diff --git a/index.js b/index.js
index 3177cd2c..1e922629 100644
--- a/index.js
+++ b/index.js
@@ -387,6 +387,26 @@ const publicApi = {
         return this;
     },
 
+    /**
+     * If enabled, a Preact preset will be applied to
+     * the generated Webpack configuration.
+     *
+     *     Encore.enablePreactPreset()
+     *
+     * If you wish to also use preact-compat (https://github.com/developit/preact-compat)
+     * you can enable it by setting the "preactCompat" option to true:
+     *
+     *     Encore.enablePreactPreset({ preactCompat: true })
+     *
+     * @param {object} options
+     * @returns {exports}
+     */
+    enablePreactPreset(options = {}) {
+        webpackConfig.enablePreactPreset(options);
+
+        return this;
+    },
+
     /**
      * Call this if you plan on loading TypeScript files.
      *
diff --git a/lib/WebpackConfig.js b/lib/WebpackConfig.js
index f1c354dc..3d5ab2f8 100644
--- a/lib/WebpackConfig.js
+++ b/lib/WebpackConfig.js
@@ -53,6 +53,10 @@ class WebpackConfig {
         this.providedVariables = {};
         this.babelConfigurationCallback = function() {};
         this.useReact = false;
+        this.usePreact = false;
+        this.preactOptions = {
+            preactCompat: false
+        };
         this.useVueLoader = false;
         this.vueLoaderOptionsCallback = () => {};
         this.loaders = [];
@@ -247,6 +251,18 @@ class WebpackConfig {
         this.useReact = true;
     }
 
+    enablePreactPreset(options = {}) {
+        this.usePreact = true;
+
+        for (const optionKey of Object.keys(options)) {
+            if (!(optionKey in this.preactOptions)) {
+                throw new Error(`Invalid option "${optionKey}" passed to enablePreactPreset(). Valid keys are ${Object.keys(this.preactOptions).join(', ')}`);
+            }
+
+            this.preactOptions[optionKey] = options[optionKey];
+        }
+    }
+
     enableTypeScriptLoader(callback = () => {}) {
         this.useTypeScriptLoader = true;
 
diff --git a/lib/config-generator.js b/lib/config-generator.js
index 1440dfd4..f8171317 100644
--- a/lib/config-generator.js
+++ b/lib/config-generator.js
@@ -81,6 +81,11 @@ class ConfigGenerator {
             config.resolve.alias['vue$'] = 'vue/dist/vue.esm.js';
         }
 
+        if (this.webpackConfig.usePreact && this.webpackConfig.preactOptions.preactCompat) {
+            config.resolve.alias['react'] = 'preact-compat';
+            config.resolve.alias['react-dom'] = 'preact-compat';
+        }
+
         return config;
     }
 
diff --git a/lib/features.js b/lib/features.js
index 94dacf82..6d419dea 100644
--- a/lib/features.js
+++ b/lib/features.js
@@ -36,6 +36,11 @@ const features = {
         packages: ['babel-preset-react'],
         description: 'process React JS files'
     },
+    preact: {
+        method: 'enablePreactPreset()',
+        packages: ['babel-plugin-transform-react-jsx'],
+        description: 'process Preact JS files'
+    },
     typescript: {
         method: 'enableTypeScriptLoader()',
         packages: ['typescript', 'ts-loader'],
diff --git a/lib/loaders/babel.js b/lib/loaders/babel.js
index 22a6a86c..83cf9b20 100644
--- a/lib/loaders/babel.js
+++ b/lib/loaders/babel.js
@@ -50,6 +50,23 @@ module.exports = {
                 babelConfig.presets.push('react');
             }
 
