diff --git a/code/lib/store/template/stories/rendering.stories.ts b/code/lib/store/template/stories/rendering.stories.ts
index 4b2181bb5ea6..8bca2f78f5c9 100644
--- a/code/lib/store/template/stories/rendering.stories.ts
+++ b/code/lib/store/template/stories/rendering.stories.ts
@@ -65,7 +65,5 @@ export const ChangeArgs = {
 
     await within(canvasElement).findByText(/New Text/);
     await expect(button).toHaveFocus();
-
-    await channel.emit(RESET_STORY_ARGS, { storyId: id });
   },
 };
diff --git a/code/renderers/svelte/package.json b/code/renderers/svelte/package.json
index f83697472c40..46417e6e1bf3 100644
--- a/code/renderers/svelte/package.json
+++ b/code/renderers/svelte/package.json
@@ -54,6 +54,7 @@
   "dependencies": {
     "@storybook/client-logger": "7.0.0-rc.6",
     "@storybook/core-client": "7.0.0-rc.6",
+    "@storybook/core-events": "7.0.0-rc.6",
     "@storybook/docs-tools": "7.0.0-rc.6",
     "@storybook/global": "^5.0.0",
     "@storybook/preview-api": "7.0.0-rc.6",
diff --git a/code/renderers/svelte/src/render.ts b/code/renderers/svelte/src/render.ts
index 777997c09598..cfde36047fa1 100644
--- a/code/renderers/svelte/src/render.ts
+++ b/code/renderers/svelte/src/render.ts
@@ -1,6 +1,7 @@
 /* eslint-disable no-param-reassign */
 import type { RenderContext, ArgsStoryFn } from '@storybook/types';
 import type { SvelteComponentTyped } from 'svelte';
+import { RESET_STORY_ARGS } from '@storybook/core-events';
 // ! DO NOT change this PreviewRender import to a relative path, it will break it.
 // ! A relative import will be compiled at build time, and Svelte will be unable to
 // ! render the component together with the user's Svelte components
@@ -8,6 +9,7 @@ import type { SvelteComponentTyped } from 'svelte';
 // ! with the same bundle as the user's Svelte components
 // eslint-disable-next-line import/no-extraneous-dependencies
 import PreviewRender from '@storybook/svelte/templates/PreviewRender.svelte';
+import { addons } from '@storybook/preview-api';
 
 import type { SvelteRenderer } from './types';
 
@@ -24,6 +26,20 @@ function teardown(canvasElement: SvelteRenderer['canvasElement']) {
   componentsByDomElement.delete(canvasElement);
 }
 
+/**
+ * This is a workaround for the issue that when resetting args,
+ * the story needs to be remounted completely to revert to the component's default props.
+ * This is because Svelte does not itself revert to defaults when a prop is undefined.
+ * See https://github.com/storybookjs/storybook/issues/21470#issuecomment-1467056479
+ *
+ * We listen for the RESET_STORY_ARGS event and store the storyId to be reset
+ * We then use this in the renderToCanvas function to force remount the story
+ */
+const storyIdsToRemountFromResetArgsEvent = new Set<string>();
+addons.getChannel().on(RESET_STORY_ARGS, ({ storyId }) => {
+  storyIdsToRemountFromResetArgsEvent.add(storyId);
+});
+
 export function renderToCanvas(
   {
     storyFn,
@@ -38,11 +54,18 @@ export function renderToCanvas(
 ) {
   const existingComponent = componentsByDomElement.get(canvasElement);
 
-  if (forceRemount) {
+  let remount = forceRemount;
+
+  if (storyIdsToRemountFromResetArgsEvent.has(storyContext.id)) {
+    remount = true;
+    storyIdsToRemountFromResetArgsEvent.delete(storyContext.id);
+  }
+
+  if (remount) {
     teardown(canvasElement);
   }
 
-  if (!existingComponent || forceRemount) {
+  if (!existingComponent || remount) {
     const createdComponent = new PreviewRender({
       target: canvasElement,
       props: {
diff --git a/code/renderers/svelte/template/stories/args.stories.js b/code/renderers/svelte/template/stories/args.stories.js
new file mode 100644
index 000000000000..f94637bbe56a
--- /dev/null
+++ b/code/renderers/svelte/template/stories/args.stories.js
@@ -0,0 +1,46 @@
+import { expect } from '@storybook/jest';
+import { within, userEvent, waitFor } from '@storybook/testing-library';
+import {
+  UPDATE_STORY_ARGS,
+  STORY_ARGS_UPDATED,
+  RESET_STORY_ARGS,
+  STORY_RENDERED,
+} from '@storybook/core-events';
+import { addons } from '@storybook/preview-api';
+import ButtonView from './views/ButtonView.svelte';
+
+export default {
+  component: ButtonView,
+};
+
+export const RemountOnResetStoryArgs = {
+  play: async ({ canvasElement, id }) => {
+    const canvas = await within(canvasElement);
+    const channel = addons.getChannel();
+
+    // Just to ensure the story is always in a clean state from the beginning, not really part of the test
+    await channel.emit(RESET_STORY_ARGS, { storyId: id });
+    await new Promise((resolve) => {
+      channel.once(STORY_RENDERED, resolve);
+    });
+    const button = await canvas.getByRole('button');
+    await expect(button).toHaveTextContent('You clicked: 0');
+
+    await userEvent.click(button);
+    await expect(button).toHaveTextContent('You clicked: 1');
+
+    await channel.emit(UPDATE_STORY_ARGS, { storyId: id, updatedArgs: { text: 'Changed' } });
+    await new Promise((resolve) => {
+      channel.once(STORY_RENDERED, resolve);
+    });
+    await expect(button).toHaveTextContent('Changed: 1');
+
+    // expect that all state and args are reset after RESET_STORY_ARGS because Svelte needs to remount the component
+    // most other renderers would have 'You clicked: 1' here because they don't remount the component
+    // if this doesn't fully remount it would be 'undefined: 1' because undefined args are used as is in Svelte, and the state is kept
+    await channel.emit(RESET_STORY_ARGS, { storyId: id });
+    await waitFor(async () =>
+      expect(await within(canvasElement).getByRole('button')).toHaveTextContent('You clicked: 0')
+    );
+  },
+};
diff --git a/code/yarn.lock b/code/yarn.lock
index c08ac3f2d7ce..af02f66ee9e9 100644
--- a/code/yarn.lock
+++ b/code/yarn.lock
@@ -7312,6 +7312,7 @@ __metadata:
   dependencies:
     "@storybook/client-logger": 7.0.0-rc.6
     "@storybook/core-client": 7.0.0-rc.6
+    "@storybook/core-events": 7.0.0-rc.6
     "@storybook/docs-tools": 7.0.0-rc.6
     "@storybook/global": ^5.0.0
     "@storybook/preview-api": 7.0.0-rc.6