diff --git a/packages/@vue/cli-service/lib/commands/serve.js b/packages/@vue/cli-service/lib/commands/serve.js
index d90e442250..26b2a3f37a 100644
--- a/packages/@vue/cli-service/lib/commands/serve.js
+++ b/packages/@vue/cli-service/lib/commands/serve.js
@@ -1,7 +1,7 @@
 const {
   info,
   hasProjectYarn,
-  hasPnpm,
+  hasProjectPnpm,
   openBrowser,
   IpcMessenger
 } = require('@vue/cli-shared-utils')
@@ -235,7 +235,7 @@ module.exports = (api, options) => {
           isFirstCompile = false
 
           if (!isProduction) {
-            const buildCommand = hasProjectYarn(api.getCwd()) ? `yarn build` : hasPnpm() ? `pnpm run build` : `npm run build`
+            const buildCommand = hasProjectYarn(api.getCwd()) ? `yarn build` : hasProjectPnpm(api.getCwd()) ? `pnpm run build` : `npm run build`
             console.log(`  Note that the development build is not optimized.`)
             console.log(`  To create a production build, run ${chalk.cyan(buildCommand)}.`)
           } else {
diff --git a/packages/@vue/cli-shared-utils/lib/env.js b/packages/@vue/cli-shared-utils/lib/env.js
index 84673f6567..64d51dd224 100644
--- a/packages/@vue/cli-shared-utils/lib/env.js
+++ b/packages/@vue/cli-shared-utils/lib/env.js
@@ -14,7 +14,6 @@ const _gitProjects = new LRU({
   max: 10,
   maxAge: 1000
 })
-let _hasPnpm
 
 // env detection
 exports.hasYarn = () => {
@@ -79,25 +78,51 @@ exports.hasProjectGit = (cwd) => {
   return result
 }
 
-exports.hasPnpm = () => {
+let _hasPnpm
+let _hasPnpm3orLater
+const _pnpmProjects = new LRU({
+  max: 10,
+  maxAge: 1000
+})
+
+exports.hasPnpm3OrLater = () => {
   if (process.env.VUE_CLI_TEST) {
     return true
   }
-  if (_hasPnpm != null) {
-    return _hasPnpm
+  if (_hasPnpm3orLater != null) {
+    return _hasPnpm3orLater
   }
   try {
     const pnpmVersion = execSync('pnpm --version').toString()
     // there's a critical bug in pnpm 2
     // https://github.com/pnpm/pnpm/issues/1678#issuecomment-469981972
     // so we only support pnpm >= 3.0.0
-    _hasPnpm = semver.gte(pnpmVersion, '3.0.0')
-    return _hasPnpm
+    _hasPnpm = true
+    _hasPnpm3orLater = semver.gte(pnpmVersion, '3.0.0')
+    return _hasPnpm3orLater
   } catch (e) {
-    return (_hasPnpm = false)
+    return (_hasPnpm3orLater = false)
   }
 }
 
+exports.hasProjectPnpm = (cwd) => {
+  if (_pnpmProjects.has(cwd)) {
+    return checkPnpm(_pnpmProjects.get(cwd))
+  }
+
+  const lockFile = path.join(cwd, 'pnpm-lock.yaml')
+  const result = fs.existsSync(lockFile)
+  _pnpmProjects.set(cwd, result)
+  return checkPnpm(result)
+}
+
+function checkPnpm (result) {
+  if (result && !exports.hasPnpm3OrLater()) {
+    throw new Error(`The project seems to require pnpm${_hasPnpm ? ' >= 3' : ''} but it's not installed.`)
+  }
+  return result
+}
+
 // OS
 exports.isWindows = process.platform === 'win32'
 exports.isMacintosh = process.platform === 'darwin'
diff --git a/packages/@vue/cli-ui/apollo-server/util/command.js b/packages/@vue/cli-ui/apollo-server/util/command.js
index 4cbc7507d3..aad7e14a11 100644
--- a/packages/@vue/cli-ui/apollo-server/util/command.js
+++ b/packages/@vue/cli-ui/apollo-server/util/command.js
@@ -1,13 +1,14 @@
 const {
   hasYarn,
   hasProjectYarn,
-  hasPnpm
+  hasPnpm3OrLater,
+  hasProjectPnpm
 } = require('@vue/cli-shared-utils')
 const { loadOptions } = require('@vue/cli/lib/options')
 
