diff --git a/NEWS.md b/NEWS.md
index 18e7f5d87316c..30dd2e6e03783 100644
--- a/NEWS.md
+++ b/NEWS.md
@@ -23,6 +23,11 @@ Language changes
   allows users to safely tear down background state (such as closing Timers and sending
   disconnect notifications to heartbeat tasks) and cleanup other resources when the program
   wants to begin exiting.
+* Code coverage and malloc tracking is no longer generated during the package precompilation stage.
+  Further, during these modes pkgimage caches are now used for packages that are not being tracked.
+  Meaning that coverage testing (the default for `julia-actions/julia-runtest`) will by default use
+  pkgimage caches for all other packages than the package being tested, likely meaning faster test
+  execution. ([#52123])
 
 Compiler/Runtime improvements
 -----------------------------
diff --git a/base/loading.jl b/base/loading.jl
index 125e9b1302fb5..803c13a65f1e1 100644
--- a/base/loading.jl
+++ b/base/loading.jl
@@ -1044,7 +1044,17 @@ const TIMING_IMPORTS = Threads.Atomic{Int}(0)
 # these return either the array of modules loaded from the path / content given
 # or an Exception that describes why it couldn't be loaded
 # and it reconnects the Base.Docs.META
-function _include_from_serialized(pkg::PkgId, path::String, ocachepath::Union{Nothing, String}, depmods::Vector{Any})
+function _include_from_serialized(pkg::PkgId, path::String, ocachepath::Union{Nothing, String}, depmods::Vector{Any}, ignore_native::Union{Nothing,Bool}=nothing)
+    if isnothing(ignore_native)
+        io = open(path, "r")
+        try
+            iszero(isvalid_cache_header(io)) && return ArgumentError("Invalid header in cache file $path.")
+            _, (includes, _, _), _, _, _, _, _, _ = parse_cache_header(io, path)
+            ignore_native = pkg_tracked(includes)
+        finally
+            close(io)
+        end
+    end
     assert_havelock(require_lock)
     timing_imports = TIMING_IMPORTS[] > 0
     try
@@ -1056,7 +1066,7 @@ function _include_from_serialized(pkg::PkgId, path::String, ocachepath::Union{No
 
     if ocachepath !== nothing
         @debug "Loading object cache file $ocachepath for $pkg"
-        sv = ccall(:jl_restore_package_image_from_file, Any, (Cstring, Any, Cint, Cstring), ocachepath, depmods, false, pkg.name)
+        sv = ccall(:jl_restore_package_image_from_file, Any, (Cstring, Any, Cint, Cstring, Cint), ocachepath, depmods, false, pkg.name, ignore_native)
     else
         @debug "Loading cache file $path for $pkg"
         sv = ccall(:jl_restore_incremental, Any, (Cstring, Any, Cint, Cstring), path, depmods, false, pkg.name)
@@ -1495,15 +1505,45 @@ function _tryrequire_from_serialized(modkey::PkgId, path::String, ocachepath::Un
     return loaded
 end
 
