diff --git a/.changeset/tangy-pants-buy.md b/.changeset/tangy-pants-buy.md
new file mode 100644
index 000000000..f8af21c02
--- /dev/null
+++ b/.changeset/tangy-pants-buy.md
@@ -0,0 +1,5 @@
+---
+'@graphprotocol/graph-cli': minor
+---
+
+require immutable flag on entities
diff --git a/examples/arweave-blocks-transactions/schema.graphql b/examples/arweave-blocks-transactions/schema.graphql
index 3c8843df1..85342ac54 100644
--- a/examples/arweave-blocks-transactions/schema.graphql
+++ b/examples/arweave-blocks-transactions/schema.graphql
@@ -1,4 +1,4 @@
-type Block @entity {
+type Block @entity(immutable: true) {
   id: ID!
 
   timestamp: BigInt!
@@ -22,7 +22,7 @@ type Block @entity {
   poa: Poa
 }
 
-type Transaction @entity {
+type Transaction @entity(immutable: true) {
   id: ID!
 
   block: Block!
@@ -39,7 +39,7 @@ type Transaction @entity {
   reward: Bytes!
 }
 
-type Poa @entity {
+type Poa @entity(immutable: true) {
   id: ID!
 
   option: String!
@@ -48,7 +48,7 @@ type Poa @entity {
   chunk: Bytes!
 }
 
-type Tag @entity {
+type Tag @entity(immutable: true) {
   id: ID!
 
   name: Bytes!
diff --git a/examples/cosmos-block-filtering/schema.graphql b/examples/cosmos-block-filtering/schema.graphql
index 803f5c7e6..c52d5b4f8 100644
--- a/examples/cosmos-block-filtering/schema.graphql
+++ b/examples/cosmos-block-filtering/schema.graphql
@@ -1,4 +1,4 @@
-type Block @entity {
+type Block @entity(immutable: true) {
   id: ID!
   number: BigInt
   timestamp: BigInt
diff --git a/examples/cosmos-osmosis-token-swaps/schema.graphql b/examples/cosmos-osmosis-token-swaps/schema.graphql
index baffd4b0f..c6f24ecda 100644
--- a/examples/cosmos-osmosis-token-swaps/schema.graphql
+++ b/examples/cosmos-osmosis-token-swaps/schema.graphql
@@ -1,10 +1,10 @@
-type Token @entity {
+type Token @entity(immutable: true) {
   id: ID!
   amount: String
   denom: String
 }
 
-type TokenSwap @entity {
+type TokenSwap @entity(immutable: true) {
   id: ID!
   sender: String
   poolId: String
diff --git a/examples/cosmos-validator-delegations/schema.graphql b/examples/cosmos-validator-delegations/schema.graphql
index 11b1433eb..a717049ea 100644
--- a/examples/cosmos-validator-delegations/schema.graphql
+++ b/examples/cosmos-validator-delegations/schema.graphql
@@ -1,11 +1,11 @@
-type Delegation @entity {
+type Delegation @entity(immutable: true) {
   id: ID!
   delegatorAddress: String
   validatorAddress: String
   amount: Coin
 }
 
-type Coin @entity {
+type Coin @entity(immutable: true) {
   id: ID!
   denom: String
   amount: String
diff --git a/examples/cosmos-validator-rewards/schema.graphql b/examples/cosmos-validator-rewards/schema.graphql
index c6863ca43..6bd20b143 100644
--- a/examples/cosmos-validator-rewards/schema.graphql
+++ b/examples/cosmos-validator-rewards/schema.graphql
@@ -1,4 +1,4 @@
-type Reward @entity {
+type Reward @entity(immutable: true) {
   id: ID!
   amount: String
   validator: String
diff --git a/examples/ethereum-basic-event-handlers/schema.graphql b/examples/ethereum-basic-event-handlers/schema.graphql
index cf8774f1b..928e5b915 100644
--- a/examples/ethereum-basic-event-handlers/schema.graphql
+++ b/examples/ethereum-basic-event-handlers/schema.graphql
@@ -1,11 +1,11 @@
-type NewGravatar @entity {
+type NewGravatar @entity(immutable: false) {
   id: ID!
   owner: Bytes!
   displayName: String!
   imageUrl: String!
 }
 
