diff --git a/.changeset/modern-pugs-appear.md b/.changeset/modern-pugs-appear.md
index c9b9f56e89..8b502fb52d 100644
--- a/.changeset/modern-pugs-appear.md
+++ b/.changeset/modern-pugs-appear.md
@@ -2,7 +2,7 @@
 '@backstage/cli': patch
 ---
 
-Added a new `--entry-dir` option to the `package start` command, which allows you to specify a custom entry directory for development applications. This is particularly useful when maintaining separate dev apps for different versions of your plugin (e.g., stable and alpha).
+Added a new `--entrypoint` option to the `package start` command, which allows you to specify a custom entry directory/file for development applications. This is particularly useful when maintaining separate dev apps for different versions of your plugin (e.g., stable and alpha).
 
 **Example usage:**
 
@@ -15,7 +15,5 @@ dev/
     index.ts
 ```
 
-- The default `yarn package start` command uses the `dev/` folder as the entry point and executes `dev/index.tsx`
-- Running `yarn package start --entry-dir dev/alpha` will instead use `dev/alpha/` as the entry point and execute `dev/alpha/index.ts`
-
-This enables you to maintain multiple development environments within a single plugin package.
+- The default `yarn package start` command uses the `dev/` folder as the entry point and executes `dev/index.tsx` file;
+- Running `yarn package start --entrypoint dev/alpha` will instead use `dev/alpha/` as the entry point and execute `dev/alpha/index.ts` file.
diff --git a/docs/tooling/cli/03-commands.md b/docs/tooling/cli/03-commands.md
index da8a9650f1..ce8f862c98 100644
--- a/docs/tooling/cli/03-commands.md
+++ b/docs/tooling/cli/03-commands.md
@@ -177,12 +177,12 @@ Usage: backstage-cli package start [options]
 Start a package for local development
 
 Options:
-  --config <path>     Config files to load instead of app-config.yaml (default: [])
-  --role <name>      Run the command with an explicit package role
-  --check            Enable type checking and linting if available
-  --inspect          Enable debugger in Node.js environments
-  --inspect-brk      Enable debugger in Node.js environments, breaking before code starts
-  --entry-dir <path> Path to the directory containing the entry point file
+  --config <path>      Config files to load instead of app-config.yaml (default: [])
+  --role <name>       Run the command with an explicit package role
+  --check             Enable type checking and linting if available
+  --inspect           Enable debugger in Node.js environments
+  --inspect-brk       Enable debugger in Node.js environments, breaking before code starts
+  --entrypoint <path> Entry directory path (uses index file) or entry file path (without extension). Defaults to "dev"
 ```
 