+            if (webpackConfig.usePreact) {
+                loaderFeatures.ensurePackagesExist('preact');
+
+                if (webpackConfig.preactOptions.preactCompat) {
+                    // If preact-compat is enabled tell babel to
+                    // transform JSX into React.createElement calls.
+                    babelConfig.plugins.push(['transform-react-jsx']);
+                } else {
+                    // If preact-compat is disabled tell babel to
+                    // transform JSX into Preact h() calls.
+                    babelConfig.plugins.push([
+                        'transform-react-jsx',
+                        { 'pragma': 'h' }
+                    ]);
+                }
+            }
+
             // allow for babel config to be controlled
             webpackConfig.babelConfigurationCallback.apply(
                 // use babelConfig as the this variable
diff --git a/package.json b/package.json
index df12d016..b2def932 100644
--- a/package.json
+++ b/package.json
@@ -49,6 +49,7 @@
   },
   "devDependencies": {
     "autoprefixer": "^6.7.7",
+    "babel-plugin-transform-react-jsx": "^6.24.1",
     "babel-preset-react": "^6.23.0",
     "chai": "^3.5.0",
     "chai-fs": "^1.0.0",
@@ -63,6 +64,8 @@
     "node-sass": "^4.5.3",
     "nsp": "^2.6.3",
     "postcss-loader": "^1.3.3",
+    "preact": "^8.2.1",
+    "preact-compat": "^3.17.0",
     "sass-loader": "^6.0.3",
     "sinon": "^2.3.4",
     "ts-loader": "^2.1.0",
diff --git a/test/WebpackConfig.js b/test/WebpackConfig.js
index 192c6910..afc1960e 100644
--- a/test/WebpackConfig.js
+++ b/test/WebpackConfig.js
@@ -364,6 +364,35 @@ describe('WebpackConfig object', () => {
         });
     });
 
+    describe('enablePreactPreset', () => {
+        it('Without preact-compat', () => {
+            const config = createConfig();
+            config.enablePreactPreset();
+
+            expect(config.usePreact).to.be.true;
+            expect(config.preactOptions.preactCompat).to.be.false;
+        });
+
+        it('With preact-compat', () => {
+            const config = createConfig();
+            config.enablePreactPreset({
+                preactCompat: true
+            });
+
+            expect(config.usePreact).to.be.true;
+            expect(config.preactOptions.preactCompat).to.be.true;
+        });
+
+        it('With an invalid option', () => {
+            const config = createConfig();
+            expect(() => {
+                config.enablePreactPreset({
+                    foo: true
+                });
+            }).to.throw('Invalid option "foo"');
+        });
+    });
+
     describe('enableTypeScriptLoader', () => {
         it('Calling method sets it', () => {
             const config = createConfig();
diff --git a/test/config-generator.js b/test/config-generator.js
index cbbe710b..543ef8a4 100644
--- a/test/config-generator.js
+++ b/test/config-generator.js
@@ -529,4 +529,32 @@ describe('The config-generator function', () => {
             expect(fontsRule.options.name).to.equal('[name].bar.[ext]');
         });
     });
+
+    describe('Test preact preset', () => {
+        describe('Without preact-compat', () => {
+            it('enablePreactPreset() does not add aliases to use preact-compat', () => {
+                const config = createConfig();
+                config.outputPath = '/tmp/public/build';
+                config.setPublicPath('/build/');
+                config.enablePreactPreset();
+
+                const actualConfig = configGenerator(config);
+                expect(actualConfig.resolve.alias).to.not.include.keys('react', 'react-dom');
+            });
+        });
+
+        describe('With preact-compat', () => {
+            it('enablePreactPreset({ preactCompat: true }) adds aliases to use preact-compat', () => {
+                const config = createConfig();
+                config.outputPath = '/tmp/public/build';
+                config.setPublicPath('/build/');
+                config.enablePreactPreset({ preactCompat: true });
+
+                const actualConfig = configGenerator(config);
+                expect(actualConfig.resolve.alias).to.include.keys('react', 'react-dom');
+                expect(actualConfig.resolve.alias['react']).to.equal('preact-compat');
+                expect(actualConfig.resolve.alias['react-dom']).to.equal('preact-compat');
+            });
+        });
+    });
 });
diff --git a/test/functional.js b/test/functional.js
index 94b8f167..e96c094b 100644
--- a/test/functional.js
+++ b/test/functional.js
@@ -630,6 +630,40 @@ module.exports = {
             });
         });
 
