diff --git a/code/lib/cli/src/generators/baseGenerator.ts b/code/lib/cli/src/generators/baseGenerator.ts
index 9a44785b7146..c61e2e7fae0e 100644
--- a/code/lib/cli/src/generators/baseGenerator.ts
+++ b/code/lib/cli/src/generators/baseGenerator.ts
@@ -4,7 +4,7 @@ import { dedent } from 'ts-dedent';
 import type { NpmOptions } from '../NpmOptions';
 import type { SupportedRenderers, SupportedFrameworks, Builder } from '../project_types';
 import { externalFrameworks, CoreBuilder } from '../project_types';
-import { getBabelDependencies, copyTemplateFiles } from '../helpers';
+import { getBabelDependencies, copyTemplateFiles, paddedLog } from '../helpers';
 import { configureMain, configurePreview } from './configure';
 import type { JsPackageManager } from '../js-package-manager';
 import { getPackageDetails } from '../js-package-manager';
@@ -234,6 +234,7 @@ export async function baseGenerator(
       (packageToInstall) => !installedDependencies.has(getPackageDetails(packageToInstall)[0])
     );
 
+  paddedLog(`\nGetting the correct version of ${packages.length} packages`);
   const versionedPackages = await packageManager.getVersionedPackages(packages);
 
   await fse.ensureDir(`./${storybookConfigFolder}`);
@@ -274,6 +275,7 @@ export async function baseGenerator(
   const depsToInstall = [...versionedPackages, ...babelDependencies];
 
   if (depsToInstall.length > 0) {
+    paddedLog('Installing Storybook dependencies');
     await packageManager.addDependencies({ ...npmOptions, packageJson }, depsToInstall);
   }
 
diff --git a/code/lib/cli/src/js-package-manager/JsPackageManager.ts b/code/lib/cli/src/js-package-manager/JsPackageManager.ts
index 3e0b16a1b25c..a33e64353967 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);
       }
@@ -440,6 +440,7 @@ export abstract class JsPackageManager {
     stdio?: 'inherit' | 'pipe'
   ): 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..8524a1113f55 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 +436,62 @@ 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(
+        '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(`Unknown NPM error`);
+    });
+
+    it('should show unknown npm error with code if it at least matches the pattern', () => {
+      const NPM_ERROR_SAMPLE = `
+        npm ERR! code ESOMETHING
+        npm ERR! ESOMETHING something something
+        npm ERR! 
+      `;
+
+      expect(npmProxy.parseErrorFromLogs(NPM_ERROR_SAMPLE)).toEqual(
+        `Unknown NPM error: ESOMETHING`
+      );
+    });
+  });
 });
diff --git a/code/lib/cli/src/js-package-manager/NPMProxy.ts b/code/lib/cli/src/js-package-manager/NPMProxy.ts
index 5dd0d63bd262..ff9a1c675490 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';
 
@@ -104,17 +141,38 @@ export class NPMProxy extends JsPackageManager {
   }
 
   protected async runAddDeps(dependencies: string[], installAsDevDependencies: boolean) {
+    const { logStream, readLogFile, moveLogFile, removeLogFile } = await createLogStream(
+      'init-storybook.log'
+    );
     let args = [...dependencies];
 
     if (installAsDevDependencies) {
       args = ['-D', ...args];
     }
 
-    await this.executeCommand({
-      command: 'npm',
-      args: ['install', ...this.getInstallArgs(), ...args],
-      stdio: 'inherit',
-    });
+    logStream.write(`\n THIS IS CUSTOM! Installing dependencies:\n${args.join('\n')}\n\n`);
+
+    try {
+      await this.executeCommand({
+        command: 'npm',
+        args: ['install', ...args, ...this.getInstallArgs()],
+        stdio: ['ignore', logStream, logStream],
+      });
+    } catch (err) {
+      const stdout = await readLogFile();
+
+      const errorMessage = this.parseErrorFromLogs(stdout);
+
+      await moveLogFile();
+
+      throw new Error(
+        dedent`${errorMessage}
+        
+        Please check the logfile generated at ./init-install.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -191,4 +249,18 @@ export class NPMProxy extends JsPackageManager {
       infoCommand: 'npm ls --depth=1',
     };
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    const match = logs.match(NPM_ERROR_REGEX);
+    let errorCode;
+    if (match) {
+      errorCode = match[1] as keyof typeof NPM_ERROR_CODES;
+      const errorMessage = NPM_ERROR_CODES[errorCode];
+      if (errorCode && errorMessage) {
+        return `${errorCode}: ${errorMessage}`.trim();
+      }
+    }
+
+    return `Unknown NPM error${errorCode ? `: ${errorCode}` : ''}`;
+  }
 }
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..2300c5dc3a7c 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 +375,42 @@ 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(
+        '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(`Unknown PNPM error`);
+    });
+
+    it('should show unknown pnpm error with code if it at least matches the pattern', () => {
+      const PNPM_ERROR_SAMPLE = `
+        ERR_PNPM_SOMETHING 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
+      `;
+
+      expect(pnpmProxy.parseErrorFromLogs(PNPM_ERROR_SAMPLE)).toEqual(
+        `Unknown PNPM error: ERR_PNPM_SOMETHING`
+      );
+    });
+  });
 });
diff --git a/code/lib/cli/src/js-package-manager/PNPMProxy.ts b/code/lib/cli/src/js-package-manager/PNPMProxy.ts
index 8e8a4dce793e..14c08067bee0 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 +24,26 @@ type PnpmListItem = {
 
 export type PnpmListOutput = PnpmListItem[];
 
