diff --git a/code/lib/cli/package.json b/code/lib/cli/package.json
index 3ece1eb5d7d2..3915dfbf19f5 100644
--- a/code/lib/cli/package.json
+++ b/code/lib/cli/package.json
@@ -81,6 +81,7 @@
     "globby": "^11.0.2",
     "jscodeshift": "^0.14.0",
     "leven": "^3.1.0",
+    "ora": "^5.4.1",
     "prettier": "^2.8.0",
     "prompts": "^2.4.0",
     "puppeteer-core": "^2.1.1",
diff --git a/code/lib/cli/src/generators/baseGenerator.ts b/code/lib/cli/src/generators/baseGenerator.ts
index f4231f56c21b..760ee4348072 100644
--- a/code/lib/cli/src/generators/baseGenerator.ts
+++ b/code/lib/cli/src/generators/baseGenerator.ts
@@ -1,10 +1,11 @@
 import path from 'path';
 import fse from 'fs-extra';
 import { dedent } from 'ts-dedent';
+import ora from 'ora';
 import type { NpmOptions } from '../NpmOptions';
 import type { SupportedRenderers, SupportedFrameworks, Builder } from '../project_types';
 import { SupportedLanguage, externalFrameworks, CoreBuilder } from '../project_types';
-import { copyTemplateFiles, paddedLog } from '../helpers';
+import { copyTemplateFiles } from '../helpers';
 import { configureMain, configurePreview } from './configure';
 import type { JsPackageManager } from '../js-package-manager';
 import { getPackageDetails } from '../js-package-manager';
@@ -16,6 +17,9 @@ import {
   extractEslintInfo,
   suggestESLintPlugin,
 } from '../automigrate/helpers/eslintPlugin';
+import { HandledError } from '../HandledError';
+
+const logger = console;
 
 const defaultOptions: FrameworkOptions = {
   extraPackages: [],
@@ -168,6 +172,31 @@ export async function baseGenerator(
   options: FrameworkOptions = defaultOptions,
   framework?: SupportedFrameworks
 ) {
+  // This is added so that we can handle the scenario where the user presses Ctrl+C and report a canceled event.
+  // Given that there are subprocesses running as part of this function, we need to handle the signal ourselves otherwise it might run into race conditions.
+  // TODO: This should be revisited once we have a better way to handle this.
+  let isNodeProcessExiting = false;
+  const setNodeProcessExiting = () => {
+    isNodeProcessExiting = true;
+  };
+  process.on('SIGINT', setNodeProcessExiting);
+
+  const stopIfExiting = async <T>(callback: () => Promise<T>) => {
+    if (isNodeProcessExiting) {
+      throw new HandledError('Canceled by the user');
+    }
+
+    try {
+      return await callback();
+    } catch (error) {
+      if (isNodeProcessExiting) {
+        throw new HandledError('Canceled by the user');
+      }
+
+      throw error;
+    }
+  };
+
   const {
     extraAddons: extraAddonPackages,
     extraPackages,
@@ -254,7 +283,15 @@ export async function baseGenerator(
       (packageToInstall) => !installedDependencies.has(getPackageDetails(packageToInstall)[0])
     );
 
-  const versionedPackages = await packageManager.getVersionedPackages(packages);
+  logger.log();
+  const versionedPackagesSpinner = ora({
+    indent: 2,
+    text: `Getting the correct version of ${packages.length} packages`,
+  }).start();
+  const versionedPackages = await stopIfExiting(async () =>
+    packageManager.getVersionedPackages(packages)
+  );
+  versionedPackagesSpinner.succeed();
 
   await fse.ensureDir(`./${storybookConfigFolder}`);
 
@@ -333,23 +370,35 @@ export async function baseGenerator(
   }
 
   if (depsToInstall.length > 0) {
-    paddedLog('Installing Storybook dependencies');
-    await packageManager.addDependencies({ ...npmOptions, packageJson }, depsToInstall);
+    const addDependenciesSpinner = ora({
+      indent: 2,
+      text: 'Installing Storybook dependencies',
+    }).start();
+    await stopIfExiting(async () =>
+      packageManager.addDependencies({ ...npmOptions, packageJson }, depsToInstall)
+    );
+    addDependenciesSpinner.succeed();
   }
 
   if (addScripts) {
-    await packageManager.addStorybookCommandInScripts({
-      port: 6006,
-    });
+    await stopIfExiting(async () =>
+      packageManager.addStorybookCommandInScripts({
+        port: 6006,
+      })
+    );
   }
 