+        it('When enabled, preact JSX is transformed without preact-compat!', (done) => {
+            const config = createWebpackConfig('www/build', 'dev');
+            config.setPublicPath('/build');
+            config.addEntry('main', './js/CoolReactComponent.jsx');
+            config.enablePreactPreset();
+
+            testSetup.runWebpack(config, (webpackAssert) => {
+                // check that babel transformed the JSX
+                webpackAssert.assertOutputFileContains(
+                    'main.js',
+                    'var hiGuys = h('
+                );
+
+                done();
+            });
+        });
+
+        it('When enabled, preact JSX is transformed with preact-compat!', (done) => {
+            const config = createWebpackConfig('www/build', 'dev');
+            config.setPublicPath('/build');
+            config.addEntry('main', './js/CoolReactComponent.jsx');
+            config.enablePreactPreset({ preactCompat: true });
+
+            testSetup.runWebpack(config, (webpackAssert) => {
+                // check that babel transformed the JSX
+                webpackAssert.assertOutputFileContains(
+                    'main.js',
+                    'React.createElement'
+                );
+
+                done();
+            });
+        });
+
         it('When configured, TypeScript is compiled!', (done) => {
             const config = createWebpackConfig('www/build', 'dev');
             config.setPublicPath('/build');
diff --git a/test/index.js b/test/index.js
index 881653c2..3a9d2676 100644
--- a/test/index.js
+++ b/test/index.js
@@ -179,6 +179,15 @@ describe('Public API', () => {
 
     });
 
+    describe('enablePreactPreset', () => {
+
+        it('must return the API object', () => {
+            const returnedValue = api.enablePreactPreset();
+            expect(returnedValue).to.equal(api);
+        });
+
+    });
+
     describe('enableTypeScriptLoader', () => {
 
         it('must return the API object', () => {
diff --git a/test/loaders/babel.js b/test/loaders/babel.js
index 7d9be172..5cffa9cd 100644
--- a/test/loaders/babel.js
+++ b/test/loaders/babel.js
@@ -65,4 +65,40 @@ describe('loaders/babel', () => {
         // foo is also still there, not overridden
         expect(actualLoaders[0].options.presets).to.include('foo');
     });
+
+    it('getLoaders() with preact', () => {
+        const config = createConfig();
+        config.enablePreactPreset();
+
+        config.configureBabel(function(babelConfig) {
+            babelConfig.plugins.push('foo');
+        });
+
+        const actualLoaders = babelLoader.getLoaders(config);
+
+        // transform-react-jsx & foo
+        expect(actualLoaders[0].options.plugins).to.have.lengthOf(2);
+        expect(actualLoaders[0].options.plugins).to.deep.include.members([
+            ['transform-react-jsx', { pragma: 'h' }],
+            'foo'
+        ]);
+    });
+
+    it('getLoaders() with preact and preact-compat', () => {
+        const config = createConfig();
+        config.enablePreactPreset({ preactCompat: true });
+
+        config.configureBabel(function(babelConfig) {
+            babelConfig.plugins.push('foo');
+        });
+
+        const actualLoaders = babelLoader.getLoaders(config);
+
+        // transform-react-jsx & foo
+        expect(actualLoaders[0].options.plugins).to.have.lengthOf(2);
+        expect(actualLoaders[0].options.plugins).to.deep.include.members([
+            ['transform-react-jsx'],
+            'foo'
+        ]);
+    });
 });
diff --git a/yarn.lock b/yarn.lock
index 24cfaec8..0b1dbe38 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -1828,6 +1828,12 @@ encodeurl@~1.0.1:
   version "1.0.1"
   resolved "https://registry.yarnpkg.com/encodeurl/-/encodeurl-1.0.1.tgz#79e3d58655346909fe6f0f45a5de68103b294d20"
 
