diff --git a/Cargo.lock b/Cargo.lock
index efa500f3d8c072..cca56b629f9643 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -4322,7 +4322,6 @@ dependencies = [
  "next-custom-transforms",
  "next-taskless",
  "once_cell",
- "pathdiff",
  "percent-encoding",
  "qstring",
  "react_remove_properties",
diff --git a/crates/next-api/src/middleware.rs b/crates/next-api/src/middleware.rs
index be41bce9a4884f..97b2a9438f6b43 100644
--- a/crates/next-api/src/middleware.rs
+++ b/crates/next-api/src/middleware.rs
@@ -6,8 +6,7 @@ use next_core::{
     middleware::get_middleware_module,
     next_edge::entry::wrap_edge_entry,
     next_manifests::{EdgeFunctionDefinition, MiddlewaresManifestV2, ProxyMatcher, Regions},
-    parse_segment_config_from_source,
-    segment_config::ParseSegmentMode,
+    segment_config::NextSegmentConfig,
     util::{MiddlewareMatcherKind, NextRuntime},
 };
 use tracing::Instrument;
@@ -49,6 +48,8 @@ pub struct MiddlewareEndpoint {
     source: ResolvedVc<Box<dyn Source>>,
     app_dir: Option<FileSystemPath>,
     ecmascript_client_reference_transition_name: Option<RcStr>,
+    config: ResolvedVc<NextSegmentConfig>,
+    runtime: NextRuntime,
 }
 
 #[turbo_tasks::value_impl]
@@ -60,6 +61,8 @@ impl MiddlewareEndpoint {
         source: ResolvedVc<Box<dyn Source>>,
         app_dir: Option<FileSystemPath>,
         ecmascript_client_reference_transition_name: Option<RcStr>,
+        config: ResolvedVc<NextSegmentConfig>,
+        runtime: NextRuntime,
     ) -> Vc<Self> {
         Self {
             project,
@@ -67,6 +70,8 @@ impl MiddlewareEndpoint {
             source,
             app_dir,
             ecmascript_client_reference_transition_name,
+            config,
+            runtime,
         }
         .cell()
     }
@@ -81,20 +86,20 @@ impl MiddlewareEndpoint {
             )
             .module();
 
+        let userland_path = userland_module.ident().path().await?;
+        let is_proxy = userland_path.file_stem() == Some("proxy");
+
         let module = get_middleware_module(
             *self.asset_context,
             self.project.project_path().owned().await?,
             userland_module,
+            is_proxy,
         );
 
-        let runtime = parse_segment_config_from_source(*self.source, ParseSegmentMode::Base)
-            .await?
-            .runtime
-            .unwrap_or(NextRuntime::Edge);
-
-        if matches!(runtime, NextRuntime::NodeJs) {
+        if matches!(self.runtime, NextRuntime::NodeJs) {
             return Ok(module);
         }
+
         Ok(wrap_edge_entry(
             *self.asset_context,
             self.project.project_path().owned().await?,
@@ -152,10 +157,7 @@ impl MiddlewareEndpoint {
     #[turbo_tasks::function]
     async fn output_assets(self: Vc<Self>) -> Result<Vc<OutputAssets>> {
         let this = self.await?;
-
-        let config =
-            parse_segment_config_from_source(*self.await?.source, ParseSegmentMode::Base).await?;
-        let runtime = config.runtime.unwrap_or(NextRuntime::Edge);
+        let config = this.config.await?;
 
         let next_config = this.project.next_config();
         let i18n = next_config.i18n().await?;
@@ -223,7 +225,7 @@ impl MiddlewareEndpoint {
             }]
         };
 
-        if matches!(runtime, NextRuntime::NodeJs) {
+        if matches!(this.runtime, NextRuntime::NodeJs) {
             let chunk = self.node_chunk().to_resolved().await?;
             let mut output_assets = vec![chunk];
             if this.project.next_mode().await?.is_production() {
diff --git a/crates/next-api/src/project.rs b/crates/next-api/src/project.rs
index 9193d6d2887386..5258e947d6dde7 100644
--- a/crates/next-api/src/project.rs
+++ b/crates/next-api/src/project.rs
@@ -1437,28 +1437,6 @@ impl Project {
         )))
     }
 
-    #[turbo_tasks::function]
-    async fn middleware_context(self: Vc<Self>) -> Result<Vc<Box<dyn AssetContext>>> {
-        let edge_module_context = self.edge_middleware_context();
-
-        let middleware = self.find_middleware();
-        let FindContextFileResult::Found(fs_path, _) = &*middleware.await? else {
-            return Ok(edge_module_context);
-        };
-        let source = Vc::upcast(FileSource::new(fs_path.clone()));
-
-        let runtime = parse_segment_config_from_source(source, ParseSegmentMode::Base)
-            .await?
-            .runtime
-            .unwrap_or(NextRuntime::Edge);
-
-        if matches!(runtime, NextRuntime::NodeJs) {
-            Ok(self.node_middleware_context())
-        } else {
-            Ok(edge_module_context)
-        }
-    }
-
     #[turbo_tasks::function]
     async fn find_middleware(self: Vc<Self>) -> Result<Vc<FindContextFileResult>> {
         Ok(find_context_file(
@@ -1483,7 +1461,25 @@ impl Project {
             .as_ref()
             .map(|_| AppProject::client_transition_name());
 
-        let middleware_asset_context = self.middleware_context();
+        let is_proxy = fs_path.file_stem() == Some("proxy");
+        let config = parse_segment_config_from_source(
+            source,
+            if is_proxy {
+                ParseSegmentMode::Proxy
+            } else {
+                ParseSegmentMode::Base
+            },
+        );
+        let runtime = config.await?.runtime.unwrap_or(if is_proxy {
+            NextRuntime::NodeJs
+        } else {
+            NextRuntime::Edge
+        });
+
+        let middleware_asset_context = match runtime {
+            NextRuntime::NodeJs => self.node_middleware_context(),
+            NextRuntime::Edge => self.edge_middleware_context(),
+        };
 
