diff --git a/CHANGELOG.md b/CHANGELOG.md
index 7100d9b2d..8cffeea57 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -26,8 +26,9 @@ environment.loaders.append('nodeModules', nodeModules)
 - Simple webpack config
 - Removed integration installers
 - Splitchunks enabled by default
-- CSS extraction enabled by default
+- CSS extraction enabled by default, except when devServer is configured and running
 - Optional CSS support
+- Renamed DevServer.running? to DevServer.configured_and_running?
 
 ## [[5.4.0]](https://github.com/rails/webpacker/compare/v5.3.0...v5.4.0) - 2021-05-18
 
diff --git a/lib/webpacker/dev_server.rb b/lib/webpacker/dev_server.rb
index c38a2f72e..f3f0eaa9f 100644
--- a/lib/webpacker/dev_server.rb
+++ b/lib/webpacker/dev_server.rb
@@ -11,7 +11,7 @@ def initialize(config)
     @config = config
   end
 
-  def running?
+  def configured_and_running?
     if config.dev_server.present?
       Socket.tcp(host, port, connect_timeout: connect_timeout).close
       true
diff --git a/lib/webpacker/dev_server_proxy.rb b/lib/webpacker/dev_server_proxy.rb
index 577a08ff2..ba663ddb1 100644
--- a/lib/webpacker/dev_server_proxy.rb
+++ b/lib/webpacker/dev_server_proxy.rb
@@ -10,7 +10,7 @@ def initialize(app = nil, opts = {})
   end
 
   def perform_request(env)
-    if env["PATH_INFO"].start_with?("/#{public_output_uri_path}") && dev_server.running?
+    if env["PATH_INFO"].start_with?("/#{public_output_uri_path}") && dev_server.configured_and_running?
       env["HTTP_HOST"] = env["HTTP_X_FORWARDED_HOST"] = dev_server.host
       env["HTTP_X_FORWARDED_SERVER"] = dev_server.host_with_port
       env["HTTP_PORT"] = env["HTTP_X_FORWARDED_PORT"] = dev_server.port.to_s
diff --git a/lib/webpacker/helper.rb b/lib/webpacker/helper.rb
index b1a56c1d9..720bbea18 100644
--- a/lib/webpacker/helper.rb
+++ b/lib/webpacker/helper.rb
@@ -128,6 +128,10 @@ def preload_pack_asset(name, **options)
   #   <link rel="stylesheet" media="screen" href="/packs/calendar-8c7ce31a.chunk.css" />
   #   <link rel="stylesheet" media="screen" href="/packs/map-8c7ce31a.chunk.css" />
   #
+  #   When using the webpack-dev-server, CSS is inlined so HMR can be turned on for CSS,
+  #   including CSS modules
+  #   <%= stylesheet_pack_tag 'calendar', 'map' %> # => nil
+  #
   # DO:
   #
   #   <%= stylesheet_pack_tag 'calendar', 'map' %>
@@ -137,7 +141,8 @@ def preload_pack_asset(name, **options)
   #   <%= stylesheet_pack_tag 'calendar' %>
   #   <%= stylesheet_pack_tag 'map' %>
   def stylesheet_pack_tag(*names, **options)
-    unless current_webpacker_instance.dev_server.running?
+    css_extracted = !Webpacker.dev_server.configured_and_running?
+    if css_extracted
       stylesheet_link_tag(*sources_from_manifest_entrypoints(names, type: :stylesheet), **options)
     end
   end
diff --git a/lib/webpacker/manifest.rb b/lib/webpacker/manifest.rb
index ba5b57f81..232257870 100644
--- a/lib/webpacker/manifest.rb
+++ b/lib/webpacker/manifest.rb
@@ -51,7 +51,7 @@ def lookup!(name, pack_type = {})
 
   private
     def compiling?
-      config.compile? && !dev_server.running?
+      config.compile? && !dev_server.configured_and_running?
     end
 
     def compile
diff --git a/lib/webpacker/railtie.rb b/lib/webpacker/railtie.rb
index f2ff72fba..89c4a3507 100644
--- a/lib/webpacker/railtie.rb
+++ b/lib/webpacker/railtie.rb
@@ -8,7 +8,7 @@ class Webpacker::Engine < ::Rails::Engine
   config.webpacker = ActiveSupport::OrderedOptions.new
 
   initializer "webpacker.proxy" do |app|
-    insert_middleware = Webpacker.config.dev_server.present? rescue nil
+    insert_middleware = Webpacker.config.dev_server.present?
     if insert_middleware
       app.middleware.insert_before 0,
         Rails::VERSION::MAJOR >= 5 ?
diff --git a/test/dev_server_test.rb b/test/dev_server_test.rb
index 28c58d464..3f0a0e328 100644
--- a/test/dev_server_test.rb
+++ b/test/dev_server_test.rb
@@ -2,7 +2,7 @@
 
 class DevServerTest < Webpacker::Test
   def test_running?
-    refute Webpacker.dev_server.running?
+    refute Webpacker.dev_server.configured_and_running?
   end
 
   def test_host