 exports.getCommand = function (cwd = undefined) {
   if (!cwd) {
-    return loadOptions().packageManager || (hasYarn() ? 'yarn' : hasPnpm() ? 'pnpm' : 'npm')
+    return loadOptions().packageManager || (hasYarn() ? 'yarn' : hasPnpm3OrLater() ? 'pnpm' : 'npm')
   }
-  return hasProjectYarn(cwd) ? 'yarn' : hasPnpm() ? 'pnpm' : 'npm'
+  return hasProjectYarn(cwd) ? 'yarn' : hasProjectPnpm() ? 'pnpm' : 'npm'
 }
diff --git a/packages/@vue/cli-ui/src/components/file-diff/FileDiffView.vue b/packages/@vue/cli-ui/src/components/file-diff/FileDiffView.vue
index b33246030e..ba1436e347 100644
--- a/packages/@vue/cli-ui/src/components/file-diff/FileDiffView.vue
+++ b/packages/@vue/cli-ui/src/components/file-diff/FileDiffView.vue
@@ -133,6 +133,7 @@ import GIT_COMMIT from '@/graphql/git/gitCommit.gql'
 
 const defaultCollapsed = [
   'yarn.lock',
+  'pnpm-lock.yaml',
   'package-lock.json'
 ]
 
diff --git a/packages/@vue/cli/lib/Creator.js b/packages/@vue/cli/lib/Creator.js
index 1cd6014fa4..c32f58f4cc 100644
--- a/packages/@vue/cli/lib/Creator.js
+++ b/packages/@vue/cli/lib/Creator.js
@@ -33,7 +33,7 @@ const {
   hasGit,
   hasProjectGit,
   hasYarn,
-  hasPnpm,
+  hasPnpm3OrLater,
   logWithSpinner,
   stopSpinner,
   exit,
@@ -99,7 +99,7 @@ module.exports = class Creator extends EventEmitter {
       cliOptions.packageManager ||
       loadOptions().packageManager ||
       (hasYarn() ? 'yarn' : null) ||
-      (hasPnpm() ? 'pnpm' : 'npm')
+      (hasPnpm3OrLater() ? 'pnpm' : 'npm')
     )
 
     await clearConsole()
@@ -192,6 +192,13 @@ module.exports = class Creator extends EventEmitter {
       'README.md': generateReadme(generator.pkg, packageManager)
     })
 
+    // generate a .npmrc file for pnpm, to persist the `shamefully-flatten` flag
+    if (packageManager === 'pnpm') {
+      await writeFileTree(context, {
+        '.npmrc': 'shamefully-flatten=true\n'
+      })
+    }
+
     // commit initial state
     let gitCommitFailed = false
     if (shouldInitGit) {
@@ -412,7 +419,7 @@ module.exports = class Creator extends EventEmitter {
 
     // ask for packageManager once
     const savedOptions = loadOptions()
-    if (!savedOptions.packageManager && (hasYarn() || hasPnpm())) {
+    if (!savedOptions.packageManager && (hasYarn() || hasPnpm3OrLater())) {
       const packageManagerChoices = []
 
       if (hasYarn()) {
@@ -423,7 +430,7 @@ module.exports = class Creator extends EventEmitter {
         })
       }
 