         Ok(Vc::upcast(MiddlewareEndpoint::new(
             self,
@@ -1491,6 +1487,8 @@ impl Project {
             source,
             app_dir.clone(),
             ecmascript_client_reference_transition_name,
+            config,
+            runtime,
         )))
     }
 
diff --git a/crates/next-core/src/middleware.rs b/crates/next-core/src/middleware.rs
index 56845fd72accf2..51cd7c290caae8 100644
--- a/crates/next-core/src/middleware.rs
+++ b/crates/next-core/src/middleware.rs
@@ -32,12 +32,12 @@ pub async fn get_middleware_module(
     asset_context: Vc<Box<dyn AssetContext>>,
     project_root: FileSystemPath,
     userland_module: ResolvedVc<Box<dyn Module>>,
+    is_proxy: bool,
 ) -> Result<Vc<Box<dyn Module>>> {
     const INNER: &str = "INNER_MIDDLEWARE_MODULE";
 
     // Determine if this is a proxy file by checking the module path
     let userland_path = userland_module.ident().path().await?;
-    let is_proxy = userland_path.file_stem() == Some("proxy");
     let (file_type, function_name, page_path) = if is_proxy {
         ("Proxy", "proxy", "/proxy")
     } else {
@@ -91,11 +91,7 @@ pub async fn get_middleware_module(
     let source = load_next_js_template(
         "middleware.js",
         project_root,
-        &[
-            ("VAR_USERLAND", INNER),
-            ("VAR_DEFINITION_PAGE", page_path),
-            ("VAR_MODULE_RELATIVE_PATH", userland_path.path.as_str()),
-        ],
+        &[("VAR_USERLAND", INNER), ("VAR_DEFINITION_PAGE", page_path)],
         &[],
         &[],
     )
diff --git a/crates/next-core/src/segment_config.rs b/crates/next-core/src/segment_config.rs
index 9baff06482b1c2..227012f894a165 100644
--- a/crates/next-core/src/segment_config.rs
+++ b/crates/next-core/src/segment_config.rs
@@ -289,6 +289,8 @@ pub enum ParseSegmentMode {
     Base,
     // Disallows "use client + generateStatic" and ignores/warns about `export const config`
     App,
+    // Disallows config = { runtime: "edge" }
+    Proxy,
 }
 
 /// Parse the raw source code of a file to get the segment config local to that file.
@@ -667,21 +669,35 @@ async fn parse_config_value(
                             .await;
                         };
 
-                        config.runtime =
-                            match serde_json::from_value(Value::String(val.to_string())) {
-                                Ok(runtime) => Some(runtime),
-                                Err(err) => {
-                                    return invalid_config(
-                                        source,
-                                        "config",
-                                        span,
-                                        format!("`runtime` has an invalid value: {err}.").into(),
-                                        Some(value),
-                                        IssueSeverity::Error,
-                                    )
-                                    .await;
-                                }
-                            };
+                        let runtime = match serde_json::from_value(Value::String(val.to_string())) {
+                            Ok(runtime) => Some(runtime),
+                            Err(err) => {
+                                return invalid_config(
+                                    source,
+                                    "config",
+                                    span,
+                                    format!("`runtime` has an invalid value: {err}.").into(),
+                                    Some(value),
+                                    IssueSeverity::Error,
+                                )
+                                .await;
+                            }
+                        };
+
+                        if mode == ParseSegmentMode::Proxy && runtime == Some(NextRuntime::Edge) {
+                            invalid_config(
+                                source,
+                                "config",
+                                span,
+                                rcstr!("Proxy does not support Edge runtime."),
+                                Some(value),
+                                IssueSeverity::Error,
+                            )
+                            .await?;
+                            continue;
+                        }
+
+                        config.runtime = runtime
                     }
                     "matcher" => {
                         config.middleware_matcher =
diff --git a/packages/next/errors.json b/packages/next/errors.json
index cbe2d5256c427d..fe9759e8d65ee5 100644
--- a/packages/next/errors.json
+++ b/packages/next/errors.json
@@ -901,5 +901,6 @@
   "900": "Both %s file \"./%s\" and %s file \"./%s\" are detected. Please use \"./%s\" only. Learn more: https://nextjs.org/docs/messages/middleware-to-proxy",
   "901": "Invalid \"cacheHandlers\" provided, expected an object e.g. { default: '/my-handler.js' }, received %s",
   "902": "Invalid handler fields configured for \"cacheHandlers\":\\n%s",
-  "903": "The file \"%s\" must export a function, either as a default export or as a named \"%s\" export.\\nThis function is what Next.js runs for every request handled by this %s.\\n\\nWhy this happens:\\n%s- The file exists but doesn't export a function.\\n- The export is not a function (e.g., an object or constant).\\n- There's a syntax error preventing the export from being recognized.\\n\\nTo fix it:\\n- Ensure this file has either a default or \"%s\" function export.\\n\\nLearn more: https://nextjs.org/docs/messages/middleware-to-proxy"
+  "903": "The file \"%s\" must export a function, either as a default export or as a named \"%s\" export.\\nThis function is what Next.js runs for every request handled by this %s.\\n\\nWhy this happens:\\n%s- The file exists but doesn't export a function.\\n- The export is not a function (e.g., an object or constant).\\n- There's a syntax error preventing the export from being recognized.\\n\\nTo fix it:\\n- Ensure this file has either a default or \"%s\" function export.\\n\\nLearn more: https://nextjs.org/docs/messages/middleware-to-proxy",
+  "904": "The file \"%s\" must export a function, either as a default export or as a named \"%s\" export."
 }
diff --git a/packages/next/src/build/analysis/get-page-static-info.ts b/packages/next/src/build/analysis/get-page-static-info.ts
index 01314d1449e2e3..fe1fae37a44602 100644
--- a/packages/next/src/build/analysis/get-page-static-info.ts
+++ b/packages/next/src/build/analysis/get-page-static-info.ts
@@ -40,6 +40,7 @@ import {
 } from '../segment-config/middleware/middleware-config'
 import { normalizeAppPath } from '../../shared/lib/router/utils/app-paths'
 import { normalizePagePath } from '../../shared/lib/page-path/normalize-page-path'
+import { isProxyFile } from '../utils'
 