+const PNPM_ERROR_REGEX = /(ELIFECYCLE|ERR_PNPM_[A-Z_]+)\s+(.*)/i;
+const PNPM_ERROR_CODES = {
+  ELIFECYCLE: 'Lifecycle error',
+  ERR_PNPM_BAD_TARBALL_SIZE: 'Bad tarball size error',
+  ERR_PNPM_DEDUPE_CHECK_ISSUES: 'Dedupe check issues error',
+  ERR_PNPM_FETCH_401: 'Fetch 401 error',
+  ERR_PNPM_FETCH_403: 'Fetch 403 error',
+  ERR_PNPM_LOCKFILE_BREAKING_CHANGE: 'Lockfile breaking change error',
+  ERR_PNPM_MODIFIED_DEPENDENCY: 'Modified dependency error',
+  ERR_PNPM_MODULES_BREAKING_CHANGE: 'Modules breaking change error',
+  ERR_PNPM_NO_MATCHING_VERSION: 'No matching version error',
+  ERR_PNPM_PEER_DEP_ISSUES: 'Peer dependency issues error',
+  ERR_PNPM_RECURSIVE_FAIL: 'Recursive command failed error',
+  ERR_PNPM_RECURSIVE_RUN_NO_SCRIPT: 'Recursive run no script error',
+  ERR_PNPM_STORE_BREAKING_CHANGE: 'Store breaking change error',
+  ERR_PNPM_UNEXPECTED_STORE: 'Unexpected store error',
+  ERR_PNPM_UNEXPECTED_VIRTUAL_STORE: 'Unexpected virtual store error',
+  ERR_PNPM_UNSUPPORTED_ENGINE: 'Unsupported engine error',
+};
+
 export class PNPMProxy extends JsPackageManager {
   readonly type = 'pnpm';
 
@@ -126,12 +148,31 @@ export class PNPMProxy extends JsPackageManager {
     if (installAsDevDependencies) {
       args = ['-D', ...args];
     }
+    const { logStream, readLogFile, moveLogFile, removeLogFile } = await createLogStream(
+      'init-storybook.log'
+    );
 
-    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 ./init-install.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -212,4 +253,18 @@ export class PNPMProxy extends JsPackageManager {
       infoCommand: 'pnpm list --depth=1',
     };
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    const match = logs.match(PNPM_ERROR_REGEX);
+    let errorCode;
+    if (match) {
+      errorCode = match[1] as keyof typeof PNPM_ERROR_CODES;
+      const errorMessage = match[2];
+      const errorType = PNPM_ERROR_CODES[errorCode];
+      if (errorType && errorMessage) {
+        return `${errorCode}: ${errorMessage}`.trim();
+      }
+    }
+    return `Unknown PNPM error${errorCode ? `: ${errorCode}` : ''}`;
+  }
 }
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..0da683dfadb8 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: 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(`Unknown 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 00de17ded091..6683ff014b9c 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';
 
@@ -93,11 +97,31 @@ 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(
+      'init-storybook.log'
+    );
+
+    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 ./init-install.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -170,4 +194,16 @@ export class Yarn1Proxy extends JsPackageManager {
 
     throw new Error('Something went wrong while parsing yarn output');
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    const match = logs.match(YARN1_ERROR_REGEX);
+    if (match) {
+      const errorMessage = match[0].replace(/^error\s(.*)$/, '$1');
+      if (errorMessage) {
+        return `YARN1: ${errorMessage}`.trim();
+      }
+    }
+
+    return `Unknown Yarn1 error`;
+  }
 }
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..521cdf1241ea 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(
+        '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(`Unknown 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 7005052b0d0a..57a9d02eff0d 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';
@@ -84,11 +141,31 @@ 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(
+      'init-storybook.log'
+    );
+
+    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 ./init-install.log for troubleshooting and try again.`
+      );
+    }
+
+    await removeLogFile();
   }
 
   protected async runRemoveDeps(dependencies: string[]) {
@@ -153,4 +230,20 @@ export class Yarn2Proxy extends JsPackageManager {
       infoCommand: 'yarn why',
     };
   }
+
+  public parseErrorFromLogs(logs: string): string {
+    const match = logs.match(YARN2_ERROR_REGEX);
+    let errorCode;
+
+    if (match) {
+      errorCode = match[1] as keyof typeof YARN2_ERROR_CODES;
+      const errorMessage = match[2];
+      const errorType = YARN2_ERROR_CODES[errorCode];
+      if (errorCode && errorMessage) {
+        return `${errorCode} - ${errorType}: ${errorMessage}`.trim();
+      }
+    }
+
+    return `Unknown Yarn2 error${errorCode ? `: ${errorCode}` : ''}`;
+  }
 }
diff --git a/code/lib/cli/src/utils.ts b/code/lib/cli/src/utils.ts
index 4650fd055dcf..8a62c49c2f92 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: string
+): 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'); // .replace(/[\x00-\x1F\x7F]/g, '');
+      };
+      resolve({ logStream, moveLogFile, clearLogFile, removeLogFile, readLogFile });
+    });
+    logStream.once('error', reject);
+  });
+};