   if (addComponents) {
     const templateLocation = hasFrameworkTemplates(framework) ? framework : rendererId;
-    await copyTemplateFiles({
-      renderer: templateLocation,
-      packageManager,
-      language,
-      destination: componentsDestinationPath,
-    });
+    await stopIfExiting(async () =>
+      copyTemplateFiles({
+        renderer: templateLocation,
+        packageManager,
+        language,
+        destination: componentsDestinationPath,
+      })
+    );
   }
+
+  process.off('SIGINT', setNodeProcessExiting);
 }
diff --git a/code/lib/cli/src/initiate.ts b/code/lib/cli/src/initiate.ts
index 97b2683e0983..b49ebc6a4d9a 100644
--- a/code/lib/cli/src/initiate.ts
+++ b/code/lib/cli/src/initiate.ts
@@ -199,7 +199,7 @@ const installStorybook = async <Project extends ProjectType>(
   try {
     return await runGenerator();
   } catch (err) {
-    if (err?.stack) {
+    if (err?.message !== 'Canceled by the user' && err?.stack) {
       logger.error(`\n     ${chalk.red(err.stack)}`);
     }
     throw new HandledError(err);
@@ -286,7 +286,7 @@ async function doInitiate(options: CommandOptions, pkg: PackageJson): Promise<vo
 
   const storybookInstantiated = isStorybookInstantiated();
 
-  if (storybookInstantiated && projectType !== ProjectType.ANGULAR) {
+  if (options.force === false && storybookInstantiated && projectType !== ProjectType.ANGULAR) {
     logger.log();
     const { force } = await prompts([
       {
diff --git a/code/lib/cli/src/js-package-manager/JsPackageManager.ts b/code/lib/cli/src/js-package-manager/JsPackageManager.ts
index f2d1c1b3ed3d..b0f96ea25f51 100644
--- a/code/lib/cli/src/js-package-manager/JsPackageManager.ts
+++ b/code/lib/cli/src/js-package-manager/JsPackageManager.ts
@@ -218,7 +218,7 @@ export abstract class JsPackageManager {
       try {
         await this.runAddDeps(dependencies, options.installAsDevDependencies);
       } catch (e) {
-        logger.error('An error occurred while installing dependencies.');
+        logger.error('\nAn error occurred while installing dependencies:');
         logger.log(e.message);
         throw new HandledError(e);
       }
@@ -411,6 +411,7 @@ export abstract class JsPackageManager {
   public abstract runPackageCommand(command: string, args: string[], cwd?: string): Promise<string>;
   public abstract runPackageCommandSync(command: string, args: string[], cwd?: string): string;
   public abstract findInstallations(pattern?: string[]): Promise<InstallationMetadata | undefined>;
+  public abstract parseErrorFromLogs(logs?: string): string;
 
   public executeCommandSync({
     command,
diff --git a/code/lib/cli/src/js-package-manager/NPMProxy.test.ts b/code/lib/cli/src/js-package-manager/NPMProxy.test.ts
index c0c8cb63be52..9de82b3114ba 100644
--- a/code/lib/cli/src/js-package-manager/NPMProxy.test.ts
+++ b/code/lib/cli/src/js-package-manager/NPMProxy.test.ts
@@ -1,5 +1,15 @@
 import { NPMProxy } from './NPMProxy';
 
+// mock createLogStream
+jest.mock('../utils', () => ({
+  createLogStream: jest.fn(() => ({
+    logStream: '',
+    readLogFile: jest.fn(),
+    moveLogFile: jest.fn(),
+    removeLogFile: jest.fn(),
+  })),
+}));
+
 describe('NPM Proxy', () => {
   let npmProxy: NPMProxy;
 