 const PARSE_PATTERN =
   /(?<!(_jsx|jsx-))runtime|preferredRegion|getStaticProps|getServerSideProps|generateStaticParams|export const|generateImageMetadata|generateSitemaps|middleware|proxy/
@@ -305,16 +306,13 @@ function validateMiddlewareProxyExports({
   ast,
   page,
   pageFilePath,
+  isDev,
 }: {
   ast: any
   page: string
   pageFilePath: string
+  isDev: boolean
 }): void {
-  // Only validate in build. In development, it will error at runtime.
-  if (process.env.NODE_ENV !== 'production') {
-    return
-  }
-
   // Check if this is middleware/proxy
   const isMiddleware =
     page === `/${MIDDLEWARE_FILENAME}` || page === `/src/${MIDDLEWARE_FILENAME}`
@@ -396,23 +394,33 @@ function validateMiddlewareProxyExports({
     (isMiddleware && hasMiddlewareExport) ||
     (isProxy && hasProxyExport)
 
-  const relativeFilePath = `./${relative(process.cwd(), pageFilePath)}`
+  const relativePath = relative(process.cwd(), pageFilePath)
+  const resolvedPath = relativePath.startsWith('.')
+    ? relativePath
+    : `./${relativePath}`
 
   if (!hasValidExport) {
-    throw new Error(
-      `The file "${relativeFilePath}" must export a function, either as a default export or as a named "${fileName}" export.\n` +
-        `This function is what Next.js runs for every request handled by this ${fileName === 'proxy' ? 'proxy (previously called middleware)' : 'middleware'}.\n\n` +
-        `Why this happens:\n` +
-        (isProxy
-          ? "- You are migrating from `middleware` to `proxy`, but haven't updated the exported function.\n"
-          : '') +
-        `- The file exists but doesn't export a function.\n` +
-        `- The export is not a function (e.g., an object or constant).\n` +
-        `- There's a syntax error preventing the export from being recognized.\n\n` +
-        `To fix it:\n` +
-        `- Ensure this file has either a default or "${fileName}" function export.\n\n` +
-        `Learn more: https://nextjs.org/docs/messages/middleware-to-proxy`
-    )
+    const message =
+      `The file "${resolvedPath}" must export a function, either as a default export or as a named "${fileName}" export.\n` +
+      `This function is what Next.js runs for every request handled by this ${fileName === 'proxy' ? 'proxy (previously called middleware)' : 'middleware'}.\n\n` +
+      `Why this happens:\n` +
+      (isProxy
+        ? "- You are migrating from `middleware` to `proxy`, but haven't updated the exported function.\n"
+        : '') +
+      `- The file exists but doesn't export a function.\n` +
+      `- The export is not a function (e.g., an object or constant).\n` +
+      `- There's a syntax error preventing the export from being recognized.\n\n` +
+      `To fix it:\n` +
+      `- Ensure this file has either a default or "${fileName}" function export.\n\n` +
+      `Learn more: https://nextjs.org/docs/messages/middleware-to-proxy`
+
+    if (isDev) {
+      // errorOnce as proxy/middleware runs per request including multiple
+      // internal _next/ routes and spams logs.
+      Log.errorOnce(message)
+    } else {
+      throw new Error(message)
+    }
   }
 }
 
@@ -593,7 +601,7 @@ function warnAboutUnsupportedValue(
 type GetPageStaticInfoParams = {
   pageFilePath: string
   nextConfig: Partial<NextConfig>
-  isDev?: boolean
+  isDev: boolean
   page: string
   pageType: PAGE_TYPES
 }
@@ -617,7 +625,12 @@ export async function getAppPageStaticInfo({
   }
 
   const ast = await parseModule(pageFilePath, content)
-  validateMiddlewareProxyExports({ ast, page, pageFilePath })
+  validateMiddlewareProxyExports({
+    ast,
+    page,
+    pageFilePath,
+    isDev,
+  })
 
   const {
     generateStaticParams,
@@ -713,7 +726,12 @@ export async function getPagesPageStaticInfo({
   }
 
   const ast = await parseModule(pageFilePath, content)
-  validateMiddlewareProxyExports({ ast, page, pageFilePath })
+  validateMiddlewareProxyExports({
+    ast,
+    page,
+    pageFilePath,
+    isDev,
+  })
 
   const { getServerSideProps, getStaticProps, exports } = checkExports(
     ast,
@@ -750,13 +768,35 @@ export async function getPagesPageStaticInfo({
   const config = parsePagesSegmentConfig(exportedConfig, route)
   const isAnAPIRoute = isAPIRoute(route)
 