+encoding@^0.1.11:
+  version "0.1.12"
+  resolved "https://registry.yarnpkg.com/encoding/-/encoding-0.1.12.tgz#538b66f3ee62cd1ab51ec323829d1f9480c74beb"
+  dependencies:
+    iconv-lite "~0.4.13"
+
 enhanced-resolve@^3.0.0, enhanced-resolve@^3.4.0:
   version "3.4.1"
   resolved "https://registry.yarnpkg.com/enhanced-resolve/-/enhanced-resolve-3.4.1.tgz#0421e339fd71419b3da13d129b3979040230476e"
@@ -2176,6 +2182,18 @@ faye-websocket@~0.11.0:
   dependencies:
     websocket-driver ">=0.5.1"
 
+fbjs@^0.8.9:
+  version "0.8.14"
+  resolved "https://registry.yarnpkg.com/fbjs/-/fbjs-0.8.14.tgz#d1dbe2be254c35a91e09f31f9cd50a40b2a0ed1c"
+  dependencies:
+    core-js "^1.0.0"
+    isomorphic-fetch "^2.1.1"
+    loose-envify "^1.0.0"
+    object-assign "^4.1.0"
+    promise "^7.1.1"
+    setimmediate "^1.0.5"
+    ua-parser-js "^0.7.9"
+
 figures@^1.3.5:
   version "1.7.0"
   resolved "https://registry.yarnpkg.com/figures/-/figures-1.7.0.tgz#cbe1e3affcf1cd44b80cadfed28dc793a9701d2e"
@@ -2676,7 +2694,7 @@ https-proxy-agent@^1.0.0:
     debug "2"
     extend "3"
 
-iconv-lite@^0.4.13:
+iconv-lite@^0.4.13, iconv-lite@~0.4.13:
   version "0.4.18"
   resolved "https://registry.yarnpkg.com/iconv-lite/-/iconv-lite-0.4.18.tgz#23d8656b16aae6742ac29732ea8f0336a4789cf2"
 
@@ -2696,6 +2714,12 @@ image-size@~0.5.0:
   version "0.5.5"
   resolved "https://registry.yarnpkg.com/image-size/-/image-size-0.5.5.tgz#09dfd4ab9d20e29eb1c3e80b8990378df9e3cb9c"
 
+immutability-helper@^2.1.2:
+  version "2.3.1"
+  resolved "https://registry.yarnpkg.com/immutability-helper/-/immutability-helper-2.3.1.tgz#8ccfce92157208c120b2afad7ed05c11114c086e"
+  dependencies:
+    invariant "^2.2.0"
+
 imurmurhash@^0.1.4:
   version "0.1.4"
   resolved "https://registry.yarnpkg.com/imurmurhash/-/imurmurhash-0.1.4.tgz#9218b9b2b928a238b13dc4fb6b6d576f231453ea"
@@ -2926,7 +2950,7 @@ is-resolvable@^1.0.0:
   dependencies:
     tryit "^1.0.1"
 
-is-stream@^1.1.0:
+is-stream@^1.0.1, is-stream@^1.1.0:
   version "1.1.0"
   resolved "https://registry.yarnpkg.com/is-stream/-/is-stream-1.1.0.tgz#12d4a3dd4e68e0b79ceb8dbc84173ae80d91ca44"
 
@@ -2970,6 +2994,13 @@ isobject@^3.0.1:
   version "3.0.1"
   resolved "https://registry.yarnpkg.com/isobject/-/isobject-3.0.1.tgz#4e431e92b11a9731636aa1f9c8d1ccbcfdab78df"
 