@@ -426,4 +436,50 @@ describe('NPM Proxy', () => {
       `);
     });
   });
+
+  describe('parseErrors', () => {
+    it('should parse npm errors', () => {
+      const NPM_ERROR_SAMPLE = `
+        npm ERR! code ERESOLVE
+        npm ERR! ERESOLVE unable to resolve dependency tree
+        npm ERR! 
+        npm ERR! While resolving: before-storybook@1.0.0
+        npm ERR! Found: react@undefined
+        npm ERR! node_modules/react
+        npm ERR!   react@"30" from the root project
+        npm ERR! 
+        npm ERR! Could not resolve dependency:
+        npm ERR! peer react@"^16.8.0 || ^17.0.0 || ^18.0.0" from @storybook/react@7.1.0-alpha.17
+        npm ERR! node_modules/@storybook/react
+        npm ERR!   dev @storybook/react@"^7.1.0-alpha.17" from the root project
+        npm ERR! 
+        npm ERR! Fix the upstream dependency conflict, or retry
+        npm ERR! this command with --force or --legacy-peer-deps
+        npm ERR! to accept an incorrect (and potentially broken) dependency resolution.
+        npm ERR! 
+        npm ERR! 
+        npm ERR! For a full report see:
+        npm ERR! /Users/yannbraga/.npm/_logs/2023-05-12T08_38_18_464Z-eresolve-report.txt
+
+        npm ERR! A complete log of this run can be found in:
+        npm ERR!     /Users/yannbraga/.npm/_logs/2023-05-12T08_38_18_464Z-debug-0.log
+        `;
+
+      expect(npmProxy.parseErrorFromLogs(NPM_ERROR_SAMPLE)).toEqual(
+        'NPM error ERESOLVE - Dependency resolution error.'
+      );
+    });
+
+    it('should show unknown npm error', () => {
+      const NPM_ERROR_SAMPLE = `
+        npm ERR! 
+        npm ERR! While resolving: before-storybook@1.0.0
+        npm ERR! Found: react@undefined
+        npm ERR! node_modules/react
+        npm ERR!   react@"30" from the root project
+      `;
+
+      expect(npmProxy.parseErrorFromLogs(NPM_ERROR_SAMPLE)).toEqual(`NPM error`);
+    });
+  });
 });
diff --git a/code/lib/cli/src/js-package-manager/NPMProxy.ts b/code/lib/cli/src/js-package-manager/NPMProxy.ts
index 090bc93fed16..fe8729468342 100644
--- a/code/lib/cli/src/js-package-manager/NPMProxy.ts
+++ b/code/lib/cli/src/js-package-manager/NPMProxy.ts
@@ -1,8 +1,10 @@
 import sort from 'semver/functions/sort';
 import { platform } from 'os';
+import dedent from 'ts-dedent';
 import { JsPackageManager } from './JsPackageManager';
 import type { PackageJson } from './PackageJson';
 import type { InstallationMetadata, PackageMetadata } from './types';
+import { createLogStream } from '../utils';
 
 type NpmDependency = {
   version: string;
@@ -19,6 +21,41 @@ export type NpmListOutput = {
   dependencies: NpmDependencies;
 };
 
+const NPM_ERROR_REGEX = /\bERR! code\s+([A-Z]+)\b/;
+const NPM_ERROR_CODES = {
+  E401: 'Authentication failed or is required.',
+  E403: 'Access to the resource is forbidden.',
+  E404: 'Requested resource not found.',
+  EACCES: 'Permission issue.',
+  EAI_FAIL: 'DNS lookup failed.',
+  EBADENGINE: 'Engine compatibility check failed.',
+  EBADPLATFORM: 'Platform not supported.',
+  ECONNREFUSED: 'Connection refused.',
+  ECONNRESET: 'Connection reset.',
+  EEXIST: 'File or directory already exists.',
+  EINVALIDTYPE: 'Invalid type encountered.',
+  EISGIT: 'Git operation failed or conflicts with an existing file.',
+  EJSONPARSE: 'Error parsing JSON data.',
+  EMISSINGARG: 'Required argument missing.',
+  ENEEDAUTH: 'Authentication needed.',
+  ENOAUDIT: 'No audit available.',
+  ENOENT: 'File or directory does not exist.',
+  ENOGIT: 'Git not found or failed to run.',
+  ENOLOCK: 'Lockfile missing.',
+  ENOSPC: 'Insufficient disk space.',
+  ENOTFOUND: 'Resource not found.',
+  EOTP: 'One-time password required.',
+  EPERM: 'Permission error.',
+  EPUBLISHCONFLICT: 'Conflict during package publishing.',
+  ERESOLVE: 'Dependency resolution error.',
+  EROFS: 'File system is read-only.',
+  ERR_SOCKET_TIMEOUT: 'Socket timed out.',
+  ETARGET: 'Package target not found.',
+  ETIMEDOUT: 'Operation timed out.',
+  ETOOMANYARGS: 'Too many arguments provided.',
+  EUNKNOWNTYPE: 'Unknown type encountered.',
+};
+
 export class NPMProxy extends JsPackageManager {
   readonly type = 'npm';
 
@@ -98,17 +135,34 @@ export class NPMProxy extends JsPackageManager {
   }
 
   protected async runAddDeps(dependencies: string[], installAsDevDependencies: boolean) {
+    const { logStream, readLogFile, moveLogFile, removeLogFile } = await createLogStream();
     let args = [...dependencies];
 
