diff --git a/examples/with-markdown/src/pages/index.astro b/examples/with-markdown/src/pages/index.astro
index de6f32303..7249f07cd 100644
--- a/examples/with-markdown/src/pages/index.astro
+++ b/examples/with-markdown/src/pages/index.astro
@@ -44,9 +44,11 @@ const items = ['A', 'B', 'C'];
     ## Oh yeah...
 
     <ReactCounter client:visible>
+
       🤯 It's also _recursive_!
 
       ### Markdown can be embedded in any child component
+
     </ReactCounter>
 
     ## Code
diff --git a/packages/astro/components/Markdown.astro b/packages/astro/components/Markdown.astro
index dbdb4e844..85bc66d5e 100644
--- a/packages/astro/components/Markdown.astro
+++ b/packages/astro/components/Markdown.astro
@@ -1,11 +1,10 @@
 ---
-import { renderMarkdown } from '@astrojs/markdown-remark';
-import stripIndent from 'strip-indent';
-
 export interface Props {
   content?: string;
 }
 
+const dedent = (str: string) => str.split('\n').map(ln => ln.trimStart()).join('\n');
+
 // Internal props that should not be part of the external interface.
 interface InternalProps extends Props {
   $scope: string;
@@ -14,13 +13,15 @@ interface InternalProps extends Props {
 let { content, class: className } = Astro.props as InternalProps;
 let html = null;
 
+const { privateRenderMarkdownDoNotUse: renderMarkdown } = (Astro as any);
+
 // If no content prop provided, use the slot.
-if(!content) {
-  const renderSlot = (Astro as any).privateRenderSlotDoNotUse;
-  content = stripIndent(await renderSlot('default'));
+if (!content) {
+  const { privateRenderSlotDoNotUse: renderSlot } = (Astro as any);
+  content = dedent(await renderSlot('default'));
 }
 
-const { code: htmlContent } = await renderMarkdown(content, {
+const htmlContent = await renderMarkdown(content, {
   mode: 'md',
   $: {
     scopedClassName: className
@@ -29,4 +30,4 @@ const { code: htmlContent } = await renderMarkdown(content, {
 
 html = htmlContent;
 ---
-{html ? html : <slot />}
\ No newline at end of file
+{html ? html : <slot />}
diff --git a/packages/astro/src/core/ssr/index.ts b/packages/astro/src/core/ssr/index.ts
index c6049e50d..e9d5dbd7e 100644
--- a/packages/astro/src/core/ssr/index.ts
+++ b/packages/astro/src/core/ssr/index.ts
@@ -132,9 +132,24 @@ export async function ssr({ astroConfig, filePath, logging, mode, origin, pathna
             url,
           },
           slots: Object.fromEntries(Object.entries(slots || {}).map(([slotName]) => [slotName, true])),
+          // This is used for <Markdown> but shouldn't be used publicly
           privateRenderSlotDoNotUse(slotName: string) {
             return renderSlot(result, slots ? slots[slotName] : null);
           },
+          // <Markdown> also needs the same `astroConfig.markdownOptions.render` as `.md` pages
+          async privateRenderMarkdownDoNotUse(content: string, opts: any) {
+            let render = astroConfig.markdownOptions.render;
+            let renderOpts = {};
+            if (Array.isArray(render)) {
+              renderOpts = render[1];
+              render = render[0];
+            }
+            if (typeof render === 'string') {
+              ({ default: render } = await import(render));
+            }
+            const { code } = await render(content, { ...renderOpts, ...(opts ?? {}) });
+            return code
+          }
         } as unknown as AstroGlobal;
       },
       _metadata: { renderers },
diff --git a/packages/markdown/remark/package.json b/packages/markdown/remark/package.json
index 32f12450b..fad9ef317 100644
--- a/packages/markdown/remark/package.json
+++ b/packages/markdown/remark/package.json
@@ -22,8 +22,8 @@
     "@silvenon/remark-smartypants": "^1.0.0",
     "assert": "^2.0.0",
     "github-slugger": "^1.3.0",
-    "mdast-util-mdx-expression": "^1.1.0",
-    "mdast-util-mdx-jsx": "^1.1.0",
+    "mdast-util-mdx-expression": "^1.1.1",
+    "mdast-util-mdx-jsx": "^1.1.1",
     "micromark-extension-mdx-expression": "^1.0.0",
     "micromark-extension-mdx-jsx": "^1.0.0",
     "prismjs": "^1.25.0",
diff --git a/packages/markdown/remark/src/index.ts b/packages/markdown/remark/src/index.ts
index 0c385be21..23dfee2e2 100644
--- a/packages/markdown/remark/src/index.ts
+++ b/packages/markdown/remark/src/index.ts
@@ -8,12 +8,14 @@ import { remarkJsx, loadRemarkJsx } from './remark-jsx.js';
 import rehypeJsx from './rehype-jsx.js';
 //import { remarkCodeBlock } from './codeblock.js';
 import remarkPrism from './remark-prism.js';
+import remarkUnwrap from './remark-unwrap.js';
 import { loadPlugins } from './load-plugins.js';
 