+# returns whether the package is tracked in coverage or malloc tracking based on
+# JLOptions and includes
+function pkg_tracked(includes)
+    if JLOptions().code_coverage == 0 && JLOptions().malloc_log == 0
+        return false
+    elseif JLOptions().code_coverage == 1 || JLOptions().malloc_log == 1 # user
+        # Just say true. Pkgimages aren't in Base
+        return true
+    elseif JLOptions().code_coverage == 2 || JLOptions().malloc_log == 2 # all
+        return true
+    elseif JLOptions().code_coverage == 3 || JLOptions().malloc_log == 3 # tracked path
+        if JLOptions().tracked_path == C_NULL
+            return false
+        else
+            tracked_path = unsafe_string(JLOptions().tracked_path)
+            if isempty(tracked_path)
+                return false
+            else
+                return any(includes) do inc
+                    startswith(inc.filename, tracked_path)
+                end
+            end
+        end
+    end
+end
+
 # loads a precompile cache file, ignoring stale_cachefile tests
 # load the best available (non-stale) version of all dependent modules first
 function _tryrequire_from_serialized(pkg::PkgId, path::String, ocachepath::Union{Nothing, String})
     assert_havelock(require_lock)
     local depmodnames
     io = open(path, "r")
+    ignore_native = false
     try
         iszero(isvalid_cache_header(io)) && return ArgumentError("Invalid header in cache file $path.")
-        _, _, depmodnames, _, _, _, clone_targets, _ = parse_cache_header(io, path)
+        _, (includes, _, _), depmodnames, _, _, _, clone_targets, _ = parse_cache_header(io, path)
+
+        ignore_native = pkg_tracked(includes)
+
         pkgimage = !isempty(clone_targets)
         if pkgimage
             ocachepath !== nothing || return ArgumentError("Expected ocachepath to be provided")
@@ -1529,7 +1569,7 @@ function _tryrequire_from_serialized(pkg::PkgId, path::String, ocachepath::Union
         depmods[i] = dep
     end
     # then load the file
-    return _include_from_serialized(pkg, path, ocachepath, depmods)
+    return _include_from_serialized(pkg, path, ocachepath, depmods, ignore_native)
 end
 
 # returns `nothing` if require found a precompile cache for this sourcepath, but couldn't load it
diff --git a/base/util.jl b/base/util.jl
index 6a9f219e403c0..a3771f4ae9dc4 100644
--- a/base/util.jl
+++ b/base/util.jl
@@ -242,9 +242,6 @@ function julia_cmd(julia=joinpath(Sys.BINDIR, julia_exename()); cpu_target::Unio
     end
     if opts.use_pkgimages == 0
         push!(addflags, "--pkgimages=no")
-    else
-        # If pkgimage is set, malloc_log and code_coverage should not
-        @assert opts.malloc_log == 0 && opts.code_coverage == 0
     end
     return `$julia -C$cpu_target -J$image_file $addflags`
 end
diff --git a/pkgimage.mk b/pkgimage.mk
index 0a4823b70e4a2..83c66bd94c702 100644
--- a/pkgimage.mk
+++ b/pkgimage.mk
@@ -35,12 +35,10 @@ $$(BUILDDIR)/stdlib/$1.debug.image: export JULIA_CPU_TARGET=$(JULIA_CPU_TARGET)
 
 $$(BUILDDIR)/stdlib/$1.release.image: $$($1_SRCS) $$(addsuffix .release.image,$$(addprefix $$(BUILDDIR)/stdlib/,$2)) $(build_private_libdir)/sys.$(SHLIB_EXT)
 	@$$(call PRINT_JULIA, $$(call spawn,$$(JULIA_EXECUTABLE)) --startup-file=no --check-bounds=yes -e 'Base.compilecache(Base.identify_package("$1"))')
-	@$$(call PRINT_JULIA, $$(call spawn,$$(JULIA_EXECUTABLE)) --startup-file=no --pkgimages=no -e 'Base.compilecache(Base.identify_package("$1"))')
 	@$$(call PRINT_JULIA, $$(call spawn,$$(JULIA_EXECUTABLE)) --startup-file=no -e 'Base.compilecache(Base.identify_package("$1"))')
 	touch $$@
 $$(BUILDDIR)/stdlib/$1.debug.image: $$($1_SRCS) $$(addsuffix .debug.image,$$(addprefix $$(BUILDDIR)/stdlib/,$2)) $(build_private_libdir)/sys-debug.$(SHLIB_EXT)
 	@$$(call PRINT_JULIA, $$(call spawn,$$(JULIA_EXECUTABLE)) --startup-file=no --check-bounds=yes -e 'Base.compilecache(Base.identify_package("$1"))')
-	@$$(call PRINT_JULIA, $$(call spawn,$$(JULIA_EXECUTABLE)) --startup-file=no --pkgimages=no -e 'Base.compilecache(Base.identify_package("$1"))')
 	@$$(call PRINT_JULIA, $$(call spawn,$$(JULIA_EXECUTABLE)) --startup-file=no -e 'Base.compilecache(Base.identify_package("$1"))')
 	touch $$@
 else
diff --git a/src/codegen.cpp b/src/codegen.cpp
index b9c796f2b3c1a..3209b076b5746 100644
--- a/src/codegen.cpp
+++ b/src/codegen.cpp
@@ -8450,15 +8450,19 @@ static jl_llvm_functions_t
         cursor = -1;
     };
 