-  const resolvedRuntime = config.runtime ?? config.config?.runtime
+  let resolvedRuntime = config.runtime ?? config.config?.runtime
+
+  if (isProxyFile(page) && resolvedRuntime) {
+    const relativePath = relative(process.cwd(), pageFilePath)
+    const resolvedPath = relativePath.startsWith('.')
+      ? relativePath
+      : `./${relativePath}`
+    const message = `Route segment config is not allowed in Proxy file at "${resolvedPath}". Proxy always runs on Node.js runtime. Learn more: https://nextjs.org/docs/messages/middleware-to-proxy`
+
+    if (isDev) {
+      // errorOnce as proxy/middleware runs per request including multiple
+      // internal _next/ routes and spams logs.
+      Log.errorOnce(message)
+      resolvedRuntime = SERVER_RUNTIME.nodejs
+    } else {
+      throw new Error(message)
+    }
+  }
 
   if (resolvedRuntime === SERVER_RUNTIME.experimentalEdge) {
     warnAboutExperimentalEdge(isAnAPIRoute ? page! : null)
   }
 
-  if (resolvedRuntime === SERVER_RUNTIME.edge && page && !isAnAPIRoute) {
+  if (
+    !isProxyFile(page) &&
+    resolvedRuntime === SERVER_RUNTIME.edge &&
+    page &&
+    !isAnAPIRoute
+  ) {
     const message = `Page ${page} provided runtime 'edge', the edge runtime for rendering is currently experimental. Use runtime 'experimental-edge' instead.`
     if (isDev) {
       Log.error(message)
diff --git a/packages/next/src/build/entries.ts b/packages/next/src/build/entries.ts
index 50a4762661e5c6..7f1f17f53784a1 100644
--- a/packages/next/src/build/entries.ts
+++ b/packages/next/src/build/entries.ts
@@ -20,8 +20,6 @@ import {
   APP_DIR_ALIAS,
   WEBPACK_LAYERS,
   INSTRUMENTATION_HOOK_FILENAME,
-  PROXY_FILENAME,
-  MIDDLEWARE_FILENAME,
 } from '../lib/constants'
 import { isAPIRoute } from '../lib/is-api-route'
 import { isEdgeRuntime } from '../lib/is-edge-runtime'
@@ -43,6 +41,7 @@ import type { __ApiPreviewProps } from '../server/api-utils'
 import {
   isMiddlewareFile,
   isMiddlewareFilename,
+  isProxyFile,
   isInstrumentationHookFile,
   isInstrumentationHookFilename,
 } from './utils'
@@ -573,7 +572,7 @@ export interface CreateEntrypointsParams {
   buildId: string
   config: NextConfigComplete
   envFiles: LoadedEnvFiles
-  isDev?: boolean
+  isDev: boolean
   pages: MappedPages
   pagesDir?: string
   previewMode: __ApiPreviewProps
@@ -642,6 +641,7 @@ export function getEdgeServerEntry(opts: {
     return {
       import: `next-middleware-loader?${stringify(loaderParams)}!`,
       layer: WEBPACK_LAYERS.middleware,
+      filename: opts.isDev ? 'middleware.js' : undefined,
     }
   }
 
@@ -764,6 +764,11 @@ export function runDependingOnPageType<T>(params: {
     return
   }
 
+  if (isProxyFile(params.page)) {
+    params.onServer()
+    return
+  }
+
   if (isMiddlewareFile(params.page)) {
     if (params.pageRuntime === 'nodejs') {
       params.onServer()
@@ -947,13 +952,7 @@ export async function createEntrypoints(
                 isDev: false,
               })
           } else if (isMiddlewareFile(page)) {
-            server[
-              serverBundlePath
-                // proxy.js still uses middleware.js for bundle path for now.
-                // TODO: Revisit when we remove middleware.js.
-                .replace(PROXY_FILENAME, MIDDLEWARE_FILENAME)
-                .replace('src/', '')
-            ] = getEdgeServerEntry({
+            server[serverBundlePath.replace('src/', '')] = getEdgeServerEntry({
               ...params,
               rootDir,
               absolutePagePath: absolutePagePath,
@@ -1028,12 +1027,7 @@ export async function createEntrypoints(
                   : undefined,
               }).import
             }
-            const edgeServerBundlePath = isMiddlewareFile(page)
-              ? serverBundlePath
-                  .replace(PROXY_FILENAME, MIDDLEWARE_FILENAME)
-                  .replace('src/', '')
-              : serverBundlePath
-            edgeServer[edgeServerBundlePath] = getEdgeServerEntry({
+            edgeServer[serverBundlePath] = getEdgeServerEntry({
               ...params,
               rootDir,
               absolutePagePath: absolutePagePath,
diff --git a/packages/next/src/build/get-static-info-including-layouts.ts b/packages/next/src/build/get-static-info-including-layouts.ts
index cf04c553749318..260bccb115ff43 100644
--- a/packages/next/src/build/get-static-info-including-layouts.ts
+++ b/packages/next/src/build/get-static-info-including-layouts.ts
@@ -29,7 +29,7 @@ export async function getStaticInfoIncludingLayouts({
   pageFilePath: string
   appDir: string | undefined
   config: NextConfigComplete
-  isDev: boolean | undefined
+  isDev: boolean
   page: string
 }): Promise<PageStaticInfo> {
   // TODO: sync types for pages: PAGE_TYPES, ROUTER_TYPE, 'app' | 'pages', etc.
diff --git a/packages/next/src/build/index.ts b/packages/next/src/build/index.ts
index bb52c5db5984f3..c9e6b1326473f8 100644
--- a/packages/next/src/build/index.ts
+++ b/packages/next/src/build/index.ts
@@ -139,6 +139,7 @@ import {
   isAppBuiltinPage,
   collectRoutesUsingEdgeRuntime,
   collectMeta,
+  isProxyFile,
 } from './utils'
 import type { PageInfo, PageInfos } from './utils'
 import type { FallbackRouteParam, PrerenderedRoute } from './static-paths/types'
@@ -1214,13 +1215,7 @@ export default async function build(
 
       for (const rootPath of rootPaths) {
         const { name: fileBaseName, dir: fileDir } = path.parse(rootPath)
-        const isAtConventionLevel =
-          fileDir === '/' ||
-          fileDir === '/src' ||
-          // rootPaths are currently relative paths from the root directory.
-          // Add safety check here for unexpected future changes.
-          fileDir === dir ||
-          fileDir === path.join(dir, 'src')
+        const isAtConventionLevel = fileDir === '/' || fileDir === '/src'
 
         if (isAtConventionLevel && fileBaseName === MIDDLEWARE_FILENAME) {
           middlewareFilePath = rootPath
@@ -2615,12 +2610,15 @@ export default async function build(
           return serverFilesManifest
         })
 
