diff --git a/buildengine/build.go b/buildengine/build.go
index bae4ca96f..43ec874ca 100644
--- a/buildengine/build.go
+++ b/buildengine/build.go
@@ -19,10 +19,10 @@ import (
 
 // Build a project in the given directory given the schema and project config.
 // For a module, this will build the module. For an external library, this will build stubs for imported modules.
-func Build(ctx context.Context, sch *schema.Schema, project Project) error {
+func Build(ctx context.Context, sch *schema.Schema, project Project, filesTransaction ModifyFilesTransaction) error {
 	switch project := project.(type) {
 	case Module:
-		return buildModule(ctx, sch, project)
+		return buildModule(ctx, sch, project, filesTransaction)
 	case ExternalLibrary:
 		return buildExternalLibrary(ctx, sch, project)
 	default:
@@ -30,7 +30,7 @@ func Build(ctx context.Context, sch *schema.Schema, project Project) error {
 	}
 }
 
-func buildModule(ctx context.Context, sch *schema.Schema, module Module) error {
+func buildModule(ctx context.Context, sch *schema.Schema, module Module, filesTransaction ModifyFilesTransaction) error {
 	logger := log.FromContext(ctx).Scope(module.Module)
 	ctx = log.ContextWithLogger(ctx, logger)
 
@@ -43,7 +43,7 @@ func buildModule(ctx context.Context, sch *schema.Schema, module Module) error {
 	var err error
 	switch module.Language {
 	case "go":
-		err = buildGoModule(ctx, sch, module)
+		err = buildGoModule(ctx, sch, module, filesTransaction)
 	case "kotlin":
 		err = buildKotlinModule(ctx, sch, module)
 	default:
diff --git a/buildengine/build_go.go b/buildengine/build_go.go
index 875fcd3da..ce7d6c677 100644
--- a/buildengine/build_go.go
+++ b/buildengine/build_go.go
@@ -8,8 +8,8 @@ import (
 	"github.com/TBD54566975/ftl/go-runtime/compile"
 )
 
-func buildGoModule(ctx context.Context, sch *schema.Schema, module Module) error {
-	if err := compile.Build(ctx, module.Dir, sch); err != nil {
+func buildGoModule(ctx context.Context, sch *schema.Schema, module Module, transaction ModifyFilesTransaction) error {
+	if err := compile.Build(ctx, module.Dir, sch, transaction); err != nil {
 		return fmt.Errorf("failed to build module %q: %w", module.Config().Key, err)
 	}
 	return nil
diff --git a/buildengine/build_test.go b/buildengine/build_test.go
index bb544e22a..757f7d44d 100644
--- a/buildengine/build_test.go
+++ b/buildengine/build_test.go
@@ -21,6 +21,20 @@ type buildContext struct {
 
 type assertion func(t testing.TB, bctx buildContext) error
 
+type mockModifyFilesTransaction struct{}
+
+func (t *mockModifyFilesTransaction) Begin() error {
+	return nil
+}
+
+func (t *mockModifyFilesTransaction) ModifiedFiles(paths ...string) error {
+	return nil
+}
+
+func (t *mockModifyFilesTransaction) End() error {
+	return nil
+}
+
 func testBuild(
 	t *testing.T,
 	bctx buildContext,
@@ -33,7 +47,7 @@ func testBuild(
 	assert.NoError(t, err, "Error getting absolute path for module directory")
 	module, err := LoadModule(abs)
 	assert.NoError(t, err)
-	err = Build(ctx, bctx.sch, module)
+	err = Build(ctx, bctx.sch, module, &mockModifyFilesTransaction{})
 	if len(expectedBuildErrMsg) > 0 {
 		assert.Error(t, err)
 		assert.Contains(t, err.Error(), expectedBuildErrMsg)
diff --git a/buildengine/deploy_test.go b/buildengine/deploy_test.go
index 8186e1be7..d2b92e529 100644
--- a/buildengine/deploy_test.go
+++ b/buildengine/deploy_test.go
@@ -72,7 +72,7 @@ func TestDeploy(t *testing.T) {
 	assert.NoError(t, err)
 
 	// Build first to make sure the files are there.
-	err = Build(ctx, sch, module)
+	err = Build(ctx, sch, module, &mockModifyFilesTransaction{})
 	assert.NoError(t, err)
 
