diff --git a/README.md b/README.md
index cb6c9848..5805a916 100644
--- a/README.md
+++ b/README.md
@@ -209,6 +209,47 @@ app.all(handlerToExpressRoute(handler));
 app.listen(3000, () => console.log('Server running on port 3000'));
 ```
 
+## Error Handling in Dev Server
+
+If your local Twilio Function throws an unhandled error or returns an `Error` instance via the `callback` method, we will return an HTTP status code of `500` and return the error object as JSON.
+
+By default we will clean up the stack trace for you to remove internal code of the dev server and add it as `at [Twilio Dev Server internals]` into the stack trace.
+
+An example would look like this:
+
+```
+Error: What?
+    at format (/Users/dkundel/dev/twilio-run/examples/basic/functions/hello.js:5:9)
+    at exports.handler (/Users/dkundel/dev/twilio-run/examples/basic/functions/hello.js:13:3)
+    at [Twilio Dev Server internals]
+```
+
+If you want to have the full un-modified stack trace instead, set the following environment variable, either in your Twilio Function or via `.env`:
+
+```
+TWILIO_SERVERLESS_FULL_ERRORS=true
+```
+
+This will result into a stack trace like this:
+
+```
+Error: What?
+    at format (/Users/dkundel/dev/twilio-run/examples/basic/functions/hello.js:5:9)
+    at exports.handler (/Users/dkundel/dev/twilio-run/examples/basic/functions/hello.js:13:3)
+    at twilioFunctionHandler (/Users/dkundel/dev/twilio-run/dist/runtime/route.js:125:13)
+    at app.all (/Users/dkundel/dev/twilio-run/dist/runtime/server.js:122:82)
+    at Layer.handle [as handle_request] (/Users/dkundel/dev/twilio-run/node_modules/express/lib/router/layer.js:95:5)
+    at next (/Users/dkundel/dev/twilio-run/node_modules/express/lib/router/route.js:137:13)
+    at next (/Users/dkundel/dev/twilio-run/node_modules/express/lib/router/route.js:131:14)
+    at next (/Users/dkundel/dev/twilio-run/node_modules/express/lib/router/route.js:131:14)
+    at next (/Users/dkundel/dev/twilio-run/node_modules/express/lib/router/route.js:131:14)
+    at next (/Users/dkundel/dev/twilio-run/node_modules/express/lib/router/route.js:131:14)
+```
+
+In general you'll want to use the cleaned-up stack trace since the internals might change throughout time. 
+
+
+
 ## Contributing
 
 This project welcomes contributions from the community. Please see the [`CONTRIBUTING.md`](CONTRIBUTING.md) file for more details.
diff --git a/__tests__/runtime/route.test.ts b/__tests__/runtime/route.test.ts
index a13d454e..9e4d3cdd 100644
--- a/__tests__/runtime/route.test.ts
+++ b/__tests__/runtime/route.test.ts
@@ -20,6 +20,7 @@ import {
 } from '../../src/runtime/route';
 import { EnvironmentVariablesWithAuth } from '../../src/types/generic';
 import { wrapErrorInHtml } from '../../src/utils/error-html';
+import { cleanUpStackTrace } from '../../src/utils/stack-trace/clean-up';
 
 const { VoiceResponse, MessagingResponse, FaxResponse } = twiml;
 
@@ -87,9 +88,14 @@ describe('handleError function', () => {
     } as ExpressUseragent.UserAgent;
 
     const err = new Error('Failed to execute');
+    const cleanedupError = cleanUpStackTrace(err);
     handleError(err, mockRequest, mockResponse);
     expect(mockResponse.status).toHaveBeenCalledWith(500);
-    expect(mockResponse.send).toHaveBeenCalledWith(err.toString());
+    expect(mockResponse.send).toHaveBeenCalledWith({
+      message: 'Failed to execute',