-type UpdatedGravatar @entity {
+type UpdatedGravatar @entity(immutable: false) {
   id: ID!
   owner: Bytes!
   displayName: String!
diff --git a/examples/ethereum-gravatar/schema.graphql b/examples/ethereum-gravatar/schema.graphql
index f45302439..e16b211a6 100644
--- a/examples/ethereum-gravatar/schema.graphql
+++ b/examples/ethereum-gravatar/schema.graphql
@@ -1,4 +1,4 @@
-type Gravatar @entity {
+type Gravatar @entity(immutable: false) {
   id: ID!
   owner: Bytes!
   displayName: String!
diff --git a/examples/example-subgraph/schema.graphql b/examples/example-subgraph/schema.graphql
index f72b1bcf3..ac473835c 100644
--- a/examples/example-subgraph/schema.graphql
+++ b/examples/example-subgraph/schema.graphql
@@ -1,4 +1,4 @@
-type ExampleEntity @entity {
+type ExampleEntity @entity(immutable: false) {
   id: ID!
 
   optionalBoolean: Boolean
@@ -32,6 +32,6 @@ type ExampleEntity @entity {
   requiredReferenceList: [OtherEntity!]!
 }
 
-type OtherEntity @entity {
+type OtherEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/examples/near-blocks/schema.graphql b/examples/near-blocks/schema.graphql
index e72cca3ef..acd43629d 100644
--- a/examples/near-blocks/schema.graphql
+++ b/examples/near-blocks/schema.graphql
@@ -1,4 +1,4 @@
-type BlockEvent @entity {
+type BlockEvent @entity(immutable: true) {
   id: ID!
   number: BigInt
   hash: Bytes
diff --git a/examples/near-receipts/schema.graphql b/examples/near-receipts/schema.graphql
index b6347b282..c81680fef 100644
--- a/examples/near-receipts/schema.graphql
+++ b/examples/near-receipts/schema.graphql
@@ -1,10 +1,10 @@
-type Greeter @entity {
+type Greeter @entity(immutable: true) {
   id: ID!
   name: String!
   greetings: [Greeting!] @derivedFrom(field: "greeter")
 }
 
-type Greeting @entity {
+type Greeting @entity(immutable: true) {
   id: ID!
   greeter: Greeter!
   timestamp: BigInt!
diff --git a/examples/substreams-powered-subgraph/schema.graphql b/examples/substreams-powered-subgraph/schema.graphql
index 7b1c7d114..7f2b80082 100644
--- a/examples/substreams-powered-subgraph/schema.graphql
+++ b/examples/substreams-powered-subgraph/schema.graphql
@@ -1,4 +1,4 @@
-type Contract @entity {
+type Contract @entity(immutable: true) {
   id: ID!
 
   "The timestamp when the contract was deployed"
diff --git a/packages/cli/src/scaffold/__snapshots__/cosmos.test.ts.snap b/packages/cli/src/scaffold/__snapshots__/cosmos.test.ts.snap
index ae7426d0a..ad641383f 100644
--- a/packages/cli/src/scaffold/__snapshots__/cosmos.test.ts.snap
+++ b/packages/cli/src/scaffold/__snapshots__/cosmos.test.ts.snap
@@ -60,7 +60,7 @@ export function handleBlock(block: cosmos.Block): void {
 `;
 
 exports[`Cosmos subgraph scaffolding > Schema (default) 1`] = `
-"type ExampleEntity @entity {
+"type ExampleEntity @entity(immutable: true) {
   id: ID!
   block: Bytes!
   count: BigInt!
diff --git a/packages/cli/src/scaffold/__snapshots__/ethereum.test.ts.snap b/packages/cli/src/scaffold/__snapshots__/ethereum.test.ts.snap
index bad4cbb02..32e19c553 100644
--- a/packages/cli/src/scaffold/__snapshots__/ethereum.test.ts.snap
+++ b/packages/cli/src/scaffold/__snapshots__/ethereum.test.ts.snap
@@ -227,7 +227,7 @@ export function handleTupleArrayEvent(event: TupleArrayEvent): void {}
 `;
 