 	sum, err := sha256.SumFile(modulePath + "/_ftl/main")
diff --git a/buildengine/engine.go b/buildengine/engine.go
index 2c541d993..c8fb8f515 100644
--- a/buildengine/engine.go
+++ b/buildengine/engine.go
@@ -51,6 +51,7 @@ type Engine struct {
 	projectMetas     *xsync.MapOf[ProjectKey, projectMeta]
 	moduleDirs       []string
 	externalDirs     []string
+	watcher          *Watcher
 	controllerSchema *xsync.MapOf[string, *schema.Module]
 	schemaChanges    *pubsub.Topic[schemaChange]
 	cancel           func()
@@ -88,6 +89,7 @@ func New(ctx context.Context, client ftlv1connect.ControllerServiceClient, modul
 		moduleDirs:       moduleDirs,
 		externalDirs:     externalDirs,
 		projectMetas:     xsync.NewMapOf[ProjectKey, projectMeta](),
+		watcher:          NewWatcher(),
 		controllerSchema: xsync.NewMapOf[string, *schema.Module](),
 		schemaChanges:    pubsub.New[schemaChange](),
 		parallelism:      runtime.NumCPU(),
@@ -242,13 +244,16 @@ func (e *Engine) watchForModuleChanges(ctx context.Context, period time.Duration
 	defer e.schemaChanges.Unsubscribe(schemaChanges)
 
 	watchEvents := make(chan WatchEvent, 128)
-	watch := Watch(ctx, period, e.moduleDirs, e.externalDirs)
-	watch.Subscribe(watchEvents)
-	defer watch.Unsubscribe(watchEvents)
-	defer watch.Close()
+	topic, err := e.watcher.Watch(ctx, period, e.moduleDirs, e.externalDirs)
+	if err != nil {
+		return err
+	}
+	topic.Subscribe(watchEvents)
+	defer topic.Unsubscribe(watchEvents)
+	defer topic.Close()
 
 	// Build and deploy all modules first.
-	err := e.buildAndDeploy(ctx, 1, true)
+	err = e.buildAndDeploy(ctx, 1, true)
 	if err != nil {
 		logger.Errorf(err, "initial deploy failed")
 	} else {
@@ -554,7 +559,7 @@ func (e *Engine) build(ctx context.Context, key ProjectKey, builtModules map[str
 	if e.listener != nil {
 		e.listener.OnBuildStarted(meta.project)
 	}
-	err := Build(ctx, sch, meta.project)
+	err := Build(ctx, sch, meta.project, e.watcher.GetTransaction(meta.project.Config().Dir))
 	if err != nil {
 		return err
 	}
diff --git a/buildengine/filehash.go b/buildengine/filehash.go
index 53a3e85d0..34a932051 100644
--- a/buildengine/filehash.go
+++ b/buildengine/filehash.go
@@ -63,47 +63,62 @@ func CompareFileHashes(oldFiles, newFiles FileHashes) (FileChangeType, string, b
 
 // ComputeFileHashes computes the SHA256 hash of all (non-git-ignored) files in
 // the given directory.
-func ComputeFileHashes(module Project) (FileHashes, error) {
-	config := module.Config()
+func ComputeFileHashes(project Project) (FileHashes, error) {
+	config := project.Config()
 
 	fileHashes := make(FileHashes)
 	err := WalkDir(config.Dir, func(srcPath string, entry fs.DirEntry) error {
-		for _, pattern := range config.Watch {
-			relativePath, err := filepath.Rel(config.Dir, srcPath)
-			if err != nil {
-				return err
-			}
+		if entry.IsDir() {
+			return nil
+		}
+		hash, matched, err := ComputeFileHash(project, srcPath)
+		if err != nil {
+			return err
+		}
+		if !matched {
+			return nil
+		}
+		fileHashes[srcPath] = hash
+		return nil
+	})
+	if err != nil {
+		return nil, err
+	}
+
+	return fileHashes, err
+}
 
-			match, err := doublestar.PathMatch(pattern, relativePath)
+func ComputeFileHash(project Project, srcPath string) (hash []byte, matched bool, err error) {
+	config := project.Config()
+
+	for _, pattern := range config.Watch {
+		relativePath, err := filepath.Rel(config.Dir, srcPath)
+		if err != nil {
+			return nil, false, err
+		}
+		match, err := doublestar.PathMatch(pattern, relativePath)
+		if err != nil {
+			return nil, false, err
+		}
+		if match {
+			file, err := os.Open(srcPath)
 			if err != nil {
-				return err
+				return nil, false, err
 			}
 
-			if match && !entry.IsDir() {
-				file, err := os.Open(srcPath)
-				if err != nil {
-					return err
-				}
-
-				hasher := sha256.New()
-				if _, err := io.Copy(hasher, file); err != nil {
-					_ = file.Close()
-					return err
-				}
+			hasher := sha256.New()
+			if _, err := io.Copy(hasher, file); err != nil {
+				_ = file.Close()
+				return nil, false, err
+			}
 
-				fileHashes[srcPath] = hasher.Sum(nil)
+			hash := hasher.Sum(nil)
 