 import { unified } from 'unified';
 import markdown from 'remark-parse';
 import markdownToHtml from 'remark-rehype';
 import rehypeStringify from 'rehype-stringify';
+import rehypeRaw from 'rehype-raw';
 import matter from 'gray-matter';
 
 export { AstroMarkdownOptions, MarkdownRenderingOptions };
@@ -40,14 +42,17 @@ export const DEFAULT_REHYPE_PLUGINS = [
 export async function renderMarkdown(content: string, opts?: MarkdownRenderingOptions | null) {
   const { remarkPlugins = DEFAULT_REMARK_PLUGINS, rehypePlugins = DEFAULT_REHYPE_PLUGINS } = opts ?? {};
   const scopedClassName = opts?.$?.scopedClassName;
+  const mode = opts?.mode ?? "mdx";
+  const isMDX = mode === 'mdx';
   const { headers, rehypeCollectHeaders } = createCollectHeaders();
 
   await Promise.all([loadRemarkExpressions(), loadRemarkJsx()]); // Vite bug: dynamically import() these because of CJS interop (this will cache)
 
   let parser = unified()
     .use(markdown)
-    .use([remarkJsx])
-    .use([remarkExpressions])
+    .use(isMDX ? [remarkJsx] : [])
+    .use(isMDX ? [remarkExpressions] : [])
+    .use([remarkUnwrap])
     .use([remarkPrism(scopedClassName)])
 
   const loadedRemarkPlugins = await Promise.all(loadPlugins(remarkPlugins));
@@ -68,13 +73,16 @@ export async function renderMarkdown(content: string, opts?: MarkdownRenderingOp
     parser.use([[plugin, opts]]);
   });
   
-  parser.use([rehypeJsx]).use(rehypeExpressions)
+  parser
+    .use(isMDX ? [rehypeJsx] : [])
+    .use(isMDX ? [rehypeExpressions] : [])
+    .use(isMDX ? [] : [rehypeRaw])
 
