always be kept as the last
@@ -177,5 +179,7 @@ export const errorMessages: { [code: number]: string } = {
 
   // generic errors
   [ErrorCodes.X_PREFIX_ID_NOT_SUPPORTED]: `"prefixIdentifiers" option is not supported in this build of compiler.`,
-  [ErrorCodes.X_MODULE_MODE_NOT_SUPPORTED]: `ES module mode is not supported in this build of compiler.`
+  [ErrorCodes.X_MODULE_MODE_NOT_SUPPORTED]: `ES module mode is not supported in this build of compiler.`,
+  [ErrorCodes.X_CACHE_HANDLER_NOT_SUPPORTED]: `"cacheHandlers" option is only supported when the "prefixIdentifiers" option is enabled.`,
+  [ErrorCodes.X_SCOPE_ID_NOT_SUPPORTED]: `"scopeId" option is only supported in module mode.`
 }
diff --git a/packages/compiler-core/src/options.ts b/packages/compiler-core/src/options.ts
index b2d7e878..2e08cdae 100644
--- a/packages/compiler-core/src/options.ts
+++ b/packages/compiler-core/src/options.ts
@@ -28,17 +28,21 @@ export interface TransformOptions {
   directiveTransforms?: { [name: string]: DirectiveTransform }
   isBuiltInComponent?: (tag: string) => symbol | void
   // Transform expressions like {{ foo }} to `_ctx.foo`.
-  // Default: mode === 'module'
+  // - This is force-enabled in module mode, since modules are by default strict
+  //   and cannot use `with`
+  // - Default: mode === 'module'
   prefixIdentifiers?: boolean
   // Hoist static VNodes and props objects to `_hoisted_x` constants
-  // Default: false
+  // - Default: false
   hoistStatic?: boolean
   // Cache v-on handlers to avoid creating new inline functions on each render,
   // also avoids the need for dynamically patching the handlers by wrapping it.
   // e.g `@click="foo"` by default is compiled to `{ onClick: foo }`. With this
   // option it's compiled to:
   // `{ onClick: _cache[0] || (_cache[0] = e => _ctx.foo(e)) }`
-  // Default: false
+  // - Requires "prefixIdentifiers" to be enabled because it relies on scope
+  //   analysis to determine if a handler is safe to cache.
+  // - Default: false
   cacheHandlers?: boolean
   onError?: (error: CompilerError) => void
 }
@@ -49,18 +53,20 @@ export interface CodegenOptions {
   // - Function mode will generate a single `const { helpers... } = Vue`
   //   statement and return the render function. It is meant to be used with
   //   `new Function(code)()` to generate a render function at runtime.
-  // Default: 'function'
+  // - Default: 'function'
   mode?: 'module' | 'function'
   // Prefix suitable identifiers with _ctx.
   // If this option is false, the generated code will be wrapped in a
   // `with (this) { ... }` block.
-  // Default: false
+  // - This is force-enabled in module mode, since modules are by default strict
+  //   and cannot use `with`
+  // - Default: mode === 'module'
   prefixIdentifiers?: boolean
   // Generate source map?
-  // Default: false
+  // - Default: false
   sourceMap?: boolean
   // Filename for source map generation.
-  // Default: `template.vue.html`
+  // - Default: `template.vue.html`
   filename?: string
   // SFC scoped styles ID
   scopeId?: string | null
diff --git a/packages/runtime-core/__tests__/helpers/scopeId.spec.ts b/packages/runtime-core/__tests__/helpers/scopeId.spec.ts
new file mode 100644
index 00000000..08f7b1e7
--- /dev/null
+++ b/packages/runtime-core/__tests__/helpers/scopeId.spec.ts
@@ -0,0 +1,47 @@
+import { withScopeId } from '../../src/helpers/scopeId'
+import { h, render, nodeOps, serializeInner } from '@vue/runtime-test'
+
+describe('scopeId runtime support', () => {
+  const withParentId = withScopeId('parent')
+  const withChildId = withScopeId('child')
+
+  test('should attach scopeId', () => {
+    const App = {
+      __scopeId: 'parent',
+      render: withParentId(() => {
+        return h('div', [h('div')])
+      })
+    }
+    const root = nodeOps.createElement('div')
+    render(h(App), root)
+    expect(serializeInner(root)).toBe(`<div parent><div parent></div></div>`)
+  })
+
+  test('should work on slots', () => {
+    const Child = {
+      __scopeId: 'child',
+      render: withChildId(function(this: any) {
+        return h('div', this.$slots.default())
+      })
+    }
+    const App = {
+      __scopeId: 'parent',
+      render: withParentId(() => {
+        return h(
+          Child,
+          withParentId(() => {
+            return h('div')
+          })
+        )
+      })
+    }
+    const root = nodeOps.createElement('div')
+    render(h(App), root)
+    // slot content should have:
+    // - scopeId from parent
+    // - slotted scopeId (with `-s` postfix) from child (the tree owner)
+    expect(serializeInner(root)).toBe(
+      `<div child><div parent child-s></div></div>`
+    )
+  })
+})
diff --git a/packages/vue/src/index.ts b/packages/vue/src/index.ts
index aea2b61e..e40ec89e 100644
--- a/packages/vue/src/index.ts
+++ b/packages/vue/src/index.ts
@@ -36,7 +36,6 @@ function compileToFunction(
 
   const { code } = compile(template, {
     hoistStatic: true,
-    cacheHandlers: true,
     onError(err: CompilerError) {
       if (__DEV__) {
         const message = `Template compilation error: ${err.message}`