-				if err := file.Close(); err != nil {
-					return err
-				}
+			if err := file.Close(); err != nil {
+				return nil, false, err
 			}
+			return hash, true, nil
 		}
-
-		return nil
-	})
-	if err != nil {
-		return nil, err
 	}
-
-	return fileHashes, err
+	return nil, false, nil
 }
diff --git a/buildengine/testdata/projects/another/go.sum b/buildengine/testdata/projects/another/go.sum
index 7ac30c81b..9bddd3462 100644
--- a/buildengine/testdata/projects/another/go.sum
+++ b/buildengine/testdata/projects/another/go.sum
@@ -128,14 +128,14 @@ gopkg.in/yaml.v3 v3.0.1 h1:fxVm/GzAzEWqLHuvctI91KS9hhNmmWOoWu0XTYJS7CA=
 gopkg.in/yaml.v3 v3.0.1/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
 modernc.org/gc/v3 v3.0.0-20240107210532-573471604cb6 h1:5D53IMaUuA5InSeMu9eJtlQXS2NxAhyWQvkKEgXZhHI=
 modernc.org/gc/v3 v3.0.0-20240107210532-573471604cb6/go.mod h1:Qz0X07sNOR1jWYCrJMEnbW/X55x206Q7Vt4mz6/wHp4=
-modernc.org/libc v1.41.0 h1:g9YAc6BkKlgORsUWj+JwqoB1wU3o4DE3bM3yvA3k+Gk=
-modernc.org/libc v1.41.0/go.mod h1:w0eszPsiXoOnoMJgrXjglgLuDy/bt5RR4y3QzUUeodY=
+modernc.org/libc v1.49.3 h1:j2MRCRdwJI2ls/sGbeSk0t2bypOG/uvPZUsGQFDulqg=
+modernc.org/libc v1.49.3/go.mod h1:yMZuGkn7pXbKfoT/M35gFJOAEdSKdxL0q64sF7KqCDo=
 modernc.org/mathutil v1.6.0 h1:fRe9+AmYlaej+64JsEEhoWuAYBkOtQiMEU7n/XgfYi4=
 modernc.org/mathutil v1.6.0/go.mod h1:Ui5Q9q1TR2gFm0AQRqQUaBWFLAhQpCwNcuhBOSedWPo=
-modernc.org/memory v1.7.2 h1:Klh90S215mmH8c9gO98QxQFsY+W451E8AnzjoE2ee1E=
-modernc.org/memory v1.7.2/go.mod h1:NO4NVCQy0N7ln+T9ngWqOQfi7ley4vpwvARR+Hjw95E=
-modernc.org/sqlite v1.29.6 h1:0lOXGrycJPptfHDuohfYgNqoe4hu+gYuN/pKgY5XjS4=
-modernc.org/sqlite v1.29.6/go.mod h1:S02dvcmm7TnTRvGhv8IGYyLnIt7AS2KPaB1F/71p75U=
+modernc.org/memory v1.8.0 h1:IqGTL6eFMaDZZhEWwcREgeMXYwmW83LYW8cROZYkg+E=
+modernc.org/memory v1.8.0/go.mod h1:XPZ936zp5OMKGWPqbD3JShgd/ZoQ7899TUuQqxY+peU=
+modernc.org/sqlite v1.29.8 h1:nGKglNx9K5v0As+zF0/Gcl1kMkmaU1XynYyq92PbsC8=
+modernc.org/sqlite v1.29.8/go.mod h1:lQPm27iqa4UNZpmr4Aor0MH0HkCLbt1huYDfWylLZFk=
 modernc.org/strutil v1.2.0 h1:agBi9dp1I+eOnxXeiZawM8F4LawKv4NzGWSaLfyeNZA=
 modernc.org/strutil v1.2.0/go.mod h1:/mdcBmfOibveCTBxUl5B5l6W+TTH1FXPLHZE6bTosX0=
 modernc.org/token v1.1.0 h1:Xl7Ap9dKaEs5kLoOQeQmPWevfnk/DM5qcLcYlA8ys6Y=
diff --git a/buildengine/watch.go b/buildengine/watch.go
index b68b81d19..4ad26c1a9 100644
--- a/buildengine/watch.go
+++ b/buildengine/watch.go
@@ -2,10 +2,13 @@ package buildengine
 
 import (
 	"context"
+	"fmt"
+	"sync"
 	"time"
 
 	"github.com/alecthomas/types/pubsub"
 
+	"github.com/TBD54566975/ftl/go-runtime/compile"
 	"github.com/TBD54566975/ftl/internal/log"
 	"github.com/TBD54566975/ftl/internal/maps"
 )
@@ -31,17 +34,48 @@ type WatchEventProjectChanged struct {
 
