diff --git a/doc/api/fs.md b/doc/api/fs.md
index 66d29bc80fbf18..07b86c5ebe450b 100644
--- a/doc/api/fs.md
+++ b/doc/api/fs.md
@@ -4786,6 +4786,9 @@ The `atime` and `mtime` arguments follow these rules:
 <!-- YAML
 added: v0.5.10
 changes:
+  - version: REPLACEME
+    pr-url: https://github.com/nodejs/node/pull/61870
+    description: Added `throwIfNoEntry` option.
   - version: v19.1.0
     pr-url: https://github.com/nodejs/node/pull/45098
     description: Added recursive support for Linux, AIX and IBMi.
@@ -4814,6 +4817,8 @@ changes:
   * `encoding` {string} Specifies the character encoding to be used for the
     filename passed to the listener. **Default:** `'utf8'`.
   * `signal` {AbortSignal} allows closing the watcher with an AbortSignal.
+  * `throwIfNoEntry` {boolean} Indicates whether an exception should be thrown when the
+    path does not exist. **Default:** `true`.
   * `ignore` {string|RegExp|Function|Array} Pattern(s) to ignore. Strings are
     glob patterns (using [`minimatch`][]), RegExp patterns are tested against
     the filename, and functions receive the filename and return `true` to
diff --git a/lib/fs.js b/lib/fs.js
index 4a03fada49ea8a..dfdc459b74ad8f 100644
--- a/lib/fs.js
+++ b/lib/fs.js
@@ -2488,6 +2488,7 @@ function appendFileSync(path, data, options) {
  *   recursive?: boolean;
  *   encoding?: string;
  *   signal?: AbortSignal;
+ *   throwIfNoEntry?: boolean;
  *   }} [options]
  * @param {(
  *   eventType?: string,
@@ -2506,6 +2507,7 @@ function watch(filename, options, listener) {
 
   if (options.persistent === undefined) options.persistent = true;
   if (options.recursive === undefined) options.recursive = false;
+  if (options.throwIfNoEntry === undefined) options.throwIfNoEntry = true;
 
   let watcher;
   const watchers = require('internal/fs/watchers');
@@ -2523,7 +2525,8 @@ function watch(filename, options, listener) {
                                     options.persistent,
                                     options.recursive,
                                     options.encoding,
-                                    options.ignore);
+                                    options.ignore,
+                                    options.throwIfNoEntry);
   }
 
   if (listener) {
diff --git a/lib/internal/fs/recursive_watch.js b/lib/internal/fs/recursive_watch.js
index 136f69f585015e..8fddd02f2dc0c6 100644
--- a/lib/internal/fs/recursive_watch.js
+++ b/lib/internal/fs/recursive_watch.js
@@ -52,6 +52,7 @@ class FSWatcher extends EventEmitter {
     assert(typeof options === 'object');
 
     const { persistent, recursive, signal, encoding, ignore } = options;
+    let { throwIfNoEntry } = options;
 
     // TODO(anonrig): Add non-recursive support to non-native-watcher for IBMi & AIX support.
     if (recursive != null) {
@@ -66,6 +67,12 @@ class FSWatcher extends EventEmitter {
       validateAbortSignal(signal, 'options.signal');
     }
 
+    if (throwIfNoEntry != null) {
+      validateBoolean(throwIfNoEntry, 'options.throwIfNoEntry');
+    } else {
+      throwIfNoEntry = true;
+    }
+
     if (encoding != null) {
       // This is required since on macOS and Windows it throws ERR_INVALID_ARG_VALUE
       if (typeof encoding !== 'string') {
@@ -76,7 +83,7 @@ class FSWatcher extends EventEmitter {
     validateIgnoreOption(ignore, 'options.ignore');
     this.#ignoreMatcher = createIgnoreMatcher(ignore);
 