+    // If a pkgimage or sysimage is being generated, disable tracking.
+    // This means sysimage build or pkgimage precompilation workloads aren't tracked.
     auto do_coverage = [&] (bool in_user_code, bool is_tracked) {
-        return (coverage_mode == JL_LOG_ALL ||
+        return (jl_generating_output() == 0 &&
+                (coverage_mode == JL_LOG_ALL ||
                 (in_user_code && coverage_mode == JL_LOG_USER) ||
-                (is_tracked && coverage_mode == JL_LOG_PATH));
+                (is_tracked && coverage_mode == JL_LOG_PATH)));
     };
     auto do_malloc_log = [&] (bool in_user_code, bool is_tracked) {
-        return (malloc_log_mode == JL_LOG_ALL ||
+        return (jl_generating_output() == 0 &&
+                (malloc_log_mode == JL_LOG_ALL ||
                 (in_user_code && malloc_log_mode == JL_LOG_USER) ||
-                (is_tracked && malloc_log_mode == JL_LOG_PATH));
+                (is_tracked && malloc_log_mode == JL_LOG_PATH)));
     };
     SmallVector<unsigned, 0> current_lineinfo, new_lineinfo;
     auto coverageVisitStmt = [&] (size_t dbg) {
diff --git a/src/init.c b/src/init.c
index 3e4bbf4e077bc..925ef0018048f 100644
--- a/src/init.c
+++ b/src/init.c
@@ -814,11 +814,6 @@ JL_DLLEXPORT void julia_init(JL_IMAGE_SEARCH rel)
 #endif
 #endif
 
-    if ((jl_options.outputo || jl_options.outputbc || jl_options.outputasm) &&
-        (jl_options.code_coverage || jl_options.malloc_log)) {
-        jl_error("cannot generate code-coverage or track allocation information while generating a .o, .bc, or .s output file");
-    }
-
     jl_init_rand();
     jl_init_runtime_ccall();
     jl_init_tasks();
diff --git a/src/jloptions.c b/src/jloptions.c
index 13ee06b862c32..cc00e102c16b1 100644
--- a/src/jloptions.c
+++ b/src/jloptions.c
@@ -333,7 +333,6 @@ JL_DLLEXPORT void jl_parse_opts(int *argcp, char ***argvp)
     const char **cmds = NULL;
     int codecov = JL_LOG_NONE;
     int malloclog = JL_LOG_NONE;
-    int pkgimage_explicit = 0;
     int argc = *argcp;
     char **argv = *argvp;
     char *endptr;
@@ -469,7 +468,6 @@ JL_DLLEXPORT void jl_parse_opts(int *argcp, char ***argvp)
                 jl_errorf("julia: invalid argument to --compiled-modules={yes|no|existing} (%s)", optarg);
             break;
         case opt_pkgimages:
-            pkgimage_explicit = 1;
             if (!strcmp(optarg,"yes"))
                 jl_options.use_pkgimages = JL_OPTIONS_USE_PKGIMAGES_YES;
             else if (!strcmp(optarg,"no"))
@@ -860,13 +858,6 @@ JL_DLLEXPORT void jl_parse_opts(int *argcp, char ***argvp)
                       "This is a bug, please report it.", c);
         }
     }
-    if (codecov || malloclog) {
-        if (pkgimage_explicit && jl_options.use_pkgimages) {
-            jl_errorf("julia: Can't use --pkgimages=yes together "
-                      "with --track-allocation or --code-coverage.");
-        }
-        jl_options.use_pkgimages = 0;
-    }
     jl_options.code_coverage = codecov;
     jl_options.malloc_log = malloclog;
     int proc_args = *argcp < optind ? *argcp : optind;
diff --git a/src/staticdata.c b/src/staticdata.c
index bf9ad12cd28b6..f34f64b28e321 100644
--- a/src/staticdata.c
+++ b/src/staticdata.c
@@ -3675,7 +3675,7 @@ JL_DLLEXPORT void jl_restore_system_image_data(const char *buf, size_t len)
     JL_SIGATOMIC_END();
 }
 