+isomorphic-fetch@^2.1.1:
+  version "2.2.1"
+  resolved "https://registry.yarnpkg.com/isomorphic-fetch/-/isomorphic-fetch-2.2.1.tgz#611ae1acf14f5e81f729507472819fe9733558a9"
+  dependencies:
+    node-fetch "^1.0.1"
+    whatwg-fetch ">=0.10.0"
+
 isstream@~0.1.2:
   version "0.1.2"
   resolved "https://registry.yarnpkg.com/isstream/-/isstream-0.1.2.tgz#47e63f7af55afa6f92e1500e690eb8b8529c099a"
@@ -3343,7 +3374,7 @@ longest@^1.0.1:
   version "1.0.1"
   resolved "https://registry.yarnpkg.com/longest/-/longest-1.0.1.tgz#30a0b2da38f73770e8294a0d22e6625ed77d0097"
 
-loose-envify@^1.0.0:
+loose-envify@^1.0.0, loose-envify@^1.3.1:
   version "1.3.1"
   resolved "https://registry.yarnpkg.com/loose-envify/-/loose-envify-1.3.1.tgz#d1a8ad33fa9ce0e713d65fdd0ac8b748d478c848"
   dependencies:
@@ -3576,6 +3607,13 @@ negotiator@0.6.1:
   version "0.6.1"
   resolved "https://registry.yarnpkg.com/negotiator/-/negotiator-0.6.1.tgz#2b327184e8992101177b28563fb5e7102acd0ca9"
 
+node-fetch@^1.0.1:
+  version "1.7.2"
+  resolved "https://registry.yarnpkg.com/node-fetch/-/node-fetch-1.7.2.tgz#c54e9aac57e432875233525f3c891c4159ffefd7"
+  dependencies:
+    encoding "^0.1.11"
+    is-stream "^1.0.1"
+
 node-forge@0.6.33:
   version "0.6.33"
   resolved "https://registry.yarnpkg.com/node-forge/-/node-forge-0.6.33.tgz#463811879f573d45155ad6a9f43dc296e8e85ebc"
@@ -4322,6 +4360,30 @@ postcss@^6.0.1:
     source-map "^0.5.6"
     supports-color "^4.2.0"
 
+preact-compat@^3.17.0:
+  version "3.17.0"
+  resolved "https://registry.yarnpkg.com/preact-compat/-/preact-compat-3.17.0.tgz#528cfdfc301190c1a0f47567336be1f4be0266b3"
+  dependencies:
+    immutability-helper "^2.1.2"
+    preact-render-to-string "^3.6.0"
+    preact-transition-group "^1.1.0"
+    prop-types "^15.5.8"
+    standalone-react-addons-pure-render-mixin "^0.1.1"
+
+preact-render-to-string@^3.6.0:
+  version "3.6.3"
+  resolved "https://registry.yarnpkg.com/preact-render-to-string/-/preact-render-to-string-3.6.3.tgz#481d0d5bdac9192d3347557437d5cd00aa312043"
+  dependencies:
+    pretty-format "^3.5.1"
+
+preact-transition-group@^1.1.0:
+  version "1.1.1"
+  resolved "https://registry.yarnpkg.com/preact-transition-group/-/preact-transition-group-1.1.1.tgz#f0a49327ea515ece34ea2be864c4a7d29e5d6e10"
+
+preact@^8.2.1:
+  version "8.2.1"
+  resolved "https://registry.yarnpkg.com/preact/-/preact-8.2.1.tgz#674243df0c847884d019834044aa2fcd311e72ed"
+
 prelude-ls@~1.1.2:
   version "1.1.2"
   resolved "https://registry.yarnpkg.com/prelude-ls/-/prelude-ls-1.1.2.tgz#21932a549f5e52ffd9a827f570e04be62a97da54"
@@ -4341,6 +4403,10 @@ pretty-error@^2.1.1:
     renderkid "^2.0.1"
     utila "~0.4"
 
+pretty-format@^3.5.1:
+  version "3.8.0"
+  resolved "https://registry.yarnpkg.com/pretty-format/-/pretty-format-3.8.0.tgz#bfbed56d5e9a776645f4b1ff7aa1a3ac4fa3c385"
+
 prime@0.0.5-alpha:
   version "0.0.5-alpha"
   resolved "https://registry.yarnpkg.com/prime/-/prime-0.0.5-alpha.tgz#e4d49a657bed2eb30e513adc6e5dfb83622e90c1"
@@ -4367,6 +4433,13 @@ promise@^7.1.1:
   dependencies:
     asap "~2.0.3"
 