 func (WatchEventProjectChanged) watchEvent() {}
 
+type projectHashes struct {
+	Hashes  FileHashes
+	Project Project
+}
+
+type Watcher struct {
+	isWatching bool
+
+	// use mutex whenever accessing / modifying existingProjects or moduleTransactions
+	mutex              sync.Mutex
+	existingProjects   map[string]projectHashes
+	moduleTransactions map[string][]*modifyFilesTransaction
+}
+
+func NewWatcher() *Watcher {
+	svc := &Watcher{
+		existingProjects:   map[string]projectHashes{},
+		moduleTransactions: map[string][]*modifyFilesTransaction{},
+	}
+
+	return svc
+}
+
+func (w *Watcher) GetTransaction(moduleDir string) ModifyFilesTransaction {
+	return &modifyFilesTransaction{
+		watcher:   w,
+		moduleDir: moduleDir,
+	}
+}
+
 // Watch the given directories for new projects, deleted projects, and changes to
 // existing projects, publishing a change event for each.
-func Watch(ctx context.Context, period time.Duration, moduleDirs []string, externalLibDirs []string) *pubsub.Topic[WatchEvent] {
+func (w *Watcher) Watch(ctx context.Context, period time.Duration, moduleDirs []string, externalLibDirs []string) (*pubsub.Topic[WatchEvent], error) {
+	if w.isWatching {
+		return nil, fmt.Errorf("file watcher is already watching")
+	}
+	w.isWatching = true
+
 	logger := log.FromContext(ctx)
 	topic := pubsub.New[WatchEvent]()
+
 	go func() {
-		type projectHashes struct {
-			Hashes  FileHashes
-			Project Project
-		}
-		existingProjects := map[string]projectHashes{}
 		wait := topic.Wait()
 		for {
 			select {
@@ -61,20 +95,29 @@ func Watch(ctx context.Context, period time.Duration, moduleDirs []string, exter
 				return project.Config().Dir, project
 			})
 
+			w.mutex.Lock()
 			// Trigger events for removed projects.
-			for _, existingProject := range existingProjects {
+			for _, existingProject := range w.existingProjects {
+				if transactions, ok := w.moduleTransactions[existingProject.Project.Config().Dir]; ok && len(transactions) > 0 {
+					// Skip projects that currently have transactions
+					continue
+				}
 				existingConfig := existingProject.Project.Config()
 				if _, haveProject := projectsByDir[existingConfig.Dir]; !haveProject {
 					logger.Debugf("removed %s %q", existingProject.Project.TypeString(), existingProject.Project.Config().Key)
 					topic.Publish(WatchEventProjectRemoved{Project: existingProject.Project})
-					delete(existingProjects, existingConfig.Dir)
+					delete(w.existingProjects, existingConfig.Dir)
 				}
 			}
 
 			// Compare the projects to the existing projects.
 			for _, project := range projectsByDir {
+				if transactions, ok := w.moduleTransactions[project.Config().Dir]; ok && len(transactions) > 0 {
+					// Skip projects that currently have transactions
+					continue
+				}
 				config := project.Config()
-				existingProject, haveExistingProject := existingProjects[config.Dir]
+				existingProject, haveExistingProject := w.existingProjects[config.Dir]
 				hashes, err := ComputeFileHashes(project)
 				if err != nil {
 					logger.Tracef("error computing file hashes for %s: %v", config.Dir, err)
@@ -88,14 +131,96 @@ func Watch(ctx context.Context, period time.Duration, moduleDirs []string, exter
 					}
 					logger.Debugf("changed %s %q: %c%s", project.TypeString(), project.Config().Key, changeType, path)
 					topic.Publish(WatchEventProjectChanged{Project: existingProject.Project, Change: changeType, Path: path, Time: time.Now()})
-					existingProjects[config.Dir] = projectHashes{Hashes: hashes, Project: existingProject.Project}
+					w.existingProjects[config.Dir] = projectHashes{Hashes: hashes, Project: existingProject.Project}
 					continue
 				}
 				logger.Debugf("added %s %q", project.TypeString(), project.Config().Key)
 				topic.Publish(WatchEventProjectAdded{Project: project})
-				existingProjects[config.Dir] = projectHashes{Hashes: hashes, Project: project}
+				w.existingProjects[config.Dir] = projectHashes{Hashes: hashes, Project: project}
 			}
+			w.mutex.Unlock()
 		}
 	}()
-	return topic
+	return topic, nil
+}
+
+// ModifyFilesTransaction allows builds to modify files in a module without triggering a watch event.
+// This helps us avoid infinite loops with builds changing files, and those changes triggering new builds.as a no-op
+type ModifyFilesTransaction interface {
+	Begin() error
+	ModifiedFiles(paths ...string) error
+	End() error
+}
+
+// Implementation of ModifyFilesTransaction protocol
+type modifyFilesTransaction struct {
+	watcher   *Watcher
+	moduleDir string
+	isActive  bool
+}
+
+var _ ModifyFilesTransaction = (*modifyFilesTransaction)(nil)
+var _ compile.ModifyFilesTransaction = (*modifyFilesTransaction)(nil)
+
+func (t *modifyFilesTransaction) Begin() error {
+	if t.isActive {
+		return fmt.Errorf("transaction is already active")
+	}
+	t.isActive = true
+
+	t.watcher.mutex.Lock()
+	defer t.watcher.mutex.Unlock()
+
+	t.watcher.moduleTransactions[t.moduleDir] = append(t.watcher.moduleTransactions[t.moduleDir], t)
+
+	return nil
+}
+
+func (t *modifyFilesTransaction) End() error {
+	if !t.isActive {
+		return fmt.Errorf("transaction is not active")
+	}
+
+	t.watcher.mutex.Lock()
+	defer t.watcher.mutex.Unlock()
+
+	for idx, transaction := range t.watcher.moduleTransactions[t.moduleDir] {
+		if transaction != t {
+			continue
+		}
+		t.isActive = false
+		t.watcher.moduleTransactions[t.moduleDir] = append(t.watcher.moduleTransactions[t.moduleDir][:idx], t.watcher.moduleTransactions[t.moduleDir][idx+1:]...)
+		return nil
+	}
+	return fmt.Errorf("could not end transaction because it was not found")
+}
+
+func (t *modifyFilesTransaction) ModifiedFiles(paths ...string) error {
+	if !t.isActive {
+		return fmt.Errorf("can not modify file because transaction is not active: %v", paths)
+	}
+
+	t.watcher.mutex.Lock()
+	defer t.watcher.mutex.Unlock()
+
+	projectHashes, ok := t.watcher.existingProjects[t.moduleDir]
+	if !ok {
+		// skip updating hashes because we have not discovered this project yet
+		return nil
+	}
+
+	for _, path := range paths {
+		hash, matched, err := ComputeFileHash(projectHashes.Project, path)
+		if err != nil {
+			return err
+		}
+		if !matched {
+			continue
+		}
+
+		projectHashes.Hashes[path] = hash
+	}
+	t.watcher.existingProjects[t.moduleDir] = projectHashes
+
+	return nil
 }
diff --git a/buildengine/watch_test.go b/buildengine/watch_test.go
index 39bc2b464..cf0560227 100644
--- a/buildengine/watch_test.go
+++ b/buildengine/watch_test.go
@@ -9,11 +9,15 @@ import (
 	"time"
 
