diff --git a/src/rollup/plugins/externals.ts b/src/rollup/plugins/externals.ts
index b119932591..b7a42d8d90 100644
--- a/src/rollup/plugins/externals.ts
+++ b/src/rollup/plugins/externals.ts
@@ -5,7 +5,7 @@ import type { PackageJson } from "pkg-types";
 import { nodeFileTrace, NodeFileTraceOptions } from "@vercel/nft";
 import type { Plugin } from "rollup";
 import { resolvePath, isValidNodeImport, normalizeid } from "mlly";
-// import semver from "semver";
+import semver from "semver";
 import { isDirectory } from "../../utils";
 
 export interface NodeExternalsOptions {
@@ -324,7 +324,10 @@ export function externals(opts: NodeExternalsOptions): Plugin {
       const linkPackage = async (from: string, to: string) => {
         const src = join(opts.outDir, "node_modules", from);
         const dst = join(opts.outDir, "node_modules", to);
-        if (existsSync(dst)) {
+        const dstStat = await fsp.lstat(dst).catch(() => null);
+        const exists = dstStat && dstStat.isSymbolicLink();
+        // console.log("Linking", from, "to", to, exists ? "!!!!" : "");
+        if (exists) {
           return;
         }
         await fsp.mkdir(dirname(dst), { recursive: true });
@@ -335,7 +338,7 @@ export function externals(opts: NodeExternalsOptions): Plugin {
             isWindows ? "junction" : "dir"
           )
           .catch((err) => {
-            console.error("Cannot link", src, "to", dst, ":", err.message);
+            console.error("Cannot link", from, "to", to, err);
           });
       };
 
@@ -363,52 +366,68 @@ export function externals(opts: NodeExternalsOptions): Plugin {
         return parentPkgs;
       };
 
-      const writeTracedPackage = async (tracedPackage: TracedPackage) => {
+      // Analyze dependency tree
+      const multiVersionPkgs: Record<string, { [version: string]: string[] }> =
+        {};
+      const singleVersionPackages: string[] = [];
+      for (const tracedPackage of Object.values(tracedPackages)) {
         const versions = Object.keys(tracedPackage.versions);
         if (versions.length === 1) {
-          // Write the only version into node_modules/{name}
-          await writePackage(tracedPackage.name, versions[0]);
-          return;
+          singleVersionPackages.push(tracedPackage.name);
+          continue;
         }
+        multiVersionPkgs[tracedPackage.name] = {};
         for (const version of versions) {
-          const parentPkgs = findPackageParents(tracedPackage, version);
-          if (parentPkgs.length === 0) {
-            // No parent packages, assume as the hoisted version
-            await writePackage(tracedPackage.name, version);
-            continue;
-          }
-          // Write alternative version into node_modules/{name}@{version}
-          await writePackage(
-            tracedPackage.name,
-            version,
-            `.nitro/${tracedPackage.name}@${version}`
+          multiVersionPkgs[tracedPackage.name][version] = findPackageParents(
+            tracedPackage,
+            version
           );
+        }
+      }
+
+      // Directly write single version packages
+      await Promise.all(
+        singleVersionPackages.map((pkgName) => {
+          const pkg = tracedPackages[pkgName];
+          const version = Object.keys(pkg.versions)[0];
+          return writePackage(pkgName, version);
+        })
+      );
+
+      // Write packages with multiple versions
+      for (const [pkgName, pkgVersions] of Object.entries(multiVersionPkgs)) {
+        const versionEntires = Object.entries(pkgVersions).sort(
+          ([v1, p1], [v2, p2]) => {
+            // 1. Packege with no parent packages to be hoisted
+            if (p1.length === 0) {
+              return -1;
+            }
+            if (p2.length === 0) {
+              return 1;
+            }
+            // 2. Newest version to be hoisted
+            return compareVersions(v1, v2);
+          }
+        );
+        for (const [version, parentPkgs] of versionEntires) {
+          // Write each version into node_modules/.nitro/{name}@{version}
+          await writePackage(pkgName, version, `.nitro/${pkgName}@${version}`);
           // Link one version to the top level (for indirect bundle deps)
-          await linkPackage(
-            `.nitro/${tracedPackage.name}@${version}`,
-            `${tracedPackage.name}`
-          );
-          // For each parent, link into node_modules/{parent}/node_modules/{name}
-          for (const parentPath of parentPkgs) {
-            await linkPackage(
-              `.nitro/${tracedPackage.name}@${version}`,
-              `.nitro/${parentPath}/node_modules/${tracedPackage.name}`
-            );
-            await linkPackage(
-              `.nitro/${tracedPackage.name}@${version}`,
-              `${parentPath.split("@")[0]}/node_modules/${tracedPackage.name}`
-            );
+          await linkPackage(`.nitro/${pkgName}@${version}`, `${pkgName}`);
+          // Link to parent packages
+          for (const parentPkg of parentPkgs) {
+            const parentPkgName = parentPkg.replace(/@[^@]+$/, "");
+            await (multiVersionPkgs[parentPkgName]
+              ? linkPackage(
+                  `.nitro/${pkgName}@${version}`,
+                  `.nitro/${parentPkg}/node_modules/${pkgName}`
+                )
+              : linkPackage(
+                  `.nitro/${pkgName}@${version}`,
+                  `${parentPkgName}/node_modules/${pkgName}`
+                ));
           }
         }
-      };
-      // Write traced packages
-      // await Promise.all(
-      //   Object.values(tracedPackages).map(async (tracedPackage) => {
-      //     await writeTracedPackage(tracedPackage);
-      //   })
-      // );
-      for (const tracedPackage of Object.values(tracedPackages)) {
-        await writeTracedPackage(tracedPackage);
       }
 