-JL_DLLEXPORT jl_value_t *jl_restore_package_image_from_file(const char *fname, jl_array_t *depmods, int completeinfo, const char *pkgname)
+JL_DLLEXPORT jl_value_t *jl_restore_package_image_from_file(const char *fname, jl_array_t *depmods, int completeinfo, const char *pkgname, int ignore_native)
 {
     void *pkgimg_handle = jl_dlopen(fname, JL_RTLD_LAZY);
     if (!pkgimg_handle) {
@@ -3696,6 +3696,10 @@ JL_DLLEXPORT jl_value_t *jl_restore_package_image_from_file(const char *fname, j
 
     jl_image_t pkgimage = jl_init_processor_pkgimg(pkgimg_handle);
 
+    if (ignore_native){
+        memset(&pkgimage.fptrs, 0, sizeof(pkgimage.fptrs));
+    }
+
     jl_value_t* mod = jl_restore_incremental_from_buf(pkgimg_handle, pkgimg_data, &pkgimage, *plen, depmods, completeinfo, pkgname, false);
 
     return mod;
diff --git a/stdlib/Test/docs/src/index.md b/stdlib/Test/docs/src/index.md
index 3d133419a1792..ddb5d580ef832 100644
--- a/stdlib/Test/docs/src/index.md
+++ b/stdlib/Test/docs/src/index.md
@@ -491,3 +491,15 @@ Using `Test.jl`, more complicated tests can be added for packages but this shoul
 ```@meta
 DocTestSetup = nothing
 ```
+
+### Code Coverage
+
+Code coverage tracking during tests can be enabled using the `pkg> test --coverage` flag (or at a lower level using the
+[`--code-coverage`](@ref command-line-interface) julia arg). This is on by default in the
+[julia-runtest](https://github.com/julia-actions/julia-runtest) GitHub action.
+
+To evaluate coverage either manually inspect the `.cov` files that are generated beside the source files locally,
+or in CI use the [julia-processcoverage](https://github.com/julia-actions/julia-processcoverage) GitHub action.
+
+!!! compat "Julia 1.11"
+    Since Julia 1.11, coverage is not collected during the package precompilation phase.
diff --git a/test/cmdlineargs.jl b/test/cmdlineargs.jl
index 26cee030f9110..1c90352af29c9 100644
--- a/test/cmdlineargs.jl
+++ b/test/cmdlineargs.jl
@@ -62,8 +62,19 @@ end
 
 @testset "julia_cmd" begin
     julia_basic = Base.julia_cmd()
+    function get_julia_cmd(arg)
+        io = Base.BufferStream()
+        cmd = `$julia_basic $arg -e 'print(repr(Base.julia_cmd()))'`
+        try
+            run(pipeline(cmd, stdout=io, stderr=io))
+        catch
+            @error "cmd failed" cmd read(io, String)
+            rethrow()
+        end
+        return read(io, String)
+    end
+
     opts = Base.JLOptions()
-    get_julia_cmd(arg) = strip(read(`$julia_basic $arg -e 'print(repr(Base.julia_cmd()))'`, String), ['`'])
 