     if (installAsDevDependencies) {
       args = ['-D', ...args];
     }
 
-    await this.executeCommand({
-      command: 'npm',
-      args: ['install', ...this.getInstallArgs(), ...args],
-      stdio: 'inherit',
-    });
+    try {
+      await this.executeCommand({
+        command: 'npm',
+        args: ['install', ...args, ...this.getInstallArgs()],
+        stdio: ['ignore', logStream, logStream],
+      });
+    } catch (err) {
+      const stdout = await readLogFile();
+
+      const errorMessage = this.parseErrorFromLogs(stdout);
+
+      await moveLogFile();
+
+      throw new Error(
+        dedent`${errorMessage}
+        
+        Please check the logfile generated at ./storybook.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -185,4 +239,24 @@ export class NPMProxy extends JsPackageManager {
       infoCommand: 'npm ls --depth=1',
     };
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    let finalMessage = 'NPM error';
+    console.log({ logs });
+    const match = logs.match(NPM_ERROR_REGEX);
+
+    if (match) {
+      const errorCode = match[1] as keyof typeof NPM_ERROR_CODES;
+      if (errorCode) {
+        finalMessage = `${finalMessage} ${errorCode}`;
+      }
+
+      const errorMessage = NPM_ERROR_CODES[errorCode];
+      if (errorMessage) {
+        finalMessage = `${finalMessage} - ${errorMessage}`;
+      }
+    }
+
+    return finalMessage.trim();
+  }
 }
diff --git a/code/lib/cli/src/js-package-manager/PNPMProxy.test.ts b/code/lib/cli/src/js-package-manager/PNPMProxy.test.ts
index eb82f1a06465..04b35ccdab37 100644
--- a/code/lib/cli/src/js-package-manager/PNPMProxy.test.ts
+++ b/code/lib/cli/src/js-package-manager/PNPMProxy.test.ts
@@ -375,4 +375,30 @@ describe('NPM Proxy', () => {
       `);
     });
   });
+
+  describe('parseErrors', () => {
+    it('should parse pnpm errors', () => {
+      const PNPM_ERROR_SAMPLE = `
+        ERR_PNPM_NO_MATCHING_VERSION No matching version found for react@29.2.0
+
+        This error happened while installing a direct dependency of /Users/yannbraga/open-source/sandboxes/react-vite/default-js/before-storybook
+        
+        The latest release of react is "18.2.0".
+        `;
+
+      expect(pnpmProxy.parseErrorFromLogs(PNPM_ERROR_SAMPLE)).toEqual(
+        'PNPM error ERR_PNPM_NO_MATCHING_VERSION No matching version found for react@29.2.0'
+      );
+    });
+
+    it('should show unknown pnpm error', () => {
+      const PNPM_ERROR_SAMPLE = `
+        This error happened while installing a direct dependency of /Users/yannbraga/open-source/sandboxes/react-vite/default-js/before-storybook
+          
+        The latest release of react is "18.2.0".
+      `;
+
+      expect(pnpmProxy.parseErrorFromLogs(PNPM_ERROR_SAMPLE)).toEqual(`PNPM error`);
+    });
+  });
 });
diff --git a/code/lib/cli/src/js-package-manager/PNPMProxy.ts b/code/lib/cli/src/js-package-manager/PNPMProxy.ts
index 1c644cdb387c..14757cce92bc 100644
--- a/code/lib/cli/src/js-package-manager/PNPMProxy.ts
+++ b/code/lib/cli/src/js-package-manager/PNPMProxy.ts
@@ -1,7 +1,9 @@
 import { pathExistsSync } from 'fs-extra';
+import dedent from 'ts-dedent';
 import { JsPackageManager } from './JsPackageManager';
 import type { PackageJson } from './PackageJson';
 import type { InstallationMetadata, PackageMetadata } from './types';
+import { createLogStream } from '../utils';
 
 type PnpmDependency = {
   from: string;
@@ -22,6 +24,8 @@ type PnpmListItem = {
 
 export type PnpmListOutput = PnpmListItem[];
 
+const PNPM_ERROR_REGEX = /(ELIFECYCLE|ERR_PNPM_[A-Z_]+)\s+(.*)/i;
+
 export class PNPMProxy extends JsPackageManager {
   readonly type = 'pnpm';
 
@@ -120,12 +124,29 @@ export class PNPMProxy extends JsPackageManager {
     if (installAsDevDependencies) {
       args = ['-D', ...args];
     }
+    const { logStream, readLogFile, moveLogFile, removeLogFile } = await createLogStream();
 
