diff --git a/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/RunesGeneric.svelte b/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/RunesGeneric.svelte
new file mode 100644
index 000000000..0b9ff0c17
--- /dev/null
+++ b/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/RunesGeneric.svelte
@@ -0,0 +1,7 @@
+<script lang="ts" generics="T">
+    let { readonly, can_bind = $bindable() }: { readonly?: T; can_bind?: T } = $props();
+
+    export function only_bind() {
+        return true;
+    }
+</script>
diff --git a/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/expected_svelte_5.json b/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/expected_svelte_5.json
index 72c8185db..b3e926780 100644
--- a/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/expected_svelte_5.json
+++ b/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/expected_svelte_5.json
@@ -66,5 +66,73 @@
         "severity": 1,
         "source": "ts",
         "tags": []
+    },
+    {
+        "code": 2322,
+        "message": "Cannot use 'bind:' with this property. It is declared as non-bindable inside the component.\nTo mark a property as bindable: 'let { readonly = $bindable() } = $props()'",
+        "range": {
+            "end": {
+                "character": 27,
+                "line": 29
+            },
+            "start": {
+                "character": 14,
+                "line": 29
+            }
+        },
+        "severity": 1,
+        "source": "ts",
+        "tags": []
+    },
+    {
+        "code": 2353,
+        "message": "Object literal may only specify known properties, and 'only_bind' does not exist in type '$$ComponentProps'.",
+        "range": {
+            "end": {
+                "character": 28,
+                "line": 30
+            },
+            "start": {
+                "character": 19,
+                "line": 30
+            }
+        },
+        "severity": 1,
+        "source": "ts",
+        "tags": []
+    },
+    {
+        "code": 2322,
+        "message": "Cannot use 'bind:' with this property. It is declared as non-bindable inside the component.\nTo mark a property as bindable: 'let { only_bind = $bindable() } = $props()'",
+        "range": {
+            "end": {
+                "character": 28,
+                "line": 30
+            },
+            "start": {
+                "character": 14,
+                "line": 30
+            }
+        },
+        "severity": 1,
+        "source": "ts",
+        "tags": []
+    },
+    {
+        "code": 2353,
+        "message": "Object literal may only specify known properties, and 'only_bind' does not exist in type '$$ComponentProps'.",
+        "range": {
+            "end": {
+                "character": 24,
+                "line": 31
+            },
+            "start": {
+                "character": 15,
+                "line": 31
+            }
+        },
+        "severity": 1,
+        "source": "ts",
+        "tags": []
     }
 ]
diff --git a/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/input.svelte b/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/input.svelte
index 55de44f2d..73fdc9d0b 100644
--- a/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/input.svelte
+++ b/packages/language-server/test/plugins/typescript/features/diagnostics/fixtures/bindings/input.svelte
@@ -9,7 +9,7 @@
     let can_bind = '';
     let readonly = ''
 
-    let instance: Runes;
+    let instance: ReturnType<typeof Runes>;
     instance!.only_bind() === true;
 </script>
 
@@ -26,3 +26,7 @@
 <Runes bind:readonly />
 <Runes bind:only_bind />
 <Runes {only_bind} />
+
+<RunesGeneric bind:readonly />
+<RunesGeneric bind:only_bind />
+<RunesGeneric {only_bind} />
diff --git a/packages/svelte2tsx/src/svelte2tsx/addComponentExport.ts b/packages/svelte2tsx/src/svelte2tsx/addComponentExport.ts
index 5e4403c35..fc9550b77 100644
--- a/packages/svelte2tsx/src/svelte2tsx/addComponentExport.ts
+++ b/packages/svelte2tsx/src/svelte2tsx/addComponentExport.ts
@@ -109,28 +109,21 @@ ${
                 : `${returnType('props')} & {${eventsSlotsType.join(', ')}}`;
         const bindingsType = `ReturnType<__sveltets_Render${generics.toReferencesAnyString()}['bindings']>`;
 
-        if (exportedNames.usesRunes() && !events.hasEvents() && !usesSlots) {
-            statement +=
-                `\ntype $$$Component${genericsDef} = import('svelte').Component<${propsType}, ${returnType('exports')}, ${bindingsType}> \n` +
-                `${doc}declare function ${className || '$$Component'}${genericsDef}(...args: Parameters<$$$Component${generics.toReferencesString()}>): ReturnType<$$$Component${generics.toReferencesString()}>;\n` +
-                // The only way to preserve the generic type when transforming this function type to a class via __sveltets_2_ensureComponent later is a function,
-                // and so we need to manually add the properties on the function itself this way.