 	"github.com/alecthomas/assert/v2"
+	"github.com/alecthomas/types/pubsub"
 
 	. "github.com/TBD54566975/ftl/buildengine"
 	"github.com/TBD54566975/ftl/internal/log"
 )
 
+const pollFrequency = time.Millisecond * 500
+const halfPollFrequency = time.Millisecond * 250
+
 func TestWatch(t *testing.T) {
 	if testing.Short() {
 		t.SkipNow()
@@ -22,32 +26,27 @@ func TestWatch(t *testing.T) {
 
 	dir := t.TempDir()
 
-	// Start the watch
-	events := make(chan WatchEvent, 128)
-	watch := Watch(ctx, time.Millisecond*200, []string{dir}, nil)
-	watch.Subscribe(events)
+	w := NewWatcher()
+	events, topic := startWatching(ctx, t, w, dir)
+
+	time.Sleep(pollFrequency + halfPollFrequency) // midway between file scans
 
 	// Initiate a bunch of changes.
 	err := ftl("init", "go", dir, "one")
 	assert.NoError(t, err)
 	err = ftl("init", "go", dir, "two")
 	assert.NoError(t, err)
-	time.Sleep(time.Millisecond * 500)
+	time.Sleep(pollFrequency)
 
 	// Delete a module
 	err = os.RemoveAll(filepath.Join(dir, "two"))
 	assert.NoError(t, err)
 
 	// Change a module.
-	cmd := exec.Command("go", "mod", "edit", "-replace=github.com/TBD54566975/ftl=..")
-	cmd.Dir = filepath.Join(dir, "one")
-	cmd.Stdout = os.Stdout
-	cmd.Stderr = os.Stderr
-	err = cmd.Run()
-	assert.NoError(t, err)
+	updateModFile(t, filepath.Join(dir, "one"))
 
-	time.Sleep(time.Millisecond * 500)
-	watch.Close()
+	time.Sleep(pollFrequency)
+	topic.Close()
 