 exports[`Ethereum subgraph scaffolding > Schema (default) 1`] = `
-"type ExampleEntity @entity {
+"type ExampleEntity @entity(immutable: true) {
   id: Bytes!
   count: BigInt!
   a: BigInt! # uint256
diff --git a/packages/cli/src/scaffold/__snapshots__/near.test.ts.snap b/packages/cli/src/scaffold/__snapshots__/near.test.ts.snap
index ff2ef9326..b4aec1b2f 100644
--- a/packages/cli/src/scaffold/__snapshots__/near.test.ts.snap
+++ b/packages/cli/src/scaffold/__snapshots__/near.test.ts.snap
@@ -62,7 +62,7 @@ export function handleReceipt(
 `;
 
 exports[`NEAR subgraph scaffolding > Schema (default) 1`] = `
-"type ExampleEntity @entity {
+"type ExampleEntity @entity(immutable: true) {
   id: ID!
   block: Bytes!
   count: BigInt!
diff --git a/packages/cli/src/scaffold/schema.ts b/packages/cli/src/scaffold/schema.ts
index 9f66b5063..ce6d82187 100644
--- a/packages/cli/src/scaffold/schema.ts
+++ b/packages/cli/src/scaffold/schema.ts
@@ -85,7 +85,7 @@ export const generateEventType = (
 
 export const generateExampleEntityType = (protocol: Protocol, events: any[]) => {
   if (protocol.hasABIs() && events.length > 0) {
-    return `type ExampleEntity @entity {
+    return `type ExampleEntity @entity(immutable: true) {
   id: Bytes!
   count: BigInt!
   ${events[0].inputs
@@ -97,7 +97,7 @@ export const generateExampleEntityType = (protocol: Protocol, events: any[]) =>
     .join('\n')}
 }`;
   }
-  return `type ExampleEntity @entity {
+  return `type ExampleEntity @entity(immutable: true) {
   id: ID!
   block: Bytes!
   count: BigInt!
diff --git a/packages/cli/src/schema.ts b/packages/cli/src/schema.ts
index 25e93a5a3..9f935fe05 100644
--- a/packages/cli/src/schema.ts
+++ b/packages/cli/src/schema.ts
@@ -42,4 +42,31 @@ export default class Schema {
       )
       .map(entity => (entity as graphql.ObjectTypeDefinitionNode).name.value);
   }
+
+  immutableEntitiesCount(): number {
+    const isImmutable = (entity: graphql.ConstDirectiveNode) => {
+      return (
+        entity.arguments?.find(arg => {
+          return (
+            (arg.name.value === 'immutable' || arg.name.value === 'timeseries') &&
+            arg.value.kind === 'BooleanValue' &&
+            arg.value.value
+          );
+        }) !== undefined
+      );
+    };
+
+    return this.ast.definitions.filter(def => {
+      if (def.kind !== 'ObjectTypeDefinition') {
+        return false;
+      }
+
+      const entity = def.directives?.find(directive => directive.name.value === 'entity');
+      if (entity === undefined) {
+        return false;
+      }
+
+      return isImmutable(entity);
+    }).length;
+  }
 }
diff --git a/packages/cli/src/type-generator.ts b/packages/cli/src/type-generator.ts
index ece607624..b38d5c35b 100644
--- a/packages/cli/src/type-generator.ts
+++ b/packages/cli/src/type-generator.ts
@@ -102,6 +102,14 @@ export default class TypeGenerator {
       typeGenDebug.extend('generateTypes')('Generating types for schema');
       await this.generateTypesForSchema({ schema });
 
