diff --git a/BREAKING_CHANGES.md b/BREAKING_CHANGES.md
index d5be6552224..04a8fd69888 100644
--- a/BREAKING_CHANGES.md
+++ b/BREAKING_CHANGES.md
@@ -652,6 +652,7 @@ Stencil v3.0.0 is in development at this time and has not been released. The lis
 change. Further details on each of these items will be included prior to the release.
 
 - [fix(testing): puppeteer v10 support #2934](https://github.com/ionic-team/stencil/pull/2934)
+- [feat(cli): update flag defaults for V3 #3502](https://github.com/ionic-team/stencil/pull/3502)
 
 ## DEPRECATIONS
 
diff --git a/src/compiler/config/outputs/validate-custom-element.ts b/src/compiler/config/outputs/validate-custom-element.ts
index 6c1a59a67a6..a903cba491a 100644
--- a/src/compiler/config/outputs/validate-custom-element.ts
+++ b/src/compiler/config/outputs/validate-custom-element.ts
@@ -36,6 +36,9 @@ export const validateCustomElement = (
     if (!isBoolean(outputTarget.externalRuntime)) {
       outputTarget.externalRuntime = true;
     }
+    if (!isBoolean(outputTarget.generateTypeDeclarations)) {
+      outputTarget.generateTypeDeclarations = true;
+    }
 
     // unlike other output targets, Stencil does not allow users to define the output location of types at this time
     if (outputTarget.generateTypeDeclarations) {
diff --git a/src/compiler/config/test/validate-config-sourcemap.spec.ts b/src/compiler/config/test/validate-config-sourcemap.spec.ts
index af99e263333..7337cc7aea0 100644
--- a/src/compiler/config/test/validate-config-sourcemap.spec.ts
+++ b/src/compiler/config/test/validate-config-sourcemap.spec.ts
@@ -53,13 +53,13 @@ describe('stencil config - sourceMap option', () => {
     expect(inlineSources).toBe(false);
   });
 
-  it('sets the sourceMap options to false in tsconfig by default', async () => {
+  it('sets the sourceMap options to true in tsconfig by default', async () => {
     const testConfig = getLoadConfigForTests();
 
     const loadConfigResults = await loadConfig(testConfig);
 
     const { sourceMap, inlineSources } = loadConfigResults.config.tsCompilerOptions;
-    expect(sourceMap).toBe(false);
-    expect(inlineSources).toBe(false);
+    expect(sourceMap).toBe(true);
+    expect(inlineSources).toBe(true);
   });
 });
diff --git a/src/compiler/config/test/validate-config.spec.ts b/src/compiler/config/test/validate-config.spec.ts
index f3f11bb89e6..a189aa30293 100644
--- a/src/compiler/config/test/validate-config.spec.ts
+++ b/src/compiler/config/test/validate-config.spec.ts
@@ -429,9 +429,9 @@ describe('validation', () => {
       expect(config.sourceMap).toBe(false);
     });
 
-    it('defaults the field to false when not set in the config', () => {
+    it('defaults the field to true when not set in the config', () => {
       const { config } = validateConfig(userConfig, bootstrapConfig);
-      expect(config.sourceMap).toBe(false);
+      expect(config.sourceMap).toBe(true);
     });
   });
 
diff --git a/src/compiler/config/test/validate-output-dist-custom-element.spec.ts b/src/compiler/config/test/validate-output-dist-custom-element.spec.ts
index 6926cf00459..e203ca56f93 100644
--- a/src/compiler/config/test/validate-output-dist-custom-element.spec.ts
+++ b/src/compiler/config/test/validate-output-dist-custom-element.spec.ts
@@ -23,12 +23,18 @@ describe('validate-output-dist-custom-element', () => {
 
       const { config } = validateConfig(userConfig, mockLoadConfigInit());
       expect(config.outputTargets).toEqual([
+        {
+          type: DIST_TYPES,
+          dir: defaultDistDir,
+          typesDir: path.join(rootDir, 'dist', 'types'),
+        },
         {
           type: DIST_CUSTOM_ELEMENTS,
           copy: [],
           dir: defaultDistDir,
           empty: true,
           externalRuntime: true,
+          generateTypeDeclarations: true,
         },
       ]);
     });
@@ -37,6 +43,7 @@ describe('validate-output-dist-custom-element', () => {
       const outputTarget: d.OutputTargetDistCustomElements = {
         type: DIST_CUSTOM_ELEMENTS,
         dir: distCustomElementsDir,
+        generateTypeDeclarations: false,
       };
       userConfig.outputTargets = [outputTarget];
 
@@ -48,6 +55,7 @@ describe('validate-output-dist-custom-element', () => {
           dir: path.join(rootDir, distCustomElementsDir),
           empty: true,
           externalRuntime: true,
+          generateTypeDeclarations: false,
         },
       ]);
     });
@@ -57,6 +65,7 @@ describe('validate-output-dist-custom-element', () => {
         const outputTarget: d.OutputTargetDistCustomElements = {
           type: DIST_CUSTOM_ELEMENTS,
           externalRuntime: false,
+          generateTypeDeclarations: false,
         };
         userConfig.outputTargets = [outputTarget];
 