 	allEvents := []WatchEvent{}
 	for event := range events {
@@ -76,7 +75,117 @@ func TestWatch(t *testing.T) {
 			}
 		}
 	}
-	assert.True(t, found >= 4, "expected at least 4 events, got %d", found)
+	assert.True(t, found >= 4, "expected at least 4 events, got %d:\n%v", found, allEvents)
+}
+
+func TestWatchWithBuildModifyingFiles(t *testing.T) {
+	if testing.Short() {
+		t.SkipNow()
+	}
+	ctx := log.ContextWithNewDefaultLogger(context.Background())
+
+	dir := t.TempDir()
+
+	w := NewWatcher()
+
+	// Initiate a module
+	err := ftl("init", "go", dir, "one")
+	assert.NoError(t, err)
+
+	events, topic := startWatching(ctx, t, w, dir)
+
+	time.Sleep(pollFrequency + halfPollFrequency) // midway between file scans
+
+	// Change a file in a module, within a transaction
+	transaction := w.GetTransaction(filepath.Join(dir, "one"))
+	err = transaction.Begin()
+	assert.NoError(t, err)
+	updateModFile(t, filepath.Join(dir, "one"))
+	err = transaction.ModifiedFiles(filepath.Join(dir, "one", "go.mod"))
+	assert.NoError(t, err)
+
+	err = transaction.End()
+	assert.NoError(t, err)
+
+	time.Sleep(pollFrequency)
+	topic.Close()
+
+	allEvents := []WatchEvent{}
+	for event := range events {
+		allEvents = append(allEvents, event)
+	}
+	for _, event := range allEvents {
+		event, wasAdded := event.(WatchEventProjectAdded)
+		assert.True(t, wasAdded, "expected only project added events, got %v", event)
+	}
+}
+
+func TestWatchWithBuildAndUserModifyingFiles(t *testing.T) {
+	if testing.Short() {
+		t.SkipNow()
+	}
+	ctx := log.ContextWithNewDefaultLogger(context.Background())
+
+	dir := t.TempDir()
+
+	// Initiate a module
+	err := ftl("init", "go", dir, "one")
+	assert.NoError(t, err)
+
+	w := NewWatcher()
+	events, topic := startWatching(ctx, t, w, dir)
+
+	time.Sleep(pollFrequency + halfPollFrequency) // midway between file scans
+
+	// Change a file in a module, within a transaction
+	transaction := w.GetTransaction(filepath.Join(dir, "one"))
+	err = transaction.Begin()
+	assert.NoError(t, err)
+
+	updateModFile(t, filepath.Join(dir, "one"))
+
+	// Change a file in a module, without a transaction (user change)
+	cmd := exec.Command("mv", "one.go", "one_.go")
+	cmd.Dir = filepath.Join(dir, "one")
+	cmd.Stdout = os.Stdout
+	cmd.Stderr = os.Stderr
+	err = cmd.Run()
+	assert.NoError(t, err)
+
+	err = transaction.End()
+	assert.NoError(t, err)
+
+	time.Sleep(pollFrequency)
+	topic.Close()
+
+	allEvents := []WatchEvent{}
+	for event := range events {
+		allEvents = append(allEvents, event)
+	}
+	foundChange := false
+	for _, event := range allEvents {
+		switch event := event.(type) {
+		case WatchEventProjectAdded:
+			// expected
+		case WatchEventProjectRemoved:
+			assert.False(t, true, "unexpected project removed event")
+		case WatchEventProjectChanged:
+			if event.Project.Config().Key == "one" {
+				foundChange = true
+			}
+		}
+	}
+	assert.True(t, foundChange, "expected project changed event")
+}
+
+func startWatching(ctx context.Context, t *testing.T, w *Watcher, dir string) (chan WatchEvent, *pubsub.Topic[WatchEvent]) {
+	t.Helper()
+	events := make(chan WatchEvent, 128)
+	topic, err := w.Watch(ctx, pollFrequency, []string{dir}, nil)
+	assert.NoError(t, err)
+	topic.Subscribe(events)
+
+	return events, topic
 }
 
 func ftl(args ...string) error {
@@ -85,3 +194,13 @@ func ftl(args ...string) error {
 	cmd.Stderr = os.Stderr
 	return cmd.Run()
 }
+
+func updateModFile(t *testing.T, dir string) {
+	t.Helper()
+	cmd := exec.Command("go", "mod", "edit", "-replace=github.com/TBD54566975/ftl=..")
+	cmd.Dir = dir
+	cmd.Stdout = os.Stdout
+	cmd.Stderr = os.Stderr
+	err := cmd.Run()
+	assert.NoError(t, err)
+}
diff --git a/go-runtime/compile/build.go b/go-runtime/compile/build.go
index f9122773f..abbe4fc4e 100644
--- a/go-runtime/compile/build.go
+++ b/go-runtime/compile/build.go
@@ -51,6 +51,12 @@ type mainModuleContext struct {
 	Replacements []*modfile.Replace
 }
 
+type ModifyFilesTransaction interface {
+	Begin() error
+	ModifiedFiles(paths ...string) error
+	End() error
+}
+
 func (b ExternalModuleContext) NonMainModules() []*schema.Module {
 	modules := make([]*schema.Module, 0, len(b.Modules))
 	for _, module := range b.Modules {
@@ -69,7 +75,16 @@ func buildDir(moduleDir string) string {
 }
 