       // Write an informative package.json
@@ -418,6 +437,7 @@ export function externals(opts: NodeExternalsOptions): Plugin {
           Object.keys(pkg.versions).join(" | "),
         ])
       );
+
       await fsp.writeFile(
         resolve(opts.outDir, "package.json"),
         JSON.stringify(
@@ -436,15 +456,13 @@ export function externals(opts: NodeExternalsOptions): Plugin {
   };
 }
 
-// function sortVersions(versions: string[]) {
-//   return versions.sort((v1 = "0.0.0", v2 = "0.0.0") => {
-//     try {
-//       return semver.lt(v1, v2, { loose: true }) ? 1 : -1;
-//     } catch {
-//       return v1.localeCompare(v2);
-//     }
-//   });
-// }
+function compareVersions(v1 = "0.0.0", v2 = "0.0.0") {
+  try {
+    return semver.lt(v1, v2, { loose: true }) ? 1 : -1;
+  } catch {
+    return v1.localeCompare(v2);
+  }
+}
 
 function parseNodeModulePath(path: string) {
   if (!path) {
diff --git a/test/fixture/_/node_modules/nitro-dep-b/node_modules/nitro-lib/package.json b/test/fixture/_/node_modules/nitro-dep-b/node_modules/nitro-lib/package.json
index 3396d6ee1d..7eb0cbba5d 100644
--- a/test/fixture/_/node_modules/nitro-dep-b/node_modules/nitro-lib/package.json
+++ b/test/fixture/_/node_modules/nitro-dep-b/node_modules/nitro-lib/package.json
@@ -6,6 +6,6 @@
     "./subpath": "./subpath.mjs"
   },
   "dependencies": {
-    "nested-lib": "2.0.0"
+    "nested-lib": "2.0.1"
   }
 }
diff --git a/test/fixture/_/node_modules/nitro-dep-b/package.json b/test/fixture/_/node_modules/nitro-dep-b/package.json
index d7235353b7..4154a93930 100644
--- a/test/fixture/_/node_modules/nitro-dep-b/package.json
+++ b/test/fixture/_/node_modules/nitro-dep-b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "nitro-dep-b",
-  "version": "1.0.0",
+  "version": "2.0.1",
   "exports": "./index.mjs",
   "dependencies": {
     "nitro-lib": "2.0.1"
diff --git a/test/fixture/_/node_modules/nitro-lib/package.json b/test/fixture/_/node_modules/nitro-lib/package.json
index ac01a7ab9d..9eeab28277 100644
--- a/test/fixture/_/node_modules/nitro-lib/package.json
+++ b/test/fixture/_/node_modules/nitro-lib/package.json
@@ -6,6 +6,6 @@
     "./subpath": "./subpath.mjs"
   },
   "dependencies": {
-    "nested-dep": "2.0.0"
+    "nested-lib": "2.0.0"
   }
 }
diff --git a/test/fixture/routes/modules.ts b/test/fixture/routes/modules.ts
index 6fda0684de..37aae1bd6a 100644
--- a/test/fixture/routes/modules.ts
+++ b/test/fixture/routes/modules.ts
@@ -7,11 +7,23 @@ import depLib from "nitro-lib";
 // @ts-ignore
 import subpathLib from "nitro-lib/subpath";
 
+/*
+Structure in fixture/_/node_modules:
+| nitrodep-a (1.0.0)
+|    nitro-lib (1.0.0)
+|       nested-lib (1.0.0)
+| nitrodep-b (2.0.1)
+|    nitro-lib (2.0.1)
+|       nested-lib (2.0.1)
+| nitro-lib (2.0.0)
+|    nested-lib (2.0.0)
+*/
+
 export default defineEventHandler(() => {
   return {
-    depA,
-    depB,
-    depLib,
-    subpathLib,
+    depA, // expected to all be 1.0.0
+    depB, // expected to all be 2.0.1
+    depLib, // expected to all be 2.0.0
+    subpathLib, // expected to 2.0.0
   };
 });