diff --git a/app/assets/javascripts/discourse-js-processor.js b/app/assets/javascripts/discourse-js-processor.js
index 5deb20f011..7050fe2ac7 100644
--- a/app/assets/javascripts/discourse-js-processor.js
+++ b/app/assets/javascripts/discourse-js-processor.js
@@ -4,6 +4,7 @@
 
 const makeEmberTemplateCompilerPlugin =
   require("babel-plugin-ember-template-compilation").default;
+const colocatedBabelPlugin = require("colocated-babel-plugin").default;
 const precompile = require("ember-template-compiler").precompile;
 const Handlebars = require("handlebars").default;
 
@@ -50,6 +51,7 @@ function buildTemplateCompilerBabelPlugins({ themeId }) {
   }
 
   return [
+    colocatedBabelPlugin,
     require("widget-hbs-compiler").WidgetHbsCompiler,
     [
       makeEmberTemplateCompilerPlugin(() => compileFunction),
diff --git a/app/models/theme.rb b/app/models/theme.rb
index 7d41ce11ba..1f9f23e548 100644
--- a/app/models/theme.rb
+++ b/app/models/theme.rb
@@ -6,7 +6,7 @@ require 'json_schemer'
 class Theme < ActiveRecord::Base
   include GlobalPath
 
-  BASE_COMPILER_VERSION = 63
+  BASE_COMPILER_VERSION = 64
 
   attr_accessor :child_components
 
diff --git a/lib/discourse_js_processor.rb b/lib/discourse_js_processor.rb
index 4e999640c3..2dbf1f91c9 100644
--- a/lib/discourse_js_processor.rb
+++ b/lib/discourse_js_processor.rb
@@ -157,6 +157,7 @@ class DiscourseJsProcessor
       load_file_in_context(ctx, "node_modules/babel-plugin-ember-template-compilation/src/plugin.js", wrap_in_module: "babel-plugin-ember-template-compilation/index")
       load_file_in_context(ctx, "node_modules/babel-plugin-ember-template-compilation/src/expression-parser.js", wrap_in_module: "babel-plugin-ember-template-compilation/expression-parser")
       load_file_in_context(ctx, "node_modules/babel-import-util/src/index.js", wrap_in_module: "babel-import-util")
+      load_file_in_context(ctx, "node_modules/ember-cli-htmlbars/lib/colocated-babel-plugin.js", wrap_in_module: "colocated-babel-plugin")
 
       # Widget HBS compiler
       widget_hbs_compiler_source = File.read("#{Rails.root}/lib/javascripts/widget-hbs-compiler.js")
diff --git a/lib/theme_javascript_compiler.rb b/lib/theme_javascript_compiler.rb
index 1713009491..998963ef55 100644
--- a/lib/theme_javascript_compiler.rb
+++ b/lib/theme_javascript_compiler.rb
@@ -39,6 +39,46 @@ class ThemeJavascriptCompiler
       end
     end
 
+    # Handle colocated components
+    tree.dup.each_pair do |filename, content|
+      is_component_template = filename.end_with?(".hbs") && filename.start_with?("#{root_name}/components/")
+      next if !is_component_template
+      template_contents = content
+
+      hbs_invocation_options = {
+        moduleName: filename,
+        parseOptions: {
+          srcName: filename
+        }
+      }
+      hbs_invocation = "hbs(#{template_contents.to_json}, #{hbs_invocation_options.to_json})"
+
+      prefix = <<~JS
+        import { hbs } from 'ember-cli-htmlbars';
+        const __COLOCATED_TEMPLATE__ = #{hbs_invocation};
+      JS
+
+      js_filename = filename.sub(/\.hbs\z/, ".js")
+      js_contents = tree[js_filename] # May be nil for template-only component
+      if js_contents && !js_contents.include?("export default")
+        message = "#{filename} does not contain a `default export`. Did you forget to export the component class?"
+        js_contents += "throw new Error(#{message.to_json});"
+      end
+
+      if js_contents.nil?
+        # No backing class, use template-only
+        js_contents = <<~JS
+          import templateOnly from '@ember/component/template-only';
+          export default templateOnly();
+        JS
+      end
+
+      js_contents = prefix + js_contents
+
+      tree[js_filename] = js_contents
+      tree.delete(filename)
+    end
+
     # Transpile and write to output
     tree.each_pair do |filename, content|
       module_name, extension = filename.split(".", 2)
diff --git a/spec/lib/theme_javascript_compiler_spec.rb b/spec/lib/theme_javascript_compiler_spec.rb
index 68b506135b..46fa810ee5 100644
--- a/spec/lib/theme_javascript_compiler_spec.rb
+++ b/spec/lib/theme_javascript_compiler_spec.rb
@@ -86,5 +86,44 @@ RSpec.describe ThemeJavascriptCompiler do
       expect(compiler.content).to include('define("discourse/theme-1/components/mycomponent"')
       expect(compiler.content).to include('define("discourse/theme-1/discourse/templates/components/mycomponent"')
     end
+
+    it "handles colocated components" do
+      compiler.append_tree(
+        {
+          "discourse/components/mycomponent.js" => <<~JS,
+            import Component from "@glimmer/component";
+            export default class MyComponent extends Component {}
+          JS
+          "discourse/components/mycomponent.hbs" => "{{my-component-template}}"
+        }
+      )
+      expect(compiler.content).to include("__COLOCATED_TEMPLATE__ =")
+      expect(compiler.content).to include("setComponentTemplate")
+    end
+
+    it "prints error when default export missing" do
+      compiler.append_tree(
+        {
+          "discourse/components/mycomponent.js" => <<~JS,
+            import Component from "@glimmer/component";
+            class MyComponent extends Component {}
+          JS
+          "discourse/components/mycomponent.hbs" => "{{my-component-template}}"
+        }
+      )
+      expect(compiler.content).to include("__COLOCATED_TEMPLATE__ =")
+      expect(compiler.content).to include("throw new Error")
+    end
+
+    it "handles template-only components" do
+      compiler.append_tree(
+        {
+          "discourse/components/mycomponent.hbs" => "{{my-component-template}}"
+        }
+      )
+      expect(compiler.content).to include("__COLOCATED_TEMPLATE__ =")
+      expect(compiler.content).to include("setComponentTemplate")
+      expect(compiler.content).to include("@ember/component/template-only")
+    end
   end
 end