     for (arg, default) in (
                             ("-C$(unsafe_string(opts.cpu_target))",  false),
diff --git a/test/loading.jl b/test/loading.jl
index efb83a6e00335..d39bdceb53341 100644
--- a/test/loading.jl
+++ b/test/loading.jl
@@ -1333,3 +1333,47 @@ end
         @test filesize(cache_path) != cache_size
     end
 end
+
+@testset "code coverage disabled during precompilation" begin
+    mktempdir() do depot
+        cov_test_dir = joinpath(@__DIR__, "project", "deps", "CovTest.jl")
+        cov_cache_dir = joinpath(depot, "compiled", "v$(VERSION.major).$(VERSION.minor)", "CovTest")
+        function rm_cov_files()
+            for cov_file in filter(endswith(".cov"), readdir(joinpath(cov_test_dir, "src"), join=true))
+                rm(cov_file)
+            end
+            @test !cov_exists()
+        end
+        cov_exists() = !isempty(filter(endswith(".cov"), readdir(joinpath(cov_test_dir, "src"))))
+
+        rm_cov_files() # clear out any coverage files first
+        @test !cov_exists()
+
+        cd(cov_test_dir) do
+            # In our depot, precompile CovTest.jl with coverage on
+            @test success(addenv(
+                `$(Base.julia_cmd()) --startup-file=no --pkgimage=yes --code-coverage=@ --project -e 'using CovTest; exit(0)'`,
+                "JULIA_DEPOT_PATH" => depot,
+            ))
+            @test !isempty(filter(!endswith(".ji"), readdir(cov_cache_dir))) # check that object cache file(s) exists
+            @test !cov_exists()
+            rm_cov_files()
+
+            # same again but call foo(), which is in the pkgimage, and should generate coverage
+            @test success(addenv(
+                `$(Base.julia_cmd()) --startup-file=no --pkgimage=yes --code-coverage=@ --project -e 'using CovTest; foo(); exit(0)'`,
+                "JULIA_DEPOT_PATH" => depot,
+            ))
+            @test cov_exists()
+            rm_cov_files()
+
+            # same again but call bar(), which is NOT in the pkgimage, and should generate coverage
+            @test success(addenv(
+                `$(Base.julia_cmd()) --startup-file=no --pkgimage=yes --code-coverage=@ --project -e 'using CovTest; bar(); exit(0)'`,
+                "JULIA_DEPOT_PATH" => depot,
+            ))
+            @test cov_exists()
+            rm_cov_files()
+        end
+    end
+end
diff --git a/test/precompile.jl b/test/precompile.jl
index 29ca79ef5fce3..bb87e1f6b1dc7 100644
--- a/test/precompile.jl
+++ b/test/precompile.jl
@@ -1778,7 +1778,7 @@ precompile_test_harness("PkgCacheInspector") do load_path
     end
 
     if ocachefile !== nothing
-        sv = ccall(:jl_restore_package_image_from_file, Any, (Cstring, Any, Cint, Cstring), ocachefile, depmods, true, "PCI")
+        sv = ccall(:jl_restore_package_image_from_file, Any, (Cstring, Any, Cint, Cstring, Cint), ocachefile, depmods, true, "PCI", false)
     else
         sv = ccall(:jl_restore_incremental, Any, (Cstring, Any, Cint, Cstring), cachefile, depmods, true, "PCI")
     end
diff --git a/test/project/deps/CovTest.jl/Project.toml b/test/project/deps/CovTest.jl/Project.toml
new file mode 100644
index 0000000000000..97fb2c7d9cfce
--- /dev/null
+++ b/test/project/deps/CovTest.jl/Project.toml
@@ -0,0 +1,3 @@
+name = "CovTest"
+uuid = "f1f4390d-b815-473a-b5dd-5af6e1d717cb"
+version = "0.1.0"
diff --git a/test/project/deps/CovTest.jl/src/CovTest.jl b/test/project/deps/CovTest.jl/src/CovTest.jl
new file mode 100644
index 0000000000000..bd172fc3a00f4
--- /dev/null
+++ b/test/project/deps/CovTest.jl/src/CovTest.jl
@@ -0,0 +1,26 @@
+# This file is a part of Julia. License is MIT: https://julialang.org/license
+
+module CovTest
+
+function foo()
+    x = 1
+    y = 2
+    z = x * y
+    return z
+end
+
+function bar()
+    x = 1
+    y = 2
+    z = x * y
+    return z
+end
+
+if Base.generating_output()
+    # precompile foo but not bar
+    foo()
+end
+
+export foo, bar
+
+end #module