+      name: 'Error',
+      stack: cleanedupError.stack,
+    });
   });
 });
 
diff --git a/__tests__/utils/stack-trace/clean-up.test.ts b/__tests__/utils/stack-trace/clean-up.test.ts
new file mode 100644
index 00000000..5306890c
--- /dev/null
+++ b/__tests__/utils/stack-trace/clean-up.test.ts
@@ -0,0 +1,37 @@
+import { cleanUpStackTrace } from '../../../src/utils/stack-trace/clean-up';
+
+jest.mock('../../../src/utils/stack-trace/helpers', () => {
+  return {
+    ...jest.requireActual('../../../src/utils/stack-trace/helpers'),
+    formatStackTraceWithInternals: jest
+      .fn()
+      .mockReturnValue('[mock stacktrace]'),
+  };
+});
+
+describe('cleanUpStackTrace', () => {
+  beforeEach(() => {
+    delete process.env.TWILIO_SERVERLESS_FULL_ERRORS;
+  });
+
+  afterAll(() => {
+    delete process.env.TWILIO_SERVERLESS_FULL_ERRORS;
+  });
+
+  test('overrides stack trace by default', () => {
+    const err = new Error('Hello');
+    cleanUpStackTrace(err);
+    expect(err.stack).toBe('[mock stacktrace]');
+    expect(err.name).toBe('Error');
+    expect(err.message).toBe('Hello');
+  });
+
+  test('leaves stack trace if env variable is set', () => {
+    process.env.TWILIO_SERVERLESS_FULL_ERRORS = 'true';
+    const err = new Error('Hello');
+    cleanUpStackTrace(err);
+    expect(err.stack).not.toBe('[mock stacktrace]');
+    expect(err.name).toBe('Error');
+    expect(err.message).toBe('Hello');
+  });
+});
diff --git a/__tests__/utils/stack-trace/helpers.test.ts b/__tests__/utils/stack-trace/helpers.test.ts
new file mode 100644
index 00000000..0b6aee19
--- /dev/null
+++ b/__tests__/utils/stack-trace/helpers.test.ts
@@ -0,0 +1,99 @@
+import { stripIndent } from 'common-tags';
+import path from 'path';
+import {
+  formatStackTraceWithInternals,
+  MODULE_ROOT,
+  stringifyStackTrace,
+} from '../../../src/utils/stack-trace/helpers';
+
+function generateMockCallSite(
+  str = `someTest (randomFakeFile.js:10:10)`,
+  fileName = 'randomFakeFile.js'
+) {
+  return {
+    getThis: jest.fn(),
+    getTypeName: jest.fn(),
+    getFunction: jest.fn(),
+    getFunctionName: jest.fn(),
+    getMethodName: jest.fn(),
+    getFileName: jest.fn().mockReturnValue(fileName),
+    getLineNumber: jest.fn(),
+    getColumnNumber: jest.fn(),
+    getEvalOrigin: jest.fn(),
+    isToplevel: jest.fn(),
+    isEval: jest.fn(),
+    isNative: jest.fn(),
+    isConstructor: jest.fn(),
+    isAsync: jest.fn(),
+    isPromiseAll: jest.fn(),
+    getPromiseIndex: jest.fn(),
+    toString: () => {
+      return str;
+    },
+  };
+}
+
+describe('MODULE_ROOT', () => {
+  test('module root points at root of source code', () => {
+    expect(MODULE_ROOT.endsWith('src')).toBe(true);
+  });
+});
+
+describe('stringifyStackTrace', () => {
+  test('formats error correctly', () => {
+    const err = new Error('Test error message');
+    err.name = 'FakeTestError';
+    const callsites = [generateMockCallSite()];
+    const stackString = stringifyStackTrace(err, callsites);
+    expect(stackString).toEqual(stripIndent`
+    FakeTestError: Test error message
+        at someTest (randomFakeFile.js:10:10)
+    `);
+  });
+
+  test('handles multiple callsites', () => {
+    const err = new Error('Test error message');
+    err.name = 'FakeTestError';
+    const callsites = [
+      generateMockCallSite(),
+      generateMockCallSite('anotherTest (randomFakeFile.js:20:0)'),