-    this.#options = { persistent, recursive, signal, encoding };
+    this.#options = { persistent, recursive, signal, encoding, throwIfNoEntry };
   }
 
   close() {
@@ -222,7 +229,7 @@ class FSWatcher extends EventEmitter {
         this.#watchFolder(filename);
       }
     } catch (error) {
-      if (error.code === 'ENOENT') {
+      if (this.#options.throwIfNoEntry !== false && error.code === 'ENOENT') {
         error.filename = filename;
         throw error;
       }
diff --git a/lib/internal/fs/watchers.js b/lib/internal/fs/watchers.js
index a493c957966907..c540307d79a52d 100644
--- a/lib/internal/fs/watchers.js
+++ b/lib/internal/fs/watchers.js
@@ -35,7 +35,7 @@ const {
 } = internalBinding('fs');
 
 const { FSEvent } = internalBinding('fs_event_wrap');
-const { UV_ENOSPC } = internalBinding('uv');
+const { UV_ENOSPC, UV_ENOENT } = internalBinding('uv');
 const { EventEmitter } = require('events');
 
 const {
@@ -293,7 +293,8 @@ FSWatcher.prototype[kFSWatchStart] = function(filename,
                                               persistent,
                                               recursive,
                                               encoding,
-                                              ignore) {
+                                              ignore,
+                                              throwIfNoEntry = true) {
   if (this._handle === null) {  // closed
     return;
   }
@@ -313,6 +314,10 @@ FSWatcher.prototype[kFSWatchStart] = function(filename,
                                  recursive,
                                  encoding);
   if (err) {
+    if (!throwIfNoEntry && err === UV_ENOENT) {
+      return;
+    }
+
     const error = new UVException({
       errno: err,
       syscall: 'watch',
diff --git a/lib/internal/main/watch_mode.js b/lib/internal/main/watch_mode.js
index 06c2c8602da444..5e2e97f2fd60f2 100644
--- a/lib/internal/main/watch_mode.js
+++ b/lib/internal/main/watch_mode.js
@@ -34,10 +34,8 @@ markBootstrapComplete();
 
 const kKillSignal = convertToValidSignal(getOptionValue('--watch-kill-signal'));
 const kShouldFilterModules = getOptionValue('--watch-path').length === 0;
-const kEnvFiles = [
-  ...getOptionValue('--env-file'),
-  ...getOptionValue('--env-file-if-exists'),
-];
+const kEnvFiles = getOptionValue('--env-file');
+const kOptionalEnvFiles = getOptionValue('--env-file-if-exists');
 const kWatchedPaths = ArrayPrototypeMap(getOptionValue('--watch-path'), (path) => resolve(path));
 const kPreserveOutput = getOptionValue('--watch-preserve-output');
 const kCommand = ArrayPrototypeSlice(process.argv, 1);
@@ -105,6 +103,10 @@ function start() {
   if (kEnvFiles.length > 0) {
     ArrayPrototypeForEach(kEnvFiles, (file) => watcher.filterFile(resolve(file)));
   }
+  if (kOptionalEnvFiles.length > 0) {
+    ArrayPrototypeForEach(kOptionalEnvFiles,
+                          (file) => watcher.filterFile(resolve(file), undefined, { allowMissing: true }));
+  }
   child.once('exit', (code) => {
     exited = true;
     const waitingForChanges = 'Waiting for file changes before restarting...';
@@ -160,6 +162,7 @@ async function stop(child) {
 }
 
 let restarting = false;
+
 async function restart(child) {
   if (restarting) return;
   restarting = true;
@@ -198,5 +201,6 @@ function signalHandler(signal) {
     process.exit(exitCode ?? kNoFailure);
   };
 }
+
 process.on('SIGTERM', signalHandler('SIGTERM'));
 process.on('SIGINT', signalHandler('SIGINT'));
diff --git a/lib/internal/watch_mode/files_watcher.js b/lib/internal/watch_mode/files_watcher.js
index 9c0eb1ed817c29..33b34eb98b45e7 100644
--- a/lib/internal/watch_mode/files_watcher.js
+++ b/lib/internal/watch_mode/files_watcher.js
@@ -110,11 +110,13 @@ class FilesWatcher extends EventEmitter {
     return [...this.#watchers.keys()];
   }
 