 // Build the given module.
-func Build(ctx context.Context, moduleDir string, sch *schema.Schema) error {
+func Build(ctx context.Context, moduleDir string, sch *schema.Schema, filesTransaction ModifyFilesTransaction) (err error) {
+	if err := filesTransaction.Begin(); err != nil {
+		return err
+	}
+	defer func() {
+		if terr := filesTransaction.End(); terr != nil {
+			err = fmt.Errorf("failed to end file transaction: %w", terr)
+		}
+	}()
+
 	replacements, goModVersion, err := updateGoModule(filepath.Join(moduleDir, "go.mod"))
 	if err != nil {
 		return err
@@ -155,28 +170,27 @@ func Build(ctx context.Context, moduleDir string, sch *schema.Schema) error {
 		return err
 	}
 
-	wg, wgctx := errgroup.WithContext(ctx)
-
 	logger.Debugf("Tidying go.mod files")
+	wg, wgctx := errgroup.WithContext(ctx)
 	wg.Go(func() error {
 		if err := exec.Command(ctx, log.Debug, moduleDir, "go", "mod", "tidy").RunBuffered(ctx); err != nil {
 			return fmt.Errorf("%s: failed to tidy go.mod: %w", moduleDir, err)
 		}
-		return nil
+		return filesTransaction.ModifiedFiles(filepath.Join(moduleDir, "go.mod"), filepath.Join(moduleDir, "go.sum"))
 	})
 	mainDir := filepath.Join(buildDir, "go", "main")
 	wg.Go(func() error {
 		if err := exec.Command(wgctx, log.Debug, mainDir, "go", "mod", "tidy").RunBuffered(wgctx); err != nil {
 			return fmt.Errorf("%s: failed to tidy go.mod: %w", mainDir, err)
 		}
-		return nil
+		return filesTransaction.ModifiedFiles(filepath.Join(mainDir, "go.mod"), filepath.Join(moduleDir, "go.sum"))
 	})
 	wg.Go(func() error {
 		modulesDir := filepath.Join(buildDir, "go", "modules")
 		if err := exec.Command(wgctx, log.Debug, modulesDir, "go", "mod", "tidy").RunBuffered(wgctx); err != nil {
 			return fmt.Errorf("%s: failed to tidy go.mod: %w", modulesDir, err)
 		}
-		return nil
+		return filesTransaction.ModifiedFiles(filepath.Join(modulesDir, "go.mod"), filepath.Join(moduleDir, "go.sum"))
 	})
 	if err := wg.Wait(); err != nil {
 		return err
diff --git a/go-runtime/compile/testdata/one/go.sum b/go-runtime/compile/testdata/one/go.sum
index 7ac30c81b..9bddd3462 100644
--- a/go-runtime/compile/testdata/one/go.sum
+++ b/go-runtime/compile/testdata/one/go.sum
@@ -128,14 +128,14 @@ gopkg.in/yaml.v3 v3.0.1 h1:fxVm/GzAzEWqLHuvctI91KS9hhNmmWOoWu0XTYJS7CA=
 gopkg.in/yaml.v3 v3.0.1/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
 modernc.org/gc/v3 v3.0.0-20240107210532-573471604cb6 h1:5D53IMaUuA5InSeMu9eJtlQXS2NxAhyWQvkKEgXZhHI=
 modernc.org/gc/v3 v3.0.0-20240107210532-573471604cb6/go.mod h1:Qz0X07sNOR1jWYCrJMEnbW/X55x206Q7Vt4mz6/wHp4=
-modernc.org/libc v1.41.0 h1:g9YAc6BkKlgORsUWj+JwqoB1wU3o4DE3bM3yvA3k+Gk=
-modernc.org/libc v1.41.0/go.mod h1:w0eszPsiXoOnoMJgrXjglgLuDy/bt5RR4y3QzUUeodY=
+modernc.org/libc v1.49.3 h1:j2MRCRdwJI2ls/sGbeSk0t2bypOG/uvPZUsGQFDulqg=
+modernc.org/libc v1.49.3/go.mod h1:yMZuGkn7pXbKfoT/M35gFJOAEdSKdxL0q64sF7KqCDo=