+    ];
+    const stackString = stringifyStackTrace(err, callsites);
+    expect(stackString).toEqual(stripIndent`
+    FakeTestError: Test error message
+        at someTest (randomFakeFile.js:10:10)
+        at anotherTest (randomFakeFile.js:20:0)
+    `);
+  });
+});
+
+describe('formatStackTraceWithInternals', () => {
+  test('does not add "internals" footer if no internals', () => {
+    const err = new Error('Test error message');
+    err.name = 'FakeTestError';
+    const callsites = [generateMockCallSite()];
+    const stackString = formatStackTraceWithInternals(err, callsites);
+    expect(stackString).toEqual(stripIndent`
+    FakeTestError: Test error message
+        at someTest (randomFakeFile.js:10:10)
+    `);
+  });
+
+  test('adds "internals" footer if internals are present', () => {
+    const err = new Error('Test error message');
+    err.name = 'FakeTestError';
+    const callsites = [
+      generateMockCallSite(),
+      generateMockCallSite(
+        'randomInternalThatShouldBeRemoved (randomFakeFile.js:20:0)',
+        path.join(MODULE_ROOT, 'randomFakeFile.js')
+      ),
+    ];
+    const stackString = formatStackTraceWithInternals(err, callsites);
+    expect(stackString).toEqual(stripIndent`
+    FakeTestError: Test error message
+        at someTest (randomFakeFile.js:10:10)
+        at [Twilio Dev Server internals]
+    `);
+  });
+});
diff --git a/examples/basic/functions/error.js b/examples/basic/functions/error.js
new file mode 100644
index 00000000..20d07cd9
--- /dev/null
+++ b/examples/basic/functions/error.js
@@ -0,0 +1,7 @@
+/// <reference path="../../../node_modules/@twilio-labs/serverless-runtime-types/index.d.ts"/>
+
+exports.handler = function(context, event, callback) {
+  const err = new Error('Something went wrong');
+  err.name = 'WebhookError';
+  callback(err);
+};
diff --git a/package.json b/package.json
index 0a1f4908..f5b23cd8 100644
--- a/package.json
+++ b/package.json
@@ -112,7 +112,7 @@
     "standard-version": "^6.0.1",
     "supertest": "^3.1.0",
     "ts-jest": "^24.0.2",
-    "typescript": "^3.5.2"
+    "typescript": "^3.7.4"
   },
   "files": [
     "bin/",
diff --git a/src/runtime/route.ts b/src/runtime/route.ts
index 89673898..125c5d34 100644
--- a/src/runtime/route.ts
+++ b/src/runtime/route.ts
@@ -14,6 +14,7 @@ import { checkForValidAccountSid } from '../checks/check-account-sid';
 import { StartCliConfig } from '../config/start';
 import { wrapErrorInHtml } from '../utils/error-html';
 import { getDebugFunction } from '../utils/logger';
+import { cleanUpStackTrace } from '../utils/stack-trace/clean-up';
 import { Response } from './internal/response';
 import * as Runtime from './internal/runtime';
 
@@ -67,6 +68,10 @@ export function constructGlobalScope(config: StartCliConfig): void {
   }
 }
 
+function isError(obj: any): obj is Error {
+  return obj instanceof Error;
+}
+
 export function handleError(
   err: Error | string | object,
   req: ExpressRequest,
@@ -74,15 +79,21 @@ export function handleError(
   functionFilePath?: string
 ) {
   res.status(500);
-  if (!(err instanceof Error)) {
-    res.send(err);
-  } else {
+  if (isError(err)) {
+    const cleanedupError = cleanUpStackTrace(err);
+
     if (req.useragent && (req.useragent.isDesktop || req.useragent.isMobile)) {
       res.type('text/html');
-      res.send(wrapErrorInHtml(err, functionFilePath));