-    await this.executeCommand({
-      command: 'pnpm',
-      args: ['add', ...args, ...this.getInstallArgs()],
-      stdio: 'inherit',
-    });
+    try {
+      await this.executeCommand({
+        command: 'pnpm',
+        args: ['add', ...args, ...this.getInstallArgs()],
+        stdio: ['ignore', logStream, logStream],
+      });
+    } catch (err) {
+      const stdout = await readLogFile();
+
+      const errorMessage = this.parseErrorFromLogs(stdout);
+
+      await moveLogFile();
+
+      throw new Error(
+        dedent`${errorMessage}
+        
+        Please check the logfile generated at ./storybook.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -206,4 +227,17 @@ export class PNPMProxy extends JsPackageManager {
       infoCommand: 'pnpm list --depth=1',
     };
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    let finalMessage = 'PNPM error';
+    const match = logs.match(PNPM_ERROR_REGEX);
+    if (match) {
+      const [errorCode] = match;
+      if (errorCode) {
+        finalMessage = `${finalMessage} ${errorCode}`;
+      }
+    }
+
+    return finalMessage.trim();
+  }
 }
diff --git a/code/lib/cli/src/js-package-manager/Yarn1Proxy.test.ts b/code/lib/cli/src/js-package-manager/Yarn1Proxy.test.ts
index fb9edaef3cc0..3edf536f2a96 100644
--- a/code/lib/cli/src/js-package-manager/Yarn1Proxy.test.ts
+++ b/code/lib/cli/src/js-package-manager/Yarn1Proxy.test.ts
@@ -1,3 +1,4 @@
+import dedent from 'ts-dedent';
 import { Yarn1Proxy } from './Yarn1Proxy';
 
 describe('Yarn 1 Proxy', () => {
@@ -275,4 +276,29 @@ describe('Yarn 1 Proxy', () => {
       `);
     });
   });
+
+  describe('parseErrors', () => {
+    it('should parse yarn1 errors', () => {
+      const YARN1_ERROR_SAMPLE = dedent`
+        yarn add v1.22.19
+        [1/4] Resolving packages...
+        error Couldn't find any versions for "react" that matches "28.2.0"
+        info Visit https://yarnpkg.com/en/docs/cli/add for documentation about this command.
+      `;
+
+      expect(yarn1Proxy.parseErrorFromLogs(YARN1_ERROR_SAMPLE)).toEqual(
+        `YARN1 error: Couldn't find any versions for "react" that matches "28.2.0"`
+      );
+    });
+
+    it('should show unknown yarn1 error', () => {
+      const YARN1_ERROR_SAMPLE = dedent`
+        yarn install v1.22.19
+        [1/4] 🔍  Resolving packages...
+        info Visit https://yarnpkg.com/en/docs/cli/install for documentation about this command.
+      `;
+
+      expect(yarn1Proxy.parseErrorFromLogs(YARN1_ERROR_SAMPLE)).toEqual(`YARN1 error`);
+    });
+  });
 });
diff --git a/code/lib/cli/src/js-package-manager/Yarn1Proxy.ts b/code/lib/cli/src/js-package-manager/Yarn1Proxy.ts
index ad85c1f5452b..a4f83c95c715 100644
--- a/code/lib/cli/src/js-package-manager/Yarn1Proxy.ts
+++ b/code/lib/cli/src/js-package-manager/Yarn1Proxy.ts
@@ -1,3 +1,5 @@
+import dedent from 'ts-dedent';
+import { createLogStream } from '../utils';
 import { JsPackageManager } from './JsPackageManager';
 import type { PackageJson } from './PackageJson';
 import type { InstallationMetadata, PackageMetadata } from './types';
@@ -18,6 +20,8 @@ export type Yarn1ListOutput = {
   data: Yarn1ListData;
 };
 
+const YARN1_ERROR_REGEX = /^error\s(.*)$/gm;
+
 export class Yarn1Proxy extends JsPackageManager {
   readonly type = 'yarn1';
 
@@ -88,11 +92,29 @@ export class Yarn1Proxy extends JsPackageManager {
       args = ['-D', ...args];
     }
 
-    await this.executeCommand({
-      command: 'yarn',
-      args: ['add', ...this.getInstallArgs(), ...args],
-      stdio: 'inherit',
-    });
+    const { logStream, readLogFile, moveLogFile, removeLogFile } = await createLogStream();
+
+    try {
+      await this.executeCommand({
+        command: 'yarn',
+        args: ['add', ...this.getInstallArgs(), ...args],
+        stdio: ['ignore', logStream, logStream],
+      });
+    } catch (err) {
+      const stdout = await readLogFile();
+
+      const errorMessage = this.parseErrorFromLogs(stdout);
+
+      await moveLogFile();
+
+      throw new Error(
+        dedent`${errorMessage}
+        
+        Please check the logfile generated at ./storybook.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -165,4 +187,18 @@ export class Yarn1Proxy extends JsPackageManager {
 
     throw new Error('Something went wrong while parsing yarn output');
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    let finalMessage = 'YARN1 error';
+    const match = logs.match(YARN1_ERROR_REGEX);
+
+    if (match) {
+      const errorMessage = match[0]?.replace(/^error\s(.*)$/, '$1');
+      if (errorMessage) {
+        finalMessage = `${finalMessage}: ${errorMessage}`;
+      }
+    }
+
+    return finalMessage.trim();
+  }
 }
diff --git a/code/lib/cli/src/js-package-manager/Yarn2Proxy.test.ts b/code/lib/cli/src/js-package-manager/Yarn2Proxy.test.ts
index f875254a6858..51e5c1235cd4 100644
--- a/code/lib/cli/src/js-package-manager/Yarn2Proxy.test.ts
+++ b/code/lib/cli/src/js-package-manager/Yarn2Proxy.test.ts
@@ -1,3 +1,4 @@
+import dedent from 'ts-dedent';
 import { Yarn2Proxy } from './Yarn2Proxy';
 