-      const middlewareFile = rootPaths.find(
-        (p) => p.includes(MIDDLEWARE_FILENAME) || p.includes(PROXY_FILENAME)
-      )
+      const middlewareFile = proxyFilePath || middlewareFilePath
       let hasNodeMiddleware = false
 
       if (middlewareFile) {
+        // Is format of `(/src)/(proxy|middleware).<ext>`, so split by
+        // "." and get the first part, regard rest of the extensions
+        // to match the `page` value format.
+        const page = middlewareFile.split('.')[0]
+
         const staticInfo = await getStaticInfoIncludingLayouts({
           isInsideAppDir: false,
           pageFilePath: path.join(dir, middlewareFile),
@@ -2628,17 +2626,17 @@ export default async function build(
           appDir,
           pageExtensions: config.pageExtensions,
           isDev: false,
-          page: 'middleware',
+          page,
         })
 
         if (staticInfo.hadUnsupportedValue) {
           errorFromUnsupportedSegmentConfig()
         }
 
-        if (staticInfo.runtime === 'nodejs') {
+        if (staticInfo.runtime === 'nodejs' || isProxyFile(page)) {
           hasNodeMiddleware = true
           functionsConfigManifest.functions['/_middleware'] = {
-            runtime: staticInfo.runtime,
+            runtime: 'nodejs',
             matchers: staticInfo.middleware?.matchers ?? [
               {
                 regexp: '^.*$',
@@ -4154,6 +4152,17 @@ export default async function build(
         buildTracesSpinner = undefined
       }
 
+      if (proxyFilePath && bundler !== Bundler.Turbopack) {
+        await fs.rename(
+          path.join(distDir, SERVER_DIRECTORY, 'proxy.js'),
+          path.join(distDir, SERVER_DIRECTORY, 'middleware.js')
+        )
+        await fs.rename(
+          path.join(distDir, SERVER_DIRECTORY, 'proxy.js.nft.json'),
+          path.join(distDir, SERVER_DIRECTORY, 'middleware.js.nft.json')
+        )
+      }
+
       if (isCompileMode) {
         Log.info(
           `Build ran with "compile" mode, to finalize the build run either "generate" or "generate-env" mode as well`
diff --git a/packages/next/src/build/output/log.ts b/packages/next/src/build/output/log.ts
index b62c42316dcc63..41ca0dc2543818 100644
--- a/packages/next/src/build/output/log.ts
+++ b/packages/next/src/build/output/log.ts
@@ -85,3 +85,12 @@ export function warnOnce(...message: any[]) {
     warn(...message)
   }
 }
+
+const errorOnceCache = new LRUCache<string>(10_000, (value) => value.length)
+export function errorOnce(...message: any[]) {
+  const key = message.join(' ')
+  if (!errorOnceCache.has(key)) {
+    errorOnceCache.set(key, key)
+    error(...message)
+  }
+}
diff --git a/packages/next/src/build/templates/middleware.ts b/packages/next/src/build/templates/middleware.ts
index 2637bd64dffaab..599b432b083e85 100644
--- a/packages/next/src/build/templates/middleware.ts
+++ b/packages/next/src/build/templates/middleware.ts
@@ -11,33 +11,23 @@ import { isNextRouterError } from '../../client/components/is-next-router-error'
 
 const mod = { ..._mod }
 
-const page = 'VAR_DEFINITION_PAGE'
-// Turbopack does not add a `./` prefix to the relative file path, but Webpack does.
-const relativeFilePath = 'VAR_MODULE_RELATIVE_PATH'
-// @ts-expect-error `page` will be replaced during build
+const page: string = 'VAR_DEFINITION_PAGE'
 const isProxy = page === '/proxy' || page === '/src/proxy'
 const handler = (isProxy ? mod.proxy : mod.middleware) || mod.default
 
-if (typeof handler !== 'function') {
-  const fileName = isProxy ? 'proxy' : 'middleware'
-  // Webpack starts the path with "." as relative, but Turbopack does not.
-  const resolvedRelativeFilePath = relativeFilePath.startsWith('.')
-    ? relativeFilePath
-    : `./${relativeFilePath}`
+class ProxyMissingExportError extends Error {
+  constructor(message: string) {
+    super(message)
+    // Stack isn't useful here, remove it considering it spams logs during development.
+    this.stack = ''
+  }
+}
 
-  throw new Error(
-    `The file "${resolvedRelativeFilePath}" must export a function, either as a default export or as a named "${fileName}" export.\n` +
-      `This function is what Next.js runs for every request handled by this ${fileName === 'proxy' ? 'proxy (previously called middleware)' : 'middleware'}.\n\n` +
-      `Why this happens:\n` +
-      (isProxy
-        ? "- You are migrating from `middleware` to `proxy`, but haven't updated the exported function.\n"
-        : '') +
-      `- The file exists but doesn't export a function.\n` +
-      `- The export is not a function (e.g., an object or constant).\n` +
-      `- There's a syntax error preventing the export from being recognized.\n\n` +
-      `To fix it:\n` +
-      `- Ensure this file has either a default or "${fileName}" function export.\n\n` +
-      `Learn more: https://nextjs.org/docs/messages/middleware-to-proxy`
+// TODO: This spams logs during development. Find a better way to handle this.
+// Removing this will spam "fn is not a function" logs which is worse.
+if (typeof handler !== 'function') {
+  throw new ProxyMissingExportError(
+    `The ${isProxy ? 'Proxy' : 'Middleware'} file "${page}" must export a function named \`${isProxy ? 'proxy' : 'middleware'}\` or a default function.`
   )
 }
 
diff --git a/packages/next/src/build/utils.ts b/packages/next/src/build/utils.ts
index 78fedfee3a1ff2..01454bb2ffb614 100644
--- a/packages/next/src/build/utils.ts
+++ b/packages/next/src/build/utils.ts
@@ -1421,6 +1421,10 @@ export function isMiddlewareFile(file: string) {
   )
 }
 