+      res.send(wrapErrorInHtml(cleanedupError, functionFilePath));
     } else {
-      res.send(err.toString());
+      res.send({
+        message: cleanedupError.message,
+        name: cleanedupError.name,
+        stack: cleanedupError.stack,
+      });
     }
+  } else {
+    res.send(err);
   }
 }
 
diff --git a/src/utils/stack-trace/clean-up.ts b/src/utils/stack-trace/clean-up.ts
new file mode 100644
index 00000000..d4b0210a
--- /dev/null
+++ b/src/utils/stack-trace/clean-up.ts
@@ -0,0 +1,19 @@
+import { formatStackTraceWithInternals } from './helpers';
+
+/**
+ * Uses the V8 Stack Trace API to hide any twilio-run internals from stack traces
+ * https://v8.dev/docs/stack-trace-api
+ *
+ * @param err Instance that inherits from Error
+ */
+export function cleanUpStackTrace<T extends Error>(err: T): T {
+  if (typeof process.env.TWILIO_SERVERLESS_FULL_ERRORS !== 'undefined') {
+    return err;
+  }
+
+  const backupPrepareStackTrace = Error.prepareStackTrace;
+  Error.prepareStackTrace = formatStackTraceWithInternals;
+  err.stack = err.stack;
+  Error.prepareStackTrace = backupPrepareStackTrace;
+  return err;
+}
diff --git a/src/utils/stack-trace/helpers.ts b/src/utils/stack-trace/helpers.ts
new file mode 100644
index 00000000..b433720d
--- /dev/null
+++ b/src/utils/stack-trace/helpers.ts
@@ -0,0 +1,62 @@
+import path from 'path';
+
+export const MODULE_ROOT = path.resolve(__dirname, '../../');
+
+/**
+ * Turns a set of stack frames into a stack trace string equivalent to the one
+ * generated by V8
+ *
+ * https://v8.dev/docs/stack-trace-api
+ *
+ * @param err The error instance for this stack trace
+ * @param stack Callsite instances for each frame from V8
+ */
+export function stringifyStackTrace(err: Error, stack: NodeJS.CallSite[]) {
+  const callSiteStrings = stack
+    .map(callSite => {
+      return `    at ${callSite}`;
+    })
+    .join('\n');
+  const stackTrace = `${err.name}: ${err.message}\n${callSiteStrings}`;
+  return stackTrace;
+}
+
+/**
+ * Returns all stack frames until one is reached that comes from inside twilio-run
+ *
+ * https://v8.dev/docs/stack-trace-api
+ *
+ * @param stack Array of callsite instances from the V8 Stack Trace API
+ */
+export function filterCallSites(stack: NodeJS.CallSite[]): NodeJS.CallSite[] {
+  let indexOfFirstInternalCallSite = stack.findIndex(callSite =>
+    callSite.getFileName()?.includes(MODULE_ROOT)
+  );
+  indexOfFirstInternalCallSite =
+    indexOfFirstInternalCallSite === -1
+      ? stack.length
+      : indexOfFirstInternalCallSite;
+  return stack.slice(0, indexOfFirstInternalCallSite);
+}
+
+/**
+ * Removes any stack traces that are internal to twilio-run and replaces it
+ * with one [Twilio Dev Server internals] statement.
+ *
+ * To be used with Error.prepareStackTrace from the V8 Stack Trace API
+ * https://v8.dev/docs/stack-trace-api
+ *
+ * @param err The error instance for this stack trace
+ * @param stack Callsite instances for each from from V8 Stack Trace API
+ */
+export function formatStackTraceWithInternals(
+  err: Error,
+  stack: NodeJS.CallSite[]
+): string {
+  const filteredStack = filterCallSites(stack);
+  const stackTraceWithoutInternals = stringifyStackTrace(err, filteredStack);
+  if (filteredStack.length === stack.length) {
+    return stackTraceWithoutInternals;
+  }
+  return `${stackTraceWithoutInternals}\n    at [Twilio Dev Server internals]`;
+}