-      if (hasPnpm()) {
+      if (hasPnpm3OrLater()) {
         packageManagerChoices.push({
           name: 'Use PNPM',
           value: 'pnpm',
diff --git a/packages/@vue/cli/lib/add.js b/packages/@vue/cli/lib/add.js
index 2fa0a0febc..b4d3698f41 100644
--- a/packages/@vue/cli/lib/add.js
+++ b/packages/@vue/cli/lib/add.js
@@ -6,7 +6,7 @@ const {
   log,
   error,
   hasProjectYarn,
-  hasPnpm,
+  hasProjectPnpm,
   resolvePluginId,
   resolveModule,
   loadModule
@@ -27,7 +27,7 @@ async function add (pluginName, options = {}, context = process.cwd()) {
   log(`📦  Installing ${chalk.cyan(packageName)}...`)
   log()
 
-  const packageManager = loadOptions().packageManager || (hasProjectYarn(context) ? 'yarn' : hasPnpm() ? 'pnpm' : 'npm')
+  const packageManager = loadOptions().packageManager || (hasProjectYarn(context) ? 'yarn' : hasProjectPnpm() ? 'pnpm' : 'npm')
   await installPackage(context, packageManager, options.registry, packageName)
 
   log(`${chalk.green('✔')}  Successfully installed plugin: ${chalk.cyan(packageName)}`)
diff --git a/packages/@vue/cli/lib/invoke.js b/packages/@vue/cli/lib/invoke.js
index 553de1f04f..b478c0db33 100644
--- a/packages/@vue/cli/lib/invoke.js
+++ b/packages/@vue/cli/lib/invoke.js
@@ -14,7 +14,7 @@ const {
   error,
   hasProjectYarn,
   hasProjectGit,
-  hasPnpm,
+  hasProjectPnpm,
   logWithSpinner,
   stopSpinner,
   resolvePluginId,
@@ -145,7 +145,7 @@ async function runGenerator (context, plugin, pkg = getPkg(context)) {
     log(`📦  Installing additional dependencies...`)
     log()
     const packageManager =
-      loadOptions().packageManager || (hasProjectYarn(context) ? 'yarn' : hasPnpm() ? 'pnpm' : 'npm')
+      loadOptions().packageManager || (hasProjectYarn(context) ? 'yarn' : hasProjectPnpm() ? 'pnpm' : 'npm')
     await installDeps(context, packageManager, plugin.options && plugin.options.registry)
   }
 
diff --git a/packages/@vue/cli/lib/util/installDeps.js b/packages/@vue/cli/lib/util/installDeps.js
index 03c443434e..8c5613453c 100644
--- a/packages/@vue/cli/lib/util/installDeps.js
+++ b/packages/@vue/cli/lib/util/installDeps.js
@@ -182,6 +182,10 @@ exports.installDeps = async function installDeps (targetDir, command, cliRegistr
     // do nothing
   }
 
+  if (command === 'pnpm') {
+    args.push('--shamefully-flatten')
+  }
+
   await addRegistryToArgs(command, args, cliRegistry)
 
   debug(`command: `, command)
diff --git a/packages/@vue/cli/lib/util/loadCommand.js b/packages/@vue/cli/lib/util/loadCommand.js
index c5e764c9b8..1253bbcb69 100644
--- a/packages/@vue/cli/lib/util/loadCommand.js
+++ b/packages/@vue/cli/lib/util/loadCommand.js
@@ -11,11 +11,11 @@ module.exports = function loadCommand (commandName, moduleName) {
       } catch (err2) {
         if (isNotFoundError(err2)) {
           const chalk = require('chalk')
-          const { hasYarn, hasPnpm } = require('@vue/cli-shared-utils')
+          const { hasYarn, hasPnpm3OrLater } = require('@vue/cli-shared-utils')
           let installCommand = `npm install -g`
           if (hasYarn()) {
             installCommand = `yarn global add`
-          } else if (hasPnpm()) {
+          } else if (hasPnpm3OrLater()) {
             installCommand = `pnpm install -g`
           }
           console.log()