-  watchPath(path, recursive = true) {
+  watchPath(path, recursive = true, options = kEmptyObject) {
     if (this.#isPathWatched(path)) {
       return;
     }
-    const watcher = watch(path, { recursive, signal: this.#signal });
+    const { allowMissing = false } = options;
+
+    const watcher = watch(path, { recursive, signal: this.#signal, throwIfNoEntry: !allowMissing });
     watcher.on('change', (eventType, fileName) => {
       // `fileName` can be `null` if it cannot be determined. See
       // https://github.com/nodejs/node/pull/49891#issuecomment-1744673430.
@@ -126,14 +128,14 @@ class FilesWatcher extends EventEmitter {
     }
   }
 
-  filterFile(file, owner) {
+  filterFile(file, owner, options = kEmptyObject) {
     if (!file) return;
     if (supportsRecursiveWatching) {
-      this.watchPath(dirname(file));
+      this.watchPath(dirname(file), true, options);
     } else {
       // Having multiple FSWatcher's seems to be slower
       // than a single recursive FSWatcher
-      this.watchPath(file, false);
+      this.watchPath(file, false, options);
     }
     this.#filteredFiles.add(file);
     if (owner) {
diff --git a/test/parallel/test-fs-watch-enoent.js b/test/parallel/test-fs-watch-enoent.js
index e4906f81f774e7..5180dd9822de62 100644
--- a/test/parallel/test-fs-watch-enoent.js
+++ b/test/parallel/test-fs-watch-enoent.js
@@ -43,6 +43,29 @@ tmpdir.refresh();
   );
 }
 
+{
+  assert.throws(
+    () => fs.watch(nonexistentFile, { throwIfNoEntry: true }, common.mustNotCall()),
+    (err) => {
+      assert.strictEqual(err.path, nonexistentFile);
+      assert.strictEqual(err.filename, nonexistentFile);
+      return err.code === 'ENOENT' || err.code === 'ENODEV';
+    },
+  );
+}
+
+{
+  if (common.isAIX) {
+    assert.throws(
+      () => fs.watch(nonexistentFile, { throwIfNoEntry: false }, common.mustNotCall()),
+      (err) => err.code === 'ENODEV',
+    );
+  } else {
+    const watcher = fs.watch(nonexistentFile, { throwIfNoEntry: false }, common.mustNotCall());
+    watcher.close();
+  }
+}
+
 {
   if (common.isMacOS || common.isWindows) {
     const file = tmpdir.resolve('file-to-watch');
diff --git a/test/sequential/test-watch-mode.mjs b/test/sequential/test-watch-mode.mjs
index a5cac129ad1c21..39ad7ef72ada00 100644
--- a/test/sequential/test-watch-mode.mjs
+++ b/test/sequential/test-watch-mode.mjs
@@ -277,6 +277,27 @@ describe('watch mode', { concurrency: !process.env.TEST_PARALLEL, timeout: 60_00
     }
   });
 
+  it('should not crash when --env-file-if-exists points to a missing file', async () => {
+    const envKey = `TEST_ENV_${Date.now()}`;
+    const jsFile = createTmpFile(`console.log('ENV: ' + process.env.${envKey});`);
+    const missingEnvFile = path.join(tmpdir.path, `missing-${Date.now()}.env`);
+    const { done, restart } = runInBackground({
+      args: ['--watch-path', tmpdir.path, `--env-file-if-exists=${missingEnvFile}`, jsFile],
+    });
+
+    try {
+      const { stderr, stdout } = await restart();
+
+      assert.doesNotMatch(stderr, /ENOENT: no such file or directory, watch/);
+      assert.deepStrictEqual(stdout, [
+        'ENV: undefined',
+        `Completed running ${inspect(jsFile)}. Waiting for file changes before restarting...`,
+      ]);
+    } finally {
+      await done();
+    }
+  });
+
   it('should watch changes to a failing file', async () => {
     const file = createTmpFile('throw new Error("fails");');
     const { stderr, stdout } = await runWriteSucceed({