@@ -68,6 +77,7 @@ describe('validate-output-dist-custom-element', () => {
             dir: defaultDistDir,
             empty: true,
             externalRuntime: false,
+            generateTypeDeclarations: false,
           },
         ]);
       });
@@ -77,6 +87,7 @@ describe('validate-output-dist-custom-element', () => {
           type: DIST_CUSTOM_ELEMENTS,
           empty: undefined,
           externalRuntime: false,
+          generateTypeDeclarations: false,
         };
         userConfig.outputTargets = [outputTarget];
 
@@ -88,6 +99,7 @@ describe('validate-output-dist-custom-element', () => {
             dir: defaultDistDir,
             empty: true,
             externalRuntime: false,
+            generateTypeDeclarations: false,
           },
         ]);
       });
@@ -98,6 +110,7 @@ describe('validate-output-dist-custom-element', () => {
         const outputTarget: d.OutputTargetDistCustomElements = {
           type: DIST_CUSTOM_ELEMENTS,
           empty: false,
+          generateTypeDeclarations: false,
         };
         userConfig.outputTargets = [outputTarget];
 
@@ -109,6 +122,7 @@ describe('validate-output-dist-custom-element', () => {
             dir: defaultDistDir,
             empty: false,
             externalRuntime: true,
+            generateTypeDeclarations: false,
           },
         ]);
       });
@@ -118,6 +132,7 @@ describe('validate-output-dist-custom-element', () => {
           type: DIST_CUSTOM_ELEMENTS,
           empty: false,
           externalRuntime: undefined,
+          generateTypeDeclarations: false,
         };
         userConfig.outputTargets = [outputTarget];
 
@@ -129,12 +144,64 @@ describe('validate-output-dist-custom-element', () => {
             dir: defaultDistDir,
             empty: false,
             externalRuntime: true,
+            generateTypeDeclarations: false,
           },
         ]);
       });
     });
 
     describe('"generateTypeDeclarations" field', () => {
+      it('defaults the "generateTypeDeclarations" field to true if not provided', () => {
+        const outputTarget: d.OutputTargetDistCustomElements = {
+          type: DIST_CUSTOM_ELEMENTS,
+          empty: false,
+        };
+        userConfig.outputTargets = [outputTarget];
+
+        const { config } = validateConfig(userConfig, mockLoadConfigInit());
+        expect(config.outputTargets).toEqual([
+          {
+            type: DIST_TYPES,
+            dir: defaultDistDir,
+            typesDir: path.join(rootDir, 'dist', 'types'),
+          },
+          {
+            type: DIST_CUSTOM_ELEMENTS,
+            copy: [],
+            dir: defaultDistDir,
+            empty: false,
+            externalRuntime: true,
+            generateTypeDeclarations: true,
+          },
+        ]);
+      });
+
+      it('defaults the "generateTypeDeclarations" field to true it\'s not a boolean', () => {
+        const outputTarget: d.OutputTargetDistCustomElements = {
+          type: DIST_CUSTOM_ELEMENTS,
+          empty: false,
+          generateTypeDeclarations: undefined,
+        };
+        userConfig.outputTargets = [outputTarget];
+
+        const { config } = validateConfig(userConfig, mockLoadConfigInit());
+        expect(config.outputTargets).toEqual([
+          {
+            type: DIST_TYPES,
+            dir: defaultDistDir,
+            typesDir: path.join(rootDir, 'dist', 'types'),
+          },
+          {
+            type: DIST_CUSTOM_ELEMENTS,
+            copy: [],
+            dir: defaultDistDir,
+            empty: false,
+            externalRuntime: true,
+            generateTypeDeclarations: true,
+          },
+        ]);
+      });
+
       it('creates a types directory when "generateTypeDeclarations" is true', () => {
         const outputTarget: d.OutputTargetDistCustomElements = {
           type: DIST_CUSTOM_ELEMENTS,
@@ -230,6 +297,7 @@ describe('validate-output-dist-custom-element', () => {
           dir: distCustomElementsDir,
           empty: false,
           externalRuntime: false,
+          generateTypeDeclarations: false,
         };
         userConfig.outputTargets = [outputTarget];
 
@@ -246,6 +314,7 @@ describe('validate-output-dist-custom-element', () => {
             dir: path.join(rootDir, distCustomElementsDir),
             empty: false,
             externalRuntime: false,
+            generateTypeDeclarations: false,
           },
         ]);
       });
diff --git a/src/compiler/config/validate-config.ts b/src/compiler/config/validate-config.ts
index 07931232e95..b128b3735a4 100644
--- a/src/compiler/config/validate-config.ts
+++ b/src/compiler/config/validate-config.ts
@@ -87,7 +87,7 @@ export const validateConfig = (
     validatedConfig,
     'sourceMap',
     null,
-    typeof validatedConfig.sourceMap === 'undefined' ? false : validatedConfig.sourceMap
+    typeof validatedConfig.sourceMap === 'undefined' ? true : validatedConfig.sourceMap
   );
   setBooleanConfig(validatedConfig, 'watch', 'watch', false);
   setBooleanConfig(validatedConfig, 'buildDocs', 'docs', !validatedConfig.devMode);