+      if (schema.immutableEntitiesCount() === 0) {
+        toolbox.print.warning(
+          '\nThe GraphQL schema does not take advantage of using immutable entities. ' +
+            'Immutable entities can significantly improve subgraph performance.\n' +
+            'Learn more about using immutable entities: https://thegraph.com/docs/en/subgraphs/best-practices/immutable-entities-bytes-as-ids/#immutable-entities',
+        );
+      }
+
       if (this.options.subgraphSources.length > 0) {
         const ipfsClient = createIpfsClient({
           url: appendApiVersionForGraph(this.options.ipfsUrl.toString()),
diff --git a/packages/cli/src/validation/schema.ts b/packages/cli/src/validation/schema.ts
index b62cf0bd6..7cfcd1af5 100644
--- a/packages/cli/src/validation/schema.ts
+++ b/packages/cli/src/validation/schema.ts
@@ -1,4 +1,5 @@
 import fs from 'node:fs';
+import { print } from 'gluegun';
 import * as graphql from 'graphql/language/index.js';
 import immutable from 'immutable';
 import debugFactory from '../debug.js';
@@ -99,6 +100,36 @@ const validateEntityDirective = (def: any) => {
       ]);
 };
 
+const validateEntityDirectiveImmutableArgument = (def: graphql.ObjectTypeDefinitionNode) => {
+  validateDebugger('Validating immutable argument on entity directive for %s', def?.name?.value);
+
+  const entity = def.directives?.find(directive => directive.name.value === 'entity');
+  if (entity === undefined) {
+    return List();
+  }
+
+  const hasImmutableArg =
+    entity.arguments?.find(arg => arg.name.value === 'immutable') !== undefined;
+  const hasTimeseriesArg =
+    entity.arguments?.find(arg => arg.name.value === 'timeseries') !== undefined;
+
+  if (hasImmutableArg || hasTimeseriesArg) {
+    return List();
+  }
+
+  return immutable.fromJS([
+    {
+      loc: def.loc,
+      entity: def.name?.value,
+      message:
+        `@entity directive requires \`immutable\` argument\n  ` +
+        print.colors.yellow(
+          `Hint: Try updating the entity definition with: @entity(immutable: true)`,
+        ),
+    },
+  ]);
+};
+
 const validateEntityID = (def: any) => {
   validateDebugger('Validating entity ID for %s', def?.name?.value);
   const idField = def.fields.find((field: any) => field.name.value === 'id');
@@ -986,6 +1017,7 @@ const typeDefinitionValidators = {
       ? List.of(...validateSubgraphSchemaDirectives(def), ...validateTypeHasNoFields(def))
       : List.of(
           ...validateEntityDirective(def),
+          ...validateEntityDirectiveImmutableArgument(def),
           ...validateEntityID(def),
           ...validateEntityFields(defs, def),
           ...validateNoImportDirective(def),
diff --git a/packages/cli/tests/cli/__snapshots__/validation.test.ts.snap b/packages/cli/tests/cli/__snapshots__/validation.test.ts.snap
index 2fbee61b8..ea81066dc 100644
--- a/packages/cli/tests/cli/__snapshots__/validation.test.ts.snap
+++ b/packages/cli/tests/cli/__snapshots__/validation.test.ts.snap
@@ -932,6 +932,20 @@ Types generated successfully
 "
 `;
 
+exports[`Validation > Should require immutable argument on entity directive 1`] = `
+"- Load subgraph from subgraph.yaml
+✖ Failed to load subgraph from subgraph.yaml: Error in schema.graphql:
+
+  EntityA:
+  - @entity directive requires \`immutable\` argument
+    Hint: Try updating the entity definition with: @entity(immutable: true)
+"
+`;
+
+exports[`Validation > Should require immutable argument on entity directive 2`] = `1`;
+
+exports[`Validation > Should require immutable argument on entity directive 3`] = `""`;
+
 exports[`Validation > Source without address is valid 1`] = `
 "- Load subgraph from subgraph.yaml
 ✔ Load subgraph from subgraph.yaml
diff --git a/packages/cli/tests/cli/add/subgraph/schema.graphql b/packages/cli/tests/cli/add/subgraph/schema.graphql
index cf8774f1b..b8fe962e4 100644
--- a/packages/cli/tests/cli/add/subgraph/schema.graphql
+++ b/packages/cli/tests/cli/add/subgraph/schema.graphql
@@ -1,11 +1,11 @@
-type NewGravatar @entity {
+type NewGravatar @entity(immutable: true) {
   id: ID!
   owner: Bytes!
   displayName: String!
   imageUrl: String!
 }
 