 describe('Yarn 2 Proxy', () => {
@@ -271,4 +272,37 @@ describe('Yarn 2 Proxy', () => {
       `);
     });
   });
+
+  describe('parseErrors', () => {
+    it('should parse yarn2 errors', () => {
+      const YARN2_ERROR_SAMPLE = `
+        ➤ YN0000: ┌ Resolution step
+        ➤ YN0001: │ Error: react@npm:28.2.0: No candidates found
+            at ge (/Users/yannbraga/.cache/node/corepack/yarn/3.5.1/yarn.js:439:8124)
+            at process.processTicksAndRejections (node:internal/process/task_queues:95:5)
+            at async Promise.allSettled (index 8)
+            at async io (/Users/yannbraga/.cache/node/corepack/yarn/3.5.1/yarn.js:390:10398)
+        ➤ YN0000: └ Completed in 2s 369ms
+        ➤ YN0000: Failed with errors in 2s 372ms
+        ➤ YN0032: fsevents@npm:2.3.2: Implicit dependencies on node-gyp are discouraged
+        ➤ YN0061: @npmcli/move-file@npm:2.0.1 is deprecated: This functionality has been moved to @npmcli/fs
+      `;
+
+      expect(yarn2Proxy.parseErrorFromLogs(YARN2_ERROR_SAMPLE)).toEqual(
+        'YARN2 error YN0001 - EXCEPTION: react@npm:28.2.0: No candidates found'
+      );
+    });
+
+    it('should show unknown yarn2 error', () => {
+      const YARN2_ERROR_SAMPLE = dedent`
+        ➤ YN0000: ┌ Resolution step
+        ➤ YN0000: └ Completed in 2s 369ms
+        ➤ YN0000: Failed with errors in 2s 372ms
+        ➤ YN0032: fsevents@npm:2.3.2: Implicit dependencies on node-gyp are discouraged
+        ➤ YN0061: @npmcli/move-file@npm:2.0.1 is deprecated: This functionality has been moved to @npmcli/fs
+      `;
+
+      expect(yarn2Proxy.parseErrorFromLogs(YARN2_ERROR_SAMPLE)).toEqual(`YARN2 error`);
+    });
+  });
 });
diff --git a/code/lib/cli/src/js-package-manager/Yarn2Proxy.ts b/code/lib/cli/src/js-package-manager/Yarn2Proxy.ts
index e565e7f12ee2..5f463bd491b0 100644
--- a/code/lib/cli/src/js-package-manager/Yarn2Proxy.ts
+++ b/code/lib/cli/src/js-package-manager/Yarn2Proxy.ts
@@ -1,8 +1,65 @@
+import dedent from 'ts-dedent';
+import { createLogStream } from '../utils';
 import { JsPackageManager } from './JsPackageManager';
 import type { PackageJson } from './PackageJson';
 import type { InstallationMetadata, PackageMetadata } from './types';
 import { parsePackageData } from './util';
 