 ## package build
diff --git a/packages/cli/cli-report.md b/packages/cli/cli-report.md
index e2f5bb9cc6..a8df5242ad 100644
--- a/packages/cli/cli-report.md
+++ b/packages/cli/cli-report.md
@@ -312,6 +312,7 @@ Usage: program [options]
 Options:
   --check
   --config <path>
+  --entrypoint <path>
   --inspect [host]
   --inspect-brk [host]
   --link <path>
diff --git a/packages/cli/src/modules/build/commands/package/start/command.ts b/packages/cli/src/modules/build/commands/package/start/command.ts
index 4a65953f76..b38957f488 100644
--- a/packages/cli/src/modules/build/commands/package/start/command.ts
+++ b/packages/cli/src/modules/build/commands/package/start/command.ts
@@ -23,7 +23,7 @@ import { paths } from '../../../../../lib/paths';
 export async function command(opts: OptionValues): Promise<void> {
   await startPackage({
     role: await findRoleFromCommand(opts),
-    entryDir: opts.entryDir,
+    entrypoint: opts.entrypoint,
     targetDir: paths.targetDir,
     configPaths: opts.config as string[],
     checksEnabled: Boolean(opts.check),
diff --git a/packages/cli/src/modules/build/commands/package/start/startPackage.test.ts b/packages/cli/src/modules/build/commands/package/start/startPackage.test.ts
new file mode 100644
index 0000000000..b2aa172867
--- /dev/null
+++ b/packages/cli/src/modules/build/commands/package/start/startPackage.test.ts
@@ -0,0 +1,89 @@
+/*
+ * Copyright 2020 The Backstage Authors
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+import { createMockDirectory } from '@backstage/backend-test-utils';
+import { resolveEntryPath } from './startPackage';
+
+describe('resolveEntryPath', () => {
+  const mockDir = createMockDirectory();
+
+  afterEach(() => {
+    mockDir.clear();
+  });
+
+  it('should remove file extensions', () => {
+    mockDir.setContent({
+      'dev/custom.tsx': '// dev app code',
+    });
+
+    const result = resolveEntryPath('dev/custom.tsx', mockDir.path);
+
+    expect(result).toBe('dev/custom');
+  });
+
+  it('should remove trailing slashes', () => {
+    mockDir.setContent({
+      'dev/alpha.ts': '// dev app code',
+    });
+
+    const result = resolveEntryPath('dev/alpha/', mockDir.path);
+
+    expect(result).toBe('dev/alpha');
+  });
+
+  it('should handle multiple dots in filename', () => {
+    mockDir.setContent({
+      'file.backup.old.ts': 'export const data = {};',
+    });
+
+    const result = resolveEntryPath('file.backup.old.ts', mockDir.path);
+
+    expect(result).toBe('file.backup.old');
+  });
+
+  it('should handle simple directory names', () => {
+    mockDir.setContent({
+      'dev/index.ts': '// dev app code',
+    });
+
+    const result = resolveEntryPath('dev', mockDir.path);
+
+    expect(result).toBe('dev/index');
+  });
+
+  it('should handle nested directory paths', () => {
+    mockDir.setContent({
+      'dev/alpha/index.ts': '// dev app code',
+    });
+
+    const result = resolveEntryPath('dev/alpha', mockDir.path);
+
+    expect(result).toBe('dev/alpha/index');
+  });
+
+  it('should return the file when there is a directory with the same name', () => {
+    mockDir.setContent({
+      'dev/alpha.ts': '// dev app code',
+      'dev/app-config.yaml': '// dev app config',
+      'dev/alpha/index.ts': '// dev app code',
+      'dev/alpha/app-config.yaml': '// dev app config',
+    });
+
+    const result = resolveEntryPath('dev/alpha', mockDir.path);
+
+    expect(result).toBe('dev/alpha');
+  });
+});
diff --git a/packages/cli/src/modules/build/commands/package/start/startPackage.ts b/packages/cli/src/modules/build/commands/package/start/startPackage.ts
index bac7bee68f..368a28b5df 100644
--- a/packages/cli/src/modules/build/commands/package/start/startPackage.ts
+++ b/packages/cli/src/modules/build/commands/package/start/startPackage.ts
@@ -17,10 +17,26 @@
 import { PackageRole } from '@backstage/cli-node';
 import { startBackend, startBackendPlugin } from './startBackend';
 import { startFrontend } from './startFrontend';
+import { statSync, readdirSync } from 'fs';
+import { resolve, join, parse } from 'path';
+
+export function resolveEntryPath(
+  entrypoint: string = 'dev',
+  targetDir: string,
+): string {
+  const { dir: entryDir, name: entryName } = parse(entrypoint);
+  const entryPath = join(entryDir, entryName);
+  const parentPath = resolve(targetDir, entryDir);
+  const isFile = readdirSync(parentPath).some(base => {
+    const path = resolve(parentPath, base);
+    return statSync(path).isFile();
+  });
+  return isFile ? entryPath : join(entryPath, 'index');
+}
 
 export async function startPackage(options: {
   role: PackageRole;
-  entryDir: string;
+  entrypoint?: string;
   targetDir: string;
   configPaths: string[];
   checksEnabled: boolean;
@@ -47,7 +63,7 @@ export async function startPackage(options: {
     case 'frontend-plugin-module':
       return startFrontend({
         ...options,
-        entry: `${options.entryDir ?? 'dev'}/index`,
+        entry: resolveEntryPath(options.entrypoint, options.targetDir),
       });
     case 'frontend-dynamic-container' as PackageRole: // experimental
       return startFrontend({
diff --git a/packages/cli/src/modules/build/index.ts b/packages/cli/src/modules/build/index.ts
index 552a35a316..88706046ee 100644
--- a/packages/cli/src/modules/build/index.ts
+++ b/packages/cli/src/modules/build/index.ts
@@ -138,8 +138,8 @@ export const buildPlugin = createCliPlugin({
             'Link an external workspace for module resolution',
           )
           .option(
-            '--entry-dir <path>',
-            'Path to the directory containing the entry point file',
+            '--entrypoint <path>',
+            'Entry directory path (uses index file) or entry file path (without extension). Defaults to "dev"',
           )
           .action(lazy(() => import('./commands/package/start'), 'command'));