-type UpdatedGravatar @entity {
+type UpdatedGravatar @entity(immutable: true) {
   id: ID!
   owner: Bytes!
   displayName: String!
diff --git a/packages/cli/tests/cli/validation.test.ts b/packages/cli/tests/cli/validation.test.ts
index 81a7838f4..aeb90211a 100644
--- a/packages/cli/tests/cli/validation.test.ts
+++ b/packages/cli/tests/cli/validation.test.ts
@@ -247,4 +247,13 @@ describe('Validation', { concurrent: true, timeout: 60_000 }, () => {
       exitCode: 0,
     },
   );
+
+  cliTest(
+    'Should require immutable argument on entity directive',
+    ['codegen', '--skip-migrations'],
+    'validation/require-immutable-argument',
+    {
+      exitCode: 1,
+    },
+  );
 });
diff --git a/packages/cli/tests/cli/validation/2d-array-is-valid/schema.graphql b/packages/cli/tests/cli/validation/2d-array-is-valid/schema.graphql
index 37e62eb4c..91dad2a14 100644
--- a/packages/cli/tests/cli/validation/2d-array-is-valid/schema.graphql
+++ b/packages/cli/tests/cli/validation/2d-array-is-valid/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   childTokenURIs: [[String!]!]! # string[][]
 }
diff --git a/packages/cli/tests/cli/validation/3d-array-is-valid/schema.graphql b/packages/cli/tests/cli/validation/3d-array-is-valid/schema.graphql
index bd0b76088..6b4e87196 100644
--- a/packages/cli/tests/cli/validation/3d-array-is-valid/schema.graphql
+++ b/packages/cli/tests/cli/validation/3d-array-is-valid/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   childTokenURIs: [[[String!]!]!]! # string[][][]
 }
diff --git a/packages/cli/tests/cli/validation/abi-not-found/schema.graphql b/packages/cli/tests/cli/validation/abi-not-found/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/abi-not-found/schema.graphql
+++ b/packages/cli/tests/cli/validation/abi-not-found/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/big-decimal-is-valid/schema.graphql b/packages/cli/tests/cli/validation/big-decimal-is-valid/schema.graphql
index 218c5b9c2..1edfc3c6c 100644
--- a/packages/cli/tests/cli/validation/big-decimal-is-valid/schema.graphql
+++ b/packages/cli/tests/cli/validation/big-decimal-is-valid/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   x: BigDecimal!
 }
diff --git a/packages/cli/tests/cli/validation/block-handler-filters/schema.graphql b/packages/cli/tests/cli/validation/block-handler-filters/schema.graphql
index 79d10a400..98b9b177a 100644
--- a/packages/cli/tests/cli/validation/block-handler-filters/schema.graphql
+++ b/packages/cli/tests/cli/validation/block-handler-filters/schema.graphql
@@ -1,3 +1,3 @@
-type A @entity {
+type A @entity(immutable: true) {
   id: ID!
-}
\ No newline at end of file
+}
diff --git a/packages/cli/tests/cli/validation/call-function-not-found/schema.graphql b/packages/cli/tests/cli/validation/call-function-not-found/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/call-function-not-found/schema.graphql
+++ b/packages/cli/tests/cli/validation/call-function-not-found/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/call-handler-with-tuple/schema.graphql b/packages/cli/tests/cli/validation/call-handler-with-tuple/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/call-handler-with-tuple/schema.graphql
+++ b/packages/cli/tests/cli/validation/call-handler-with-tuple/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/conflicting-network-names/schema.graphql b/packages/cli/tests/cli/validation/conflicting-network-names/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/conflicting-network-names/schema.graphql
+++ b/packages/cli/tests/cli/validation/conflicting-network-names/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/conflicting-protocol-names/schema.graphql b/packages/cli/tests/cli/validation/conflicting-protocol-names/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/conflicting-protocol-names/schema.graphql
+++ b/packages/cli/tests/cli/validation/conflicting-protocol-names/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/derived-from-target-type-missing/schema.graphql b/packages/cli/tests/cli/validation/derived-from-target-type-missing/schema.graphql
index c3cc44b10..d43afb1e7 100644
--- a/packages/cli/tests/cli/validation/derived-from-target-type-missing/schema.graphql
+++ b/packages/cli/tests/cli/validation/derived-from-target-type-missing/schema.graphql
@@ -1,4 +1,4 @@
-type Foo @entity {
+type Foo @entity(immutable: true) {
   id: ID!
   bars: [Bars!]! @derivedFrom(field: "foo")
 }
diff --git a/packages/cli/tests/cli/validation/derived-from-with-interface/schema.graphql b/packages/cli/tests/cli/validation/derived-from-with-interface/schema.graphql
index 422682703..cfe420f39 100644
--- a/packages/cli/tests/cli/validation/derived-from-with-interface/schema.graphql
+++ b/packages/cli/tests/cli/validation/derived-from-with-interface/schema.graphql
@@ -1,4 +1,4 @@
-type Gravatar @entity {
+type Gravatar @entity(immutable: false) {
   id: ID!
   # This field points at an interface; we allow that a derived field
   # in a type that implements the interface derives from this field
@@ -12,7 +12,7 @@ interface Account {
   gravatars: [Gravatar!]! @derivedFrom(field: "owner")
 }
 