+const YARN2_ERROR_REGEX = /(YN\d{4}):.*?Error:\s+(.*)/i;
+const YARN2_ERROR_CODES = {
+  YN0000: 'UNNAMED',
+  YN0001: 'EXCEPTION',
+  YN0002: 'MISSING_PEER_DEPENDENCY',
+  YN0003: 'CYCLIC_DEPENDENCIES',
+  YN0004: 'DISABLED_BUILD_SCRIPTS',
+  YN0005: 'BUILD_DISABLED',
+  YN0006: 'SOFT_LINK_BUILD',
+  YN0007: 'MUST_BUILD',
+  YN0008: 'MUST_REBUILD',
+  YN0009: 'BUILD_FAILED',
+  YN0010: 'RESOLVER_NOT_FOUND',
+  YN0011: 'FETCHER_NOT_FOUND',
+  YN0012: 'LINKER_NOT_FOUND',
+  YN0013: 'FETCH_NOT_CACHED',
+  YN0014: 'YARN_IMPORT_FAILED',
+  YN0015: 'REMOTE_INVALID',
+  YN0016: 'REMOTE_NOT_FOUND',
+  YN0017: 'RESOLUTION_PACK',
+  YN0018: 'CACHE_CHECKSUM_MISMATCH',
+  YN0019: 'UNUSED_CACHE_ENTRY',
+  YN0020: 'MISSING_LOCKFILE_ENTRY',
+  YN0021: 'WORKSPACE_NOT_FOUND',
+  YN0022: 'TOO_MANY_MATCHING_WORKSPACES',
+  YN0023: 'CONSTRAINTS_MISSING_DEPENDENCY',
+  YN0024: 'CONSTRAINTS_INCOMPATIBLE_DEPENDENCY',
+  YN0025: 'CONSTRAINTS_EXTRANEOUS_DEPENDENCY',
+  YN0026: 'CONSTRAINTS_INVALID_DEPENDENCY',
+  YN0027: 'CANT_SUGGEST_RESOLUTIONS',
+  YN0028: 'FROZEN_LOCKFILE_EXCEPTION',
+  YN0029: 'CROSS_DRIVE_VIRTUAL_LOCAL',
+  YN0030: 'FETCH_FAILED',
+  YN0031: 'DANGEROUS_NODE_MODULES',
+  YN0032: 'NODE_GYP_INJECTED',
+  YN0046: 'AUTOMERGE_FAILED_TO_PARSE',
+  YN0047: 'AUTOMERGE_IMMUTABLE',
+  YN0048: 'AUTOMERGE_SUCCESS',
+  YN0049: 'AUTOMERGE_REQUIRED',
+  YN0050: 'DEPRECATED_CLI_SETTINGS',
+  YN0059: 'INVALID_RANGE_PEER_DEPENDENCY',
+  YN0060: 'INCOMPATIBLE_PEER_DEPENDENCY',
+  YN0061: 'DEPRECATED_PACKAGE',
+  YN0062: 'INCOMPATIBLE_OS',
+  YN0063: 'INCOMPATIBLE_CPU',
+  YN0068: 'UNUSED_PACKAGE_EXTENSION',
+  YN0069: 'REDUNDANT_PACKAGE_EXTENSION',
+  YN0071: 'NM_CANT_INSTALL_EXTERNAL_SOFT_LINK',
+  YN0072: 'NM_PRESERVE_SYMLINKS_REQUIRED',
+  YN0074: 'NM_HARDLINKS_MODE_DOWNGRADED',
+  YN0075: 'PROLOG_INSTANTIATION_ERROR',
+  YN0076: 'INCOMPATIBLE_ARCHITECTURE',
+  YN0077: 'GHOST_ARCHITECTURE',
+};
+
 // This encompasses both yarn 2 and yarn 3
 export class Yarn2Proxy extends JsPackageManager {
   readonly type = 'yarn2';
@@ -79,11 +136,29 @@ export class Yarn2Proxy extends JsPackageManager {
       args = ['-D', ...args];
     }
 