+export function isProxyFile(file: string) {
+  return file === `/${PROXY_FILENAME}` || file === `/src/${PROXY_FILENAME}`
+}
+
 export function isInstrumentationHookFile(file: string) {
   return (
     file === `/${INSTRUMENTATION_HOOK_FILENAME}` ||
diff --git a/packages/next/src/build/webpack/loaders/next-middleware-loader.ts b/packages/next/src/build/webpack/loaders/next-middleware-loader.ts
index 512d1ca32d05c6..9f2066f3a4c29d 100644
--- a/packages/next/src/build/webpack/loaders/next-middleware-loader.ts
+++ b/packages/next/src/build/webpack/loaders/next-middleware-loader.ts
@@ -70,8 +70,5 @@ export default async function middlewareLoader(this: any) {
   return await loadEntrypoint('middleware', {
     VAR_USERLAND: pagePath,
     VAR_DEFINITION_PAGE: page,
-    // Turbopack sets `VAR_USERLAND` to `INNER_MIDDLEWARE_MODULE`, so use
-    // `VAR_MODULE_RELATIVE_PATH` for error messages.
-    VAR_MODULE_RELATIVE_PATH: pagePath,
   })
 }
diff --git a/packages/next/src/server/dev/hot-reloader-turbopack.ts b/packages/next/src/server/dev/hot-reloader-turbopack.ts
index caa6ddbc3c5ca2..d9c027e143cd4d 100644
--- a/packages/next/src/server/dev/hot-reloader-turbopack.ts
+++ b/packages/next/src/server/dev/hot-reloader-turbopack.ts
@@ -89,6 +89,7 @@ import {
   processIssues,
   renderStyledStringToErrorAnsi,
   type EntryIssuesMap,
+  type IssuesMap,
   type TopLevelIssuesMap,
 } from '../../shared/lib/turbopack/utils'
 import { getDevOverlayFontMiddleware } from '../../next-devtools/server/font/get-dev-overlay-font-middleware'
@@ -1432,28 +1433,36 @@ export async function createHotReloaderTurbopack(
         case 'end': {
           sendEnqueuedMessages()
 
+          function addToErrorsMap(
+            errorsMap: Map<string, CompilationError>,
+            issueMap: IssuesMap
+          ) {
+            for (const [key, issue] of issueMap) {
+              if (issue.severity === 'warning') continue
+              if (errorsMap.has(key)) continue
+
+              const message = formatIssue(issue)
+
+              errorsMap.set(key, {
+                message,
+                details: issue.detail
+                  ? renderStyledStringToErrorAnsi(issue.detail)
+                  : undefined,
+              })
+            }
+          }
+
           function addErrors(
             errorsMap: Map<string, CompilationError>,
             issues: EntryIssuesMap
           ) {
             for (const issueMap of issues.values()) {
-              for (const [key, issue] of issueMap) {
-                if (issue.severity === 'warning') continue
-                if (errorsMap.has(key)) continue
-
-                const message = formatIssue(issue)
-
-                errorsMap.set(key, {
-                  message,
-                  details: issue.detail
-                    ? renderStyledStringToErrorAnsi(issue.detail)
-                    : undefined,
-                })
-              }
+              addToErrorsMap(errorsMap, issueMap)
             }
           }
 
           const errors = new Map<string, CompilationError>()
+          addToErrorsMap(errors, currentTopLevelIssues)
           addErrors(errors, currentEntryIssues)
 
           for (const client of [
diff --git a/packages/next/src/server/next-server.ts b/packages/next/src/server/next-server.ts
index 3e0adebee88425..8616e7326612b8 100644
--- a/packages/next/src/server/next-server.ts
+++ b/packages/next/src/server/next-server.ts
@@ -1574,6 +1574,10 @@ export default class NextNodeServer extends BaseServer<
           functionsConfig?.functions?.['/_middleware']
         ) {
           // if used with top level await, this will be a promise
+          // Try loading middleware.js first, then proxy.js. Instead
+          // of mapping proxy to middleware as the entry, just fallback
+          // to proxy.
+          // TODO: Remove this once we handle as the single entrypoint.
           return require(
             join(
               /* turbopackIgnore: true */ this.distDir,
@@ -1736,7 +1740,10 @@ export default class NextNodeServer extends BaseServer<
 
       try {
         result = await adapterFn({
-          handler: middlewareModule.middleware || middlewareModule,
+          handler:
+            middlewareModule.proxy ||
+            middlewareModule.middleware ||
+            middlewareModule,
           request: {
             ...requestData,
             body: hasRequestBody
diff --git a/test/e2e/app-dir/app-middleware-proxy/app-middleware-proxy.test.ts b/test/e2e/app-dir/app-middleware-proxy/app-middleware-proxy.test.ts
index b0c080aadbe9a8..35c19a0f4e0e8c 100644
--- a/test/e2e/app-dir/app-middleware-proxy/app-middleware-proxy.test.ts
+++ b/test/e2e/app-dir/app-middleware-proxy/app-middleware-proxy.test.ts
@@ -117,7 +117,9 @@ describe('app-dir with proxy', () => {
       expect(res.headers.get('x-middleware-request-x-from-client3')).toBeNull()
     })
 