-type UserAccount implements Account @entity {
+type UserAccount implements Account @entity(immutable: true) {
   id: ID!
   name: String!
   gravatars: [Gravatar!]! @derivedFrom(field: "owner")
diff --git a/packages/cli/tests/cli/validation/duplicate-data-source-name/schema.graphql b/packages/cli/tests/cli/validation/duplicate-data-source-name/schema.graphql
index 218c5b9c2..1edfc3c6c 100644
--- a/packages/cli/tests/cli/validation/duplicate-data-source-name/schema.graphql
+++ b/packages/cli/tests/cli/validation/duplicate-data-source-name/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   x: BigDecimal!
 }
diff --git a/packages/cli/tests/cli/validation/duplicate-template-name/schema.graphql b/packages/cli/tests/cli/validation/duplicate-template-name/schema.graphql
index 218c5b9c2..1edfc3c6c 100644
--- a/packages/cli/tests/cli/validation/duplicate-template-name/schema.graphql
+++ b/packages/cli/tests/cli/validation/duplicate-template-name/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   x: BigDecimal!
 }
diff --git a/packages/cli/tests/cli/validation/entity-field-args/schema.graphql b/packages/cli/tests/cli/validation/entity-field-args/schema.graphql
index 31a2be445..7fc28009e 100644
--- a/packages/cli/tests/cli/validation/entity-field-args/schema.graphql
+++ b/packages/cli/tests/cli/validation/entity-field-args/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   foo(bar: Int!): Int!
 }
diff --git a/packages/cli/tests/cli/validation/ethereum-contract-without-handlers/schema.graphql b/packages/cli/tests/cli/validation/ethereum-contract-without-handlers/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/ethereum-contract-without-handlers/schema.graphql
+++ b/packages/cli/tests/cli/validation/ethereum-contract-without-handlers/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/event-not-found/schema.graphql b/packages/cli/tests/cli/validation/event-not-found/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/event-not-found/schema.graphql
+++ b/packages/cli/tests/cli/validation/event-not-found/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/example-values-found/schema.graphql b/packages/cli/tests/cli/validation/example-values-found/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/example-values-found/schema.graphql
+++ b/packages/cli/tests/cli/validation/example-values-found/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/indexer-hints/schema.graphql b/packages/cli/tests/cli/validation/indexer-hints/schema.graphql
index 218c5b9c2..1edfc3c6c 100644
--- a/packages/cli/tests/cli/validation/indexer-hints/schema.graphql
+++ b/packages/cli/tests/cli/validation/indexer-hints/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   x: BigDecimal!
 }
diff --git a/packages/cli/tests/cli/validation/invalid-abis/schema.graphql b/packages/cli/tests/cli/validation/invalid-abis/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/invalid-abis/schema.graphql
+++ b/packages/cli/tests/cli/validation/invalid-abis/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/invalid-contract-addresses/schema.graphql b/packages/cli/tests/cli/validation/invalid-contract-addresses/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/invalid-contract-addresses/schema.graphql
+++ b/packages/cli/tests/cli/validation/invalid-contract-addresses/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/invalid-data-source-template/schema.graphql b/packages/cli/tests/cli/validation/invalid-data-source-template/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/invalid-data-source-template/schema.graphql
+++ b/packages/cli/tests/cli/validation/invalid-data-source-template/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/invalid-entity-field-types/schema.graphql b/packages/cli/tests/cli/validation/invalid-entity-field-types/schema.graphql
index 7bd510a07..e09396486 100644
--- a/packages/cli/tests/cli/validation/invalid-entity-field-types/schema.graphql
+++ b/packages/cli/tests/cli/validation/invalid-entity-field-types/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 
   isSet1: bool
diff --git a/packages/cli/tests/cli/validation/invalid-fulltext-directive/schema.graphql b/packages/cli/tests/cli/validation/invalid-fulltext-directive/schema.graphql
index e9f26c94b..96b6b613e 100644
--- a/packages/cli/tests/cli/validation/invalid-fulltext-directive/schema.graphql
+++ b/packages/cli/tests/cli/validation/invalid-fulltext-directive/schema.graphql
@@ -117,7 +117,7 @@ type _Schema_
     }
   ]
 )
-type A @entity @fulltext(
+type A @entity(immutable: true) @fulltext(
   name: "FulltextOnWrongType"
   language: en
   algorithm: rank
@@ -134,7 +134,7 @@ type A @entity @fulltext(
   id: ID!
 }
 