-                `${className || '$$Component'}.z_$$bindings = null as any as ${bindingsType};\n` +
-                `${className || '$$Component'}.element = null as any;\n` +
-                `export default ${className || '$$Component'};`;
-        } else {
-            statement +=
-                `\ninterface $$IsomorphicComponent {\n` +
-                `    new ${genericsDef}(options: import('svelte').ComponentConstructorOptions<${returnType('props') + (usesSlots ? '& {children?: any}' : '')}>): import('svelte').SvelteComponent<${returnType('props')}, ${returnType('events')}, ${returnType('slots')}> & { $$bindings?: ${returnType('bindings')} } & ${returnType('exports')};\n` +
-                `    ${genericsDef}(internal: unknown, props: ${propsType}): ${returnType('exports')};\n` +
-                `    z_$$bindings?: ${bindingsType};\n` +
-                `}\n` +
-                `${doc}const ${className || '$$Component'}: $$IsomorphicComponent = null as any;\n` +
-                surroundWithIgnoreComments(
-                    `type ${className || '$$Component'}${genericsDef} = InstanceType<typeof ${className || '$$Component'}${genericsRef}>;\n`
-                ) +
-                `export default ${className || '$$Component'};`;
-        }
+        // Sadly, due to a combination of requirements and TypeScript limitations, we need to always create both a legacy class component and function component type.
+        // - Constraints: Need to support Svelte 4 class component types, therefore we need to use __sveltets_2_ensureComponent to transform function components to classes
+        // - Limitations: TypeScript is not able to preserve generics during said transformation (i.e. there's no way to express keeping the generic etc)
+        // TODO Svelte 6/7: Switch this around and not use new Component in svelte2tsx anymore, which means we can remove the legacy class component. We need something like _ensureFnComponent then.
+        statement +=
+            `\ninterface $$IsomorphicComponent {\n` +
+            `    new ${genericsDef}(options: import('svelte').ComponentConstructorOptions<${returnType('props') + (usesSlots ? '& {children?: any}' : '')}>): import('svelte').SvelteComponent<${returnType('props')}, ${returnType('events')}, ${returnType('slots')}> & { $$bindings?: ${returnType('bindings')} } & ${returnType('exports')};\n` +
+            `    ${genericsDef}(internal: unknown, props: ${propsType}): ${returnType('exports')};\n` +
+            `    z_$$bindings?: ${bindingsType};\n` +
+            `}\n` +
+            `${doc}const ${className || '$$Component'}: $$IsomorphicComponent = null as any;\n` +
+            surroundWithIgnoreComments(
+                `type ${className || '$$Component'}${genericsDef} = InstanceType<typeof ${className || '$$Component'}${genericsRef}>;\n`
+            ) +
+            `export default ${className || '$$Component'};`;
     } else if (mode === 'dts') {
         statement +=
             `export type ${PropsName}${genericsDef} = ${returnType('props')};\n` +
diff --git a/packages/svelte2tsx/svelte-shims-v4.d.ts b/packages/svelte2tsx/svelte-shims-v4.d.ts
index 292f99cdd..71bfbac6d 100644
--- a/packages/svelte2tsx/svelte-shims-v4.d.ts
+++ b/packages/svelte2tsx/svelte-shims-v4.d.ts
@@ -220,11 +220,36 @@ declare type ATypedSvelteComponent = {
  * ```
  */
 declare type ConstructorOfATypedSvelteComponent = new (args: {target: any, props?: any}) => ATypedSvelteComponent
+// Usage note: Cannot properly transform generic function components to class components due to TypeScript limitations
 declare function __sveltets_2_ensureComponent<
-    // @ts-ignore svelte.Component doesn't exist in Svelte 4
-    T extends ConstructorOfATypedSvelteComponent | (typeof import('svelte') extends { mount: any } ? import('svelte').Component<any, any, any> : never) | null | undefined
-    // @ts-ignore svelte.Component doesn't exist in Svelte 4
->(type: T): NonNullable<T extends ConstructorOfATypedSvelteComponent ? T : typeof import('svelte') extends { mount: any } ? T extends import('svelte').Component<infer Props extends Record<string, any>> ? typeof import('svelte').SvelteComponent<Props, Props['$$events'], Props['$$slots']> : T : T>;
+    T extends
+        | ConstructorOfATypedSvelteComponent
+        | (typeof import('svelte') extends { mount: any }
+              ? // @ts-ignore svelte.Component doesn't exist in Svelte 4
+                import('svelte').Component<any, any, any>
+              : never)
+        | null
+        | undefined
+>(
+    type: T
+): NonNullable<
+    T extends ConstructorOfATypedSvelteComponent
+        ? T
+        : typeof import('svelte') extends { mount: any }