-    it(`Supports draft mode`, async () => {
+    // Cannot set draftMode in nodejs runtime
+    // TODO: Investigate https://github.com/vercel/next.js/pull/85174
+    it.skip(`Supports draft mode`, async () => {
       const res = await next.fetch(`${path}?draft=true`)
       const headers: string = res.headers.get('set-cookie') || ''
       const bypassCookie = headers
diff --git a/test/e2e/app-dir/app-middleware-proxy/proxy.js b/test/e2e/app-dir/app-middleware-proxy/proxy.js
index d5a7c82b381ad3..58ab998be71863 100644
--- a/test/e2e/app-dir/app-middleware-proxy/proxy.js
+++ b/test/e2e/app-dir/app-middleware-proxy/proxy.js
@@ -1,6 +1,6 @@
 import { NextResponse } from 'next/server'
 
-import { headers as nextHeaders, draftMode } from 'next/headers'
+import { headers as nextHeaders } from 'next/headers'
 
 /**
  * @param {import('next/server').NextRequest} request
@@ -20,9 +20,11 @@ export async function proxy(request) {
     throw new Error('Expected headers from client to match')
   }
 
-  if (request.nextUrl.searchParams.get('draft')) {
-    ;(await draftMode()).enable()
-  }
+  // Cannot set draftMode in nodejs runtime
+  // TODO: Investigate https://github.com/vercel/next.js/pull/85174
+  // if (request.nextUrl.searchParams.get('draft')) {
+  //   ;(await draftMode()).enable()
+  // }
 
   const removeHeaders = request.nextUrl.searchParams.get('remove-headers')
   if (removeHeaders) {
diff --git a/test/e2e/app-dir/proxy-runtime-nodejs/app/layout.tsx b/test/e2e/app-dir/proxy-runtime-nodejs/app/layout.tsx
new file mode 100644
index 00000000000000..888614deda3ba5
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime-nodejs/app/layout.tsx
@@ -0,0 +1,8 @@
+import { ReactNode } from 'react'
+export default function Root({ children }: { children: ReactNode }) {
+  return (
+    <html>
+      <body>{children}</body>
+    </html>
+  )
+}
diff --git a/test/e2e/app-dir/proxy-runtime-nodejs/app/page.tsx b/test/e2e/app-dir/proxy-runtime-nodejs/app/page.tsx
new file mode 100644
index 00000000000000..ff7159d9149fee
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime-nodejs/app/page.tsx
@@ -0,0 +1,3 @@
+export default function Page() {
+  return <p>hello world</p>
+}
diff --git a/test/e2e/app-dir/proxy-runtime-nodejs/next.config.js b/test/e2e/app-dir/proxy-runtime-nodejs/next.config.js
new file mode 100644
index 00000000000000..807126e4cf0bf5
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime-nodejs/next.config.js
@@ -0,0 +1,6 @@
+/**
+ * @type {import('next').NextConfig}
+ */
+const nextConfig = {}
+
+module.exports = nextConfig
diff --git a/test/e2e/app-dir/proxy-runtime-nodejs/proxy-runtime-nodejs.test.ts b/test/e2e/app-dir/proxy-runtime-nodejs/proxy-runtime-nodejs.test.ts
new file mode 100644
index 00000000000000..f68f7377ecb757
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime-nodejs/proxy-runtime-nodejs.test.ts
@@ -0,0 +1,12 @@
+import { nextTestSetup } from 'e2e-utils'
+
+describe('proxy-runtime-nodejs', () => {
+  const { next } = nextTestSetup({
+    files: __dirname,
+  })
+
+  it('should use nodejs runtime for proxy by default', async () => {
+    const browser = await next.browser('/foo')
+    expect(await browser.elementByCss('p').text()).toBe('hello world')
+  })
+})
diff --git a/test/e2e/app-dir/proxy-runtime-nodejs/proxy.ts b/test/e2e/app-dir/proxy-runtime-nodejs/proxy.ts
new file mode 100644
index 00000000000000..dd49dfb801a3d8
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime-nodejs/proxy.ts
@@ -0,0 +1,11 @@
+import { NextRequest, NextResponse } from 'next/server'
+// Will not work in edge runtime
+import { join } from 'path/posix'
+
+export function proxy(request: NextRequest) {
+  if (request.nextUrl.pathname === join('/', 'foo')) {
+    return NextResponse.redirect(new URL('/', request.url))
+  }
+
+  return NextResponse.next()
+}
diff --git a/test/e2e/app-dir/proxy-runtime-nodejs/redirect-path.txt b/test/e2e/app-dir/proxy-runtime-nodejs/redirect-path.txt
new file mode 100644
index 00000000000000..7370610cce702d
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime-nodejs/redirect-path.txt
@@ -0,0 +1 @@
+/foo
\ No newline at end of file
diff --git a/test/e2e/app-dir/proxy-runtime/app/layout.tsx b/test/e2e/app-dir/proxy-runtime/app/layout.tsx
new file mode 100644
index 00000000000000..888614deda3ba5
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime/app/layout.tsx
@@ -0,0 +1,8 @@
+import { ReactNode } from 'react'
+export default function Root({ children }: { children: ReactNode }) {
+  return (
+    <html>
+      <body>{children}</body>
+    </html>
+  )
+}
diff --git a/test/e2e/app-dir/proxy-runtime/app/page.tsx b/test/e2e/app-dir/proxy-runtime/app/page.tsx
new file mode 100644
index 00000000000000..ff7159d9149fee
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime/app/page.tsx
@@ -0,0 +1,3 @@
+export default function Page() {
+  return <p>hello world</p>
+}
diff --git a/test/e2e/app-dir/proxy-runtime/next.config.js b/test/e2e/app-dir/proxy-runtime/next.config.js
new file mode 100644
index 00000000000000..807126e4cf0bf5
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime/next.config.js
@@ -0,0 +1,6 @@
+/**
+ * @type {import('next').NextConfig}
+ */
+const nextConfig = {}
+
+module.exports = nextConfig
diff --git a/test/e2e/app-dir/proxy-runtime/proxy-runtime.test.ts b/test/e2e/app-dir/proxy-runtime/proxy-runtime.test.ts
new file mode 100644
index 00000000000000..ca90133c084337
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime/proxy-runtime.test.ts
@@ -0,0 +1,46 @@
+import { nextTestSetup } from 'e2e-utils'
+import stripAnsi from 'strip-ansi'
+
+describe('proxy-runtime', () => {
+  const { next, isNextDev, skipped } = nextTestSetup({
+    files: __dirname,
+    skipDeployment: true,
+    skipStart: true,
+  })
+
+  if (skipped) {
+    return
+  }
+
+  it('should error when proxy file has runtime config export', async () => {
+    let cliOutput: string
+
+    if (isNextDev) {
+      await next.start().catch(() => {})
+      // Use .catch() because Turbopack errors during compile and exits before runtime.
+      await next.browser('/').catch(() => {})
+      cliOutput = next.cliOutput
+    } else {
+      cliOutput = (await next.build()).cliOutput
+    }
+
+    // TODO: Investigate why in dev-turbo, the error is shown in the browser console, not CLI output.
+    if (process.env.IS_TURBOPACK_TEST && !isNextDev) {
+      expect(stripAnsi(cliOutput)).toContain(`proxy.ts:3:14
+Next.js can't recognize the exported \`config\` field in route. Proxy does not support Edge runtime.
+  1 | export default function () {}
+  2 |
+> 3 | export const config = { runtime: 'edge' }
+    |              ^^^^^^
+  4 |
+
+The exported configuration object in a source file needs to have a very specific format from which some properties can be statically parsed at compiled-time.`)
+    } else {
+      expect(cliOutput).toContain(
+        `Route segment config is not allowed in Proxy file at "./proxy.ts". Proxy always runs on Node.js runtime. Learn more: https://nextjs.org/docs/messages/middleware-to-proxy`
+      )
+    }
+
+    await next.stop()
+  })
+})
diff --git a/test/e2e/app-dir/proxy-runtime/proxy.ts b/test/e2e/app-dir/proxy-runtime/proxy.ts
new file mode 100644
index 00000000000000..586ed05ca9d43a
--- /dev/null
+++ b/test/e2e/app-dir/proxy-runtime/proxy.ts
@@ -0,0 +1,3 @@
+export default function () {}
+
+export const config = { runtime: 'edge' }
diff --git a/test/production/proxy-typescript/app/proxy.ts b/test/production/proxy-typescript/app/proxy.ts
index 85db0de0aa0d53..fcdb0047720ba1 100644
--- a/test/production/proxy-typescript/app/proxy.ts
+++ b/test/production/proxy-typescript/app/proxy.ts
@@ -1,11 +1,6 @@
-import { NextProxy, NextResponse, URLPattern, ProxyConfig } from 'next/server'
+import { NextProxy, NextResponse, ProxyConfig } from 'next/server'
 