-type B @entity {
+type B @entity(immutable: true) {
   id: ID!
   foo: String!
 }
diff --git a/packages/cli/tests/cli/validation/invalid-graphql-schema/schema.graphql b/packages/cli/tests/cli/validation/invalid-graphql-schema/schema.graphql
index 33ef8f4be..350d9b093 100644
--- a/packages/cli/tests/cli/validation/invalid-graphql-schema/schema.graphql
+++ b/packages/cli/tests/cli/validation/invalid-graphql-schema/schema.graphql
@@ -1,8 +1,8 @@
-type Something @entity {
+type Something @entity(immutable: true) {
   id: ID!
 }
 
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   invalidField: [Something]!
 }
diff --git a/packages/cli/tests/cli/validation/missing-entity-id/schema.graphql b/packages/cli/tests/cli/validation/missing-entity-id/schema.graphql
index ed0670aa7..bba9058a4 100644
--- a/packages/cli/tests/cli/validation/missing-entity-id/schema.graphql
+++ b/packages/cli/tests/cli/validation/missing-entity-id/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   name: String!
 }
diff --git a/packages/cli/tests/cli/validation/missing-or-invalid-derived-from-fields/schema.graphql b/packages/cli/tests/cli/validation/missing-or-invalid-derived-from-fields/schema.graphql
index 1894f34e1..5e182fb18 100644
--- a/packages/cli/tests/cli/validation/missing-or-invalid-derived-from-fields/schema.graphql
+++ b/packages/cli/tests/cli/validation/missing-or-invalid-derived-from-fields/schema.graphql
@@ -1,4 +1,4 @@
-type A @entity {
+type A @entity(immutable: true) {
   id: ID!
   b: B @derivedFrom(field: "a")
   c: [C!]! @derivedFrom(field: "a")
@@ -9,32 +9,32 @@ type A @entity {
   h: H @derivedFrom(field: "a")
 }
 