 modernc.org/mathutil v1.6.0 h1:fRe9+AmYlaej+64JsEEhoWuAYBkOtQiMEU7n/XgfYi4=
 modernc.org/mathutil v1.6.0/go.mod h1:Ui5Q9q1TR2gFm0AQRqQUaBWFLAhQpCwNcuhBOSedWPo=
-modernc.org/memory v1.7.2 h1:Klh90S215mmH8c9gO98QxQFsY+W451E8AnzjoE2ee1E=
-modernc.org/memory v1.7.2/go.mod h1:NO4NVCQy0N7ln+T9ngWqOQfi7ley4vpwvARR+Hjw95E=
-modernc.org/sqlite v1.29.6 h1:0lOXGrycJPptfHDuohfYgNqoe4hu+gYuN/pKgY5XjS4=
-modernc.org/sqlite v1.29.6/go.mod h1:S02dvcmm7TnTRvGhv8IGYyLnIt7AS2KPaB1F/71p75U=
+modernc.org/memory v1.8.0 h1:IqGTL6eFMaDZZhEWwcREgeMXYwmW83LYW8cROZYkg+E=
+modernc.org/memory v1.8.0/go.mod h1:XPZ936zp5OMKGWPqbD3JShgd/ZoQ7899TUuQqxY+peU=
+modernc.org/sqlite v1.29.8 h1:nGKglNx9K5v0As+zF0/Gcl1kMkmaU1XynYyq92PbsC8=
+modernc.org/sqlite v1.29.8/go.mod h1:lQPm27iqa4UNZpmr4Aor0MH0HkCLbt1huYDfWylLZFk=
 modernc.org/strutil v1.2.0 h1:agBi9dp1I+eOnxXeiZawM8F4LawKv4NzGWSaLfyeNZA=
 modernc.org/strutil v1.2.0/go.mod h1:/mdcBmfOibveCTBxUl5B5l6W+TTH1FXPLHZE6bTosX0=
 modernc.org/token v1.1.0 h1:Xl7Ap9dKaEs5kLoOQeQmPWevfnk/DM5qcLcYlA8ys6Y=
diff --git a/go-runtime/compile/testdata/two/go.sum b/go-runtime/compile/testdata/two/go.sum
index 7ac30c81b..9bddd3462 100644
--- a/go-runtime/compile/testdata/two/go.sum
+++ b/go-runtime/compile/testdata/two/go.sum
@@ -128,14 +128,14 @@ gopkg.in/yaml.v3 v3.0.1 h1:fxVm/GzAzEWqLHuvctI91KS9hhNmmWOoWu0XTYJS7CA=
 gopkg.in/yaml.v3 v3.0.1/go.mod h1:K4uyk7z7BCEPqu6E+C64Yfv1cQ7kz7rIZviUmN+EgEM=
 modernc.org/gc/v3 v3.0.0-20240107210532-573471604cb6 h1:5D53IMaUuA5InSeMu9eJtlQXS2NxAhyWQvkKEgXZhHI=
 modernc.org/gc/v3 v3.0.0-20240107210532-573471604cb6/go.mod h1:Qz0X07sNOR1jWYCrJMEnbW/X55x206Q7Vt4mz6/wHp4=
-modernc.org/libc v1.41.0 h1:g9YAc6BkKlgORsUWj+JwqoB1wU3o4DE3bM3yvA3k+Gk=
-modernc.org/libc v1.41.0/go.mod h1:w0eszPsiXoOnoMJgrXjglgLuDy/bt5RR4y3QzUUeodY=
+modernc.org/libc v1.49.3 h1:j2MRCRdwJI2ls/sGbeSk0t2bypOG/uvPZUsGQFDulqg=
+modernc.org/libc v1.49.3/go.mod h1:yMZuGkn7pXbKfoT/M35gFJOAEdSKdxL0q64sF7KqCDo=
 modernc.org/mathutil v1.6.0 h1:fRe9+AmYlaej+64JsEEhoWuAYBkOtQiMEU7n/XgfYi4=
 modernc.org/mathutil v1.6.0/go.mod h1:Ui5Q9q1TR2gFm0AQRqQUaBWFLAhQpCwNcuhBOSedWPo=
-modernc.org/memory v1.7.2 h1:Klh90S215mmH8c9gO98QxQFsY+W451E8AnzjoE2ee1E=
-modernc.org/memory v1.7.2/go.mod h1:NO4NVCQy0N7ln+T9ngWqOQfi7ley4vpwvARR+Hjw95E=
-modernc.org/sqlite v1.29.6 h1:0lOXGrycJPptfHDuohfYgNqoe4hu+gYuN/pKgY5XjS4=
-modernc.org/sqlite v1.29.6/go.mod h1:S02dvcmm7TnTRvGhv8IGYyLnIt7AS2KPaB1F/71p75U=
+modernc.org/memory v1.8.0 h1:IqGTL6eFMaDZZhEWwcREgeMXYwmW83LYW8cROZYkg+E=
+modernc.org/memory v1.8.0/go.mod h1:XPZ936zp5OMKGWPqbD3JShgd/ZoQ7899TUuQqxY+peU=
+modernc.org/sqlite v1.29.8 h1:nGKglNx9K5v0As+zF0/Gcl1kMkmaU1XynYyq92PbsC8=
+modernc.org/sqlite v1.29.8/go.mod h1:lQPm27iqa4UNZpmr4Aor0MH0HkCLbt1huYDfWylLZFk=
 modernc.org/strutil v1.2.0 h1:agBi9dp1I+eOnxXeiZawM8F4LawKv4NzGWSaLfyeNZA=
 modernc.org/strutil v1.2.0/go.mod h1:/mdcBmfOibveCTBxUl5B5l6W+TTH1FXPLHZE6bTosX0=
 modernc.org/token v1.1.0 h1:Xl7Ap9dKaEs5kLoOQeQmPWevfnk/DM5qcLcYlA8ys6Y=