+          ? // @ts-ignore svelte.Component doesn't exist in Svelte 4
+            T extends import('svelte').Component<
+                infer Props extends Record<string, any>,
+                infer Exports extends Record<string, any>,
+                infer Bindings extends string
+            >
+              ? new (
+                    options: import('svelte').ComponentConstructorOptions<Props>
+                ) => import('svelte').SvelteComponent<Props, Props['$$events'], Props['$$slots']> &
+                    Exports & { $$bindings: Bindings }
+              : never
+          : never
+>;
+
 declare function __sveltets_2_ensureArray<T extends ArrayLike<unknown> | Iterable<unknown>>(array: T): T extends ArrayLike<infer U> ? U[] : T extends Iterable<infer U> ? Iterable<U> : any[];
 
 type __sveltets_2_PropsWithChildren<Props, Slots> = Props &
diff --git a/packages/svelte2tsx/test/emitDts/samples/typescript-runes-generics.v5/expected/TestRunes.svelte.d.ts b/packages/svelte2tsx/test/emitDts/samples/typescript-runes-generics.v5/expected/TestRunes.svelte.d.ts
index 5d9fef43d..296b24ab4 100644
--- a/packages/svelte2tsx/test/emitDts/samples/typescript-runes-generics.v5/expected/TestRunes.svelte.d.ts
+++ b/packages/svelte2tsx/test/emitDts/samples/typescript-runes-generics.v5/expected/TestRunes.svelte.d.ts
@@ -10,10 +10,13 @@ declare class __sveltets_Render<T extends Record<string, any>, K extends keyof T
         baz: () => T;
     };
 }
-type $$$Component<T extends Record<string, any>, K extends keyof T> = import('svelte').Component<ReturnType<__sveltets_Render<T, K>['props']> & {}, ReturnType<__sveltets_Render<T, K>['exports']>, ReturnType<__sveltets_Render<any, any>['bindings']>>;
-declare function TestRunes<T extends Record<string, any>, K extends keyof T>(...args: Parameters<$$$Component<T, K>>): ReturnType<$$$Component<T, K>>;
-declare namespace TestRunes {
-    var z_$$bindings: "bar";
-    var element: any;
+interface $$IsomorphicComponent {
+    new <T extends Record<string, any>, K extends keyof T>(options: import('svelte').ComponentConstructorOptions<ReturnType<__sveltets_Render<T, K>['props']>>): import('svelte').SvelteComponent<ReturnType<__sveltets_Render<T, K>['props']>, ReturnType<__sveltets_Render<T, K>['events']>, ReturnType<__sveltets_Render<T, K>['slots']>> & {
+        $$bindings?: ReturnType<__sveltets_Render<T, K>['bindings']>;
+    } & ReturnType<__sveltets_Render<T, K>['exports']>;
+    <T extends Record<string, any>, K extends keyof T>(internal: unknown, props: ReturnType<__sveltets_Render<T, K>['props']> & {}): ReturnType<__sveltets_Render<T, K>['exports']>;
+    z_$$bindings?: ReturnType<__sveltets_Render<any, any>['bindings']>;
 }
+declare const TestRunes: $$IsomorphicComponent;
+type TestRunes<T extends Record<string, any>, K extends keyof T> = InstanceType<typeof TestRunes<T, K>>;
 export default TestRunes;
diff --git a/packages/svelte2tsx/test/svelte2tsx/samples/ts-runes-generics.v5/expectedv2.ts b/packages/svelte2tsx/test/svelte2tsx/samples/ts-runes-generics.v5/expectedv2.ts
index 2308c5e7e..d87b3a3ee 100644
--- a/packages/svelte2tsx/test/svelte2tsx/samples/ts-runes-generics.v5/expectedv2.ts
+++ b/packages/svelte2tsx/test/svelte2tsx/samples/ts-runes-generics.v5/expectedv2.ts
@@ -21,8 +21,11 @@ class __sveltets_Render<T> {
     exports() { return {}; }
 }
 
-type $$$Component<T> = import('svelte').Component<ReturnType<__sveltets_Render<T>['props']> & {}, ReturnType<__sveltets_Render<T>['exports']>, ReturnType<__sveltets_Render<any>['bindings']>> 
-declare function Input__SvelteComponent_<T>(...args: Parameters<$$$Component<T>>): ReturnType<$$$Component<T>>;
-Input__SvelteComponent_.z_$$bindings = null as any as ReturnType<__sveltets_Render<any>['bindings']>;
-Input__SvelteComponent_.element = null as any;
-export default Input__SvelteComponent_;
\ No newline at end of file
+interface $$IsomorphicComponent {
+    new <T>(options: import('svelte').ComponentConstructorOptions<ReturnType<__sveltets_Render<T>['props']>>): import('svelte').SvelteComponent<ReturnType<__sveltets_Render<T>['props']>, ReturnType<__sveltets_Render<T>['events']>, ReturnType<__sveltets_Render<T>['slots']>> & { $$bindings?: ReturnType<__sveltets_Render<T>['bindings']> } & ReturnType<__sveltets_Render<T>['exports']>;
+    <T>(internal: unknown, props: ReturnType<__sveltets_Render<T>['props']> & {}): ReturnType<__sveltets_Render<T>['exports']>;
+    z_$$bindings?: ReturnType<__sveltets_Render<any>['bindings']>;
+}
+const Input__SvelteComponent_: $$IsomorphicComponent = null as any;
+/*Ωignore_startΩ*/type Input__SvelteComponent_<T> = InstanceType<typeof Input__SvelteComponent_<T>>;
+/*Ωignore_endΩ*/export default Input__SvelteComponent_;
\ No newline at end of file