-type B @entity {
+type B @entity(immutable: true) {
   id: ID!
 }
 
-type C @entity {
+type C @entity(immutable: true) {
   id: ID!
 }
 
-type D @entity {
+type D @entity(immutable: true) {
   id: ID!
 }
 
-type E @entity {
+type E @entity(immutable: true) {
   id: ID!
 }
 
-type F @entity {
+type F @entity(immutable: true) {
   id: ID!
 }
 
-type G @entity {
+type G @entity(immutable: true) {
   id: ID!
   a: BigInt
 }
 
-type H @entity {
+type H @entity(immutable: true) {
   id: ID!
   a: A!
 }
diff --git a/packages/cli/tests/cli/validation/near-is-valid/schema.graphql b/packages/cli/tests/cli/validation/near-is-valid/schema.graphql
index ddf2095ee..c15de8351 100644
--- a/packages/cli/tests/cli/validation/near-is-valid/schema.graphql
+++ b/packages/cli/tests/cli/validation/near-is-valid/schema.graphql
@@ -1,8 +1,8 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   x: Account!
 }
 
-type Account @entity {
+type Account @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/nested-template-nice-error/schema.graphql b/packages/cli/tests/cli/validation/nested-template-nice-error/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/nested-template-nice-error/schema.graphql
+++ b/packages/cli/tests/cli/validation/nested-template-nice-error/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/no-network-names/schema.graphql b/packages/cli/tests/cli/validation/no-network-names/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/no-network-names/schema.graphql
+++ b/packages/cli/tests/cli/validation/no-network-names/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/require-immutable-argument.stderr b/packages/cli/tests/cli/validation/require-immutable-argument.stderr
new file mode 100644
index 000000000..a0896befc
--- /dev/null
+++ b/packages/cli/tests/cli/validation/require-immutable-argument.stderr
@@ -0,0 +1,6 @@
+- Load subgraph from subgraph.yaml
+✖ Failed to load subgraph from subgraph.yaml: Error in schema.graphql:
+
+  EntityA:
+  - @entity directive requires `immutable` argument
+    Hint: Try updating the entity definition with: @entity(immutable: true)
diff --git a/packages/cli/tests/cli/validation/require-immutable-argument/Abi.json b/packages/cli/tests/cli/validation/require-immutable-argument/Abi.json
new file mode 100644
index 000000000..4d05f5839
--- /dev/null
+++ b/packages/cli/tests/cli/validation/require-immutable-argument/Abi.json
@@ -0,0 +1,7 @@
+[
+  {
+    "type": "event",
+    "name": "ExampleEvent",
+    "inputs": [{ "type": "string" }]
+  }
+]
diff --git a/packages/cli/tests/cli/validation/require-immutable-argument/mapping.ts b/packages/cli/tests/cli/validation/require-immutable-argument/mapping.ts
new file mode 100644
index 000000000..e69de29bb
diff --git a/packages/cli/tests/cli/validation/require-immutable-argument/schema.graphql b/packages/cli/tests/cli/validation/require-immutable-argument/schema.graphql
new file mode 100644
index 000000000..6934ebc29
--- /dev/null
+++ b/packages/cli/tests/cli/validation/require-immutable-argument/schema.graphql
@@ -0,0 +1,19 @@
+# Entity is not valid because it is missing the immutable argument;
+type EntityA @entity {
+    id: ID!
+}
+
+# Entity is valid because it has the immutable argument;
+type EntityB @entity(immutable: true) {
+    id: ID!
+}
+
+# Entity is valid because it has the immutable argument;
+type EntityC @entity(immutable: false) {
+    id: ID!
+}
+
+# Entity is valid because the timeseries argument ensures immutability;
+type EntityD @entity(timeseries: true) {
+    id: ID!
+}
diff --git a/packages/cli/tests/cli/validation/require-immutable-argument/subgraph.yaml b/packages/cli/tests/cli/validation/require-immutable-argument/subgraph.yaml
new file mode 100644
index 000000000..901269f2c
--- /dev/null
+++ b/packages/cli/tests/cli/validation/require-immutable-argument/subgraph.yaml
@@ -0,0 +1,25 @@
+specVersion: 0.0.1
+schema:
+  file: ./schema.graphql
+dataSources:
+  - kind: ethereum/