 export const proxy: NextProxy = function (request) {
-  const pattern = new URLPattern({
-    pathname: '/:path',
-  })
-  console.log(pattern.test(request.nextUrl.pathname))
-
   if (request.nextUrl.pathname === '/static') {
     return new NextResponse(null, {
       headers: {
diff --git a/test/unit/parse-page-static-info.test.ts b/test/unit/parse-page-static-info.test.ts
index e1282b97336def..df004408407f3d 100644
--- a/test/unit/parse-page-static-info.test.ts
+++ b/test/unit/parse-page-static-info.test.ts
@@ -16,6 +16,7 @@ describe('parse page static info', () => {
         pageFilePath: join(fixtureDir, 'page-runtime/nodejs-ssr.js'),
         nextConfig: createNextConfig(),
         pageType: PAGE_TYPES.PAGES,
+        isDev: false,
       })
     expect(runtime).toBe('nodejs')
     expect(getServerSideProps).toBe(true)
@@ -29,6 +30,7 @@ describe('parse page static info', () => {
         pageFilePath: join(fixtureDir, 'page-runtime/nodejs.js'),
         nextConfig: createNextConfig(),
         pageType: PAGE_TYPES.PAGES,
+        isDev: false,
       })
     expect(runtime).toBe('nodejs')
     expect(getServerSideProps).toBe(false)
@@ -41,6 +43,7 @@ describe('parse page static info', () => {
       pageFilePath: join(fixtureDir, 'page-runtime/edge.js'),
       nextConfig: createNextConfig(),
       pageType: PAGE_TYPES.PAGES,
+      isDev: false,
     })
     expect(runtime).toBe('experimental-edge')
   })
@@ -51,6 +54,7 @@ describe('parse page static info', () => {
       pageFilePath: join(fixtureDir, 'page-runtime/static.js'),
       nextConfig: createNextConfig(),
       pageType: PAGE_TYPES.PAGES,
+      isDev: false,
     })
     expect(runtime).toBe(undefined)
   })
@@ -62,6 +66,7 @@ describe('parse page static info', () => {
         pageFilePath: join(fixtureDir, 'page-runtime/ssr-variable-gssp.js'),
         nextConfig: createNextConfig(),
         pageType: PAGE_TYPES.PAGES,
+        isDev: false,
       }
     )
     expect(getStaticProps).toBe(false)