   let result: string;
   try {
     const vfile = await parser
     .use([rehypeCollectHeaders])
-      .use(rehypeStringify, { allowParseErrors: true, preferUnquoted: false, allowDangerousHtml: true })
+      .use(rehypeStringify, { allowParseErrors: true, allowDangerousHtml: true })
       .process(content);
     result = vfile.toString();
   } catch (err) {
diff --git a/packages/markdown/remark/src/remark-unwrap.ts b/packages/markdown/remark/src/remark-unwrap.ts
new file mode 100644
index 000000000..e43a57a0c
--- /dev/null
+++ b/packages/markdown/remark/src/remark-unwrap.ts
@@ -0,0 +1,38 @@
+import {visit, SKIP} from 'unist-util-visit'
+
+// Remove the wrapping paragraph for <astro-root> islands
+export default function remarkUnwrap() {
+  const astroRootNodes = new Set();
+  let insideAstroRoot = false;
+
+  return (tree: any) => {
+    // reset state
+    insideAstroRoot = false;
+    astroRootNodes.clear();
+
+    visit(tree, 'html', (node) => {
+      if (node.value.indexOf('<astro-root') > -1 && !insideAstroRoot) {
+        insideAstroRoot = true;
+      }
+      if (node.value.indexOf('</astro-root') > -1 && insideAstroRoot) {
+        insideAstroRoot = false;
+      }
+      astroRootNodes.add(node);
+    })
+
+    visit(tree, 'paragraph', (node, index, parent) => {
+      if (
+        parent &&
+        typeof index === 'number' &&
+        containsAstroRootNode(node)
+      ) {
+        parent.children.splice(index, 1, ...node.children)
+        return [SKIP, index]
+      }
+    })
+  }
+
+  function containsAstroRootNode(node: any) {
+    return node.children.map((child: any) => astroRootNodes.has(child)).reduce((all: boolean, v: boolean) => all ? all : v, false)
+  }
+}
diff --git a/packages/markdown/remark/src/types.ts b/packages/markdown/remark/src/types.ts
index fb5cdf4ac..201e50931 100644
--- a/packages/markdown/remark/src/types.ts
+++ b/packages/markdown/remark/src/types.ts
@@ -4,6 +4,7 @@ export type UnifiedPluginImport = Promise<{ default: unified.Plugin }>;
 export type Plugin = string | [string, any] | UnifiedPluginImport | [UnifiedPluginImport, any];
 
 export interface AstroMarkdownOptions {
+  mode?: 'md'|'mdx';
   remarkPlugins?: Plugin[];
   rehypePlugins?: Plugin[];
 }
diff --git a/yarn.lock b/yarn.lock
index 98fb91f51..593a58782 100644
--- a/yarn.lock
+++ b/yarn.lock
@@ -6927,10 +6927,17 @@ mdast-util-mdx-expression@^1.1.0:
     "@types/estree-jsx" "^0.0.1"
     strip-indent "^4.0.0"
 
-mdast-util-mdx-jsx@^1.1.0:
-  version "1.1.0"
-  resolved "https://registry.yarnpkg.com/mdast-util-mdx-jsx/-/mdast-util-mdx-jsx-1.1.0.tgz#e44bf620c3d218b0d9d836b30927098f1c080d72"
-  integrity sha512-iPeyjvvPU7biH1bw/1VM9PLSM9ZXy7409RRB4GKMWl2CASjwz27i6DIHAyjAsYdwdtPXXvX/TJ6AsfWP9M5DSA==
+mdast-util-mdx-expression@^1.1.1:
+  version "1.1.1"
+  resolved "https://registry.yarnpkg.com/mdast-util-mdx-expression/-/mdast-util-mdx-expression-1.1.1.tgz#657522e78b84f5c85cd2395776aba8dcfb7bbb0f"
+  integrity sha512-RDLRkBFmBKCJl6/fQdxxKL2BqNtoPFoNBmQAlj5ZNKOijIWRKjdhPkeufsUOaexLj+78mhJc+L7d1MYka8/LdQ==
+  dependencies:
+    "@types/estree-jsx" "^0.0.1"
+
+mdast-util-mdx-jsx@^1.1.1:
+  version "1.1.1"
+  resolved "https://registry.yarnpkg.com/mdast-util-mdx-jsx/-/mdast-util-mdx-jsx-1.1.1.tgz#f2ee5e3b74282a8fecf3a6608bb19ed656751a34"
+  integrity sha512-C4W4hXmagipaeMwi5O8y+lVWE4qP2MDxfKlIh0lZN6MZWSPpQTK5RPwKBH4DdYHorgjbV2rKk84rNWlRtvoZCg==
   dependencies:
     "@types/estree-jsx" "^0.0.1"
     "@types/mdast" "^3.0.0"