+prop-types@^15.5.8:
+  version "15.5.10"
+  resolved "https://registry.yarnpkg.com/prop-types/-/prop-types-15.5.10.tgz#2797dfc3126182e3a95e3dfbb2e893ddd7456154"
+  dependencies:
+    fbjs "^0.8.9"
+    loose-envify "^1.3.1"
+
 proto-list@~1.2.1:
   version "1.2.4"
   resolved "https://registry.yarnpkg.com/proto-list/-/proto-list-1.2.4.tgz#212d5bfe1318306a420f6402b8e26ff39647a849"
@@ -4893,7 +4966,7 @@ set-immediate-shim@^1.0.1:
   version "1.0.1"
   resolved "https://registry.yarnpkg.com/set-immediate-shim/-/set-immediate-shim-1.0.1.tgz#4b2b1b27eb808a9f8dcc481a58e5e56f599f3f61"
 
-setimmediate@^1.0.4:
+setimmediate@^1.0.4, setimmediate@^1.0.5:
   version "1.0.5"
   resolved "https://registry.yarnpkg.com/setimmediate/-/setimmediate-1.0.5.tgz#290cbb232e306942d7d7ea9b83732ab7856f8285"
 
@@ -5101,6 +5174,10 @@ stackframe@^1.0.3:
   version "1.0.3"
   resolved "https://registry.yarnpkg.com/stackframe/-/stackframe-1.0.3.tgz#fe64ab20b170e4ce49044b126c119dfa0e5dc7cc"
 
+standalone-react-addons-pure-render-mixin@^0.1.1:
+  version "0.1.1"
+  resolved "https://registry.yarnpkg.com/standalone-react-addons-pure-render-mixin/-/standalone-react-addons-pure-render-mixin-0.1.1.tgz#3c7409f4c79c40de9ac72c616cf679a994f37551"
+
 "statuses@>= 1.3.1 < 2", statuses@~1.3.1:
   version "1.3.1"
   resolved "https://registry.yarnpkg.com/statuses/-/statuses-1.3.1.tgz#faf51b9eb74aaef3b3acf4ad5f61abf24cb7b93e"
@@ -5406,6 +5483,10 @@ typescript@^2.3.4:
   version "2.4.2"
   resolved "https://registry.yarnpkg.com/typescript/-/typescript-2.4.2.tgz#f8395f85d459276067c988aa41837a8f82870844"
 
+ua-parser-js@^0.7.9:
+  version "0.7.14"
+  resolved "https://registry.yarnpkg.com/ua-parser-js/-/ua-parser-js-0.7.14.tgz#110d53fa4c3f326c121292bbeac904d2e03387ca"
+
 uglify-js@^2.8.29:
   version "2.8.29"
   resolved "https://registry.yarnpkg.com/uglify-js/-/uglify-js-2.8.29.tgz#29c5733148057bb4e1f75df35b7a9cb72e6a59dd"
@@ -5697,6 +5778,10 @@ websocket-extensions@>=0.1.1:
   version "0.1.1"
   resolved "https://registry.yarnpkg.com/websocket-extensions/-/websocket-extensions-0.1.1.tgz#76899499c184b6ef754377c2dbb0cd6cb55d29e7"
 
+whatwg-fetch@>=0.10.0:
+  version "2.0.3"
+  resolved "https://registry.yarnpkg.com/whatwg-fetch/-/whatwg-fetch-2.0.3.tgz#9c84ec2dcf68187ff00bc64e1274b442176e1c84"
+
 whatwg-url-compat@~0.6.5:
   version "0.6.5"
   resolved "https://registry.yarnpkg.com/whatwg-url-compat/-/whatwg-url-compat-0.6.5.tgz#00898111af689bb097541cd5a45ca6c8798445bf"