-    await this.executeCommand({
-      command: 'yarn',
-      args: ['add', ...this.getInstallArgs(), ...args],
-      stdio: 'inherit',
-    });
+    const { logStream, readLogFile, moveLogFile, removeLogFile } = await createLogStream();
+
+    try {
+      await this.executeCommand({
+        command: 'yarn',
+        args: ['add', ...this.getInstallArgs(), ...args],
+        stdio: ['ignore', logStream, logStream],
+      });
+    } catch (err) {
+      const stdout = await readLogFile();
+
+      const errorMessage = this.parseErrorFromLogs(stdout);
+
+      await moveLogFile();
+
+      throw new Error(
+        dedent`${errorMessage}
+        
+        Please check the logfile generated at ./storybook.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -148,4 +223,28 @@ export class Yarn2Proxy extends JsPackageManager {
       infoCommand: 'yarn why',
     };
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    let finalMessage = 'YARN2 error';
+    const match = logs.match(YARN2_ERROR_REGEX);
+
+    if (match) {
+      const errorCode = match[1] as keyof typeof YARN2_ERROR_CODES;
+      if (errorCode) {
+        finalMessage = `${finalMessage} ${errorCode}`;
+      }
+
+      const errorType = YARN2_ERROR_CODES[errorCode];
+      if (errorType) {
+        finalMessage = `${finalMessage} - ${errorType}`;
+      }
+
+      const errorMessage = match[2];
+      if (errorMessage) {
+        finalMessage = `${finalMessage}: ${errorMessage}`;
+      }
+    }
+
+    return finalMessage.trim();
+  }
 }
diff --git a/code/lib/cli/src/utils.ts b/code/lib/cli/src/utils.ts
index 4650fd055dcf..4ae92e61ad66 100644
--- a/code/lib/cli/src/utils.ts
+++ b/code/lib/cli/src/utils.ts
@@ -1,3 +1,8 @@
+import type { WriteStream } from 'fs-extra';
+import { move, remove, writeFile, readFile, createWriteStream } from 'fs-extra';
+import { join } from 'path';
+import tempy from 'tempy';
+
 export function parseList(str: string): string[] {
   return str
     .split(',')
@@ -15,3 +20,65 @@ export function getEnvConfig(program: Record<string, any>, configEnv: Record<str
     }
   });
 }
+
+/**
+ * Given a file name, creates an object with utilities to manage a log file.
+ * It creates a temporary log file which you can manage with the returned functions.
+ * You can then decide whether to move the log file to the users project, or remove it.
+ *
+ * @example
+ * ```
+ *  const { logStream, moveLogFile, removeLogFile, clearLogFile, readLogFile } = await createLogStream('my-log-file.log');
+ *
+ *  // SCENARIO 1:
+ *  // you can write custom messages to generate a log file
+ *  logStream.write('my log message');
+ *  await moveLogFile();
+ *
+ *  // SCENARIO 2:
+ *  // or you can pass it to stdio and capture the output of that command
+ *  try {
+ *    await this.executeCommand({
+ *      command: 'pnpm',
+ *      args: ['info', packageName, ...args],
+ *      // do not output to the user, and send stdio and stderr to log file
+ *      stdio: ['ignore', logStream, logStream]
+ *    });
+ *  } catch (err) {
+ *    // do something with the log file content
+ *    const output = await readLogFile();
+ *    // move the log file to the users project
+ *    await moveLogFile();
+ *  }
+ *  // success, no need to keep the log file
+ *  await removeLogFile();
+ *
+ * ```
+ */
+export const createLogStream = async (
+  logFileName = 'storybook.log'
+): Promise<{
+  moveLogFile: () => Promise<void>;
+  removeLogFile: () => Promise<void>;
+  clearLogFile: () => Promise<void>;
+  readLogFile: () => Promise<string>;
+  logStream: WriteStream;
+}> => {
+  const finalLogPath = join(process.cwd(), logFileName);
+  const temporaryLogPath = tempy.file({ name: logFileName });
+
+  const logStream = createWriteStream(temporaryLogPath, { encoding: 'utf8' });
+
+  return new Promise((resolve, reject) => {
+    logStream.once('open', () => {
+      const moveLogFile = async () => move(temporaryLogPath, finalLogPath, { overwrite: true });
+      const clearLogFile = async () => writeFile(temporaryLogPath, '');
+      const removeLogFile = async () => remove(temporaryLogPath);
+      const readLogFile = async () => {
+        return readFile(temporaryLogPath, 'utf8');
+      };
+      resolve({ logStream, moveLogFile, clearLogFile, removeLogFile, readLogFile });
+    });
+    logStream.once('error', reject);
+  });
+};
diff --git a/code/lib/core-server/src/withTelemetry.ts b/code/lib/core-server/src/withTelemetry.ts
index c95529533599..ac14a142cd39 100644
--- a/code/lib/core-server/src/withTelemetry.ts
+++ b/code/lib/core-server/src/withTelemetry.ts
@@ -100,16 +100,30 @@ export async function withTelemetry<T>(
   options: TelemetryOptions,
   run: () => Promise<T>
 ): Promise<T> {
+  // We catch Ctrl+C user interactions to be able to detect a cancel event
+  process.on('SIGINT', async () => {
+    if (!options.cliOptions.disableTelemetry) {
+      await telemetry('canceled', { eventType }, { stripMetadata: true, immediate: true });
+      process.exit(0);
+    }
+
+    process.exit(0);
+  });
+
   if (!options.cliOptions.disableTelemetry)
     telemetry('boot', { eventType }, { stripMetadata: true });
 
   try {
     return await run();
   } catch (error) {
+    if (error?.message === 'Canceled by the user') {
+      return undefined;
+    }
+
     const { printError = logger.error } = options;
     printError(error);
-
     await sendTelemetryError(error, eventType, options);
+
     throw error;
   }
 }
diff --git a/code/lib/telemetry/src/types.ts b/code/lib/telemetry/src/types.ts
index d33b89677343..e65da2747a34 100644
--- a/code/lib/telemetry/src/types.ts
+++ b/code/lib/telemetry/src/types.ts
@@ -9,6 +9,7 @@ export type EventType =
   | 'build'
   | 'upgrade'
   | 'init'
+  | 'canceled'
   | 'error'
   | 'error-metadata'
   | 'version-update';
diff --git a/code/yarn.lock b/code/yarn.lock
index 35f47455fc2a..c3683eeacc92 100644
--- a/code/yarn.lock
+++ b/code/yarn.lock
@@ -5715,6 +5715,7 @@ __metadata:
     globby: ^11.0.2
     jscodeshift: ^0.14.0
     leven: ^3.1.0
+    ora: ^5.4.1
     prettier: ^2.8.0
     prompts: ^2.4.0
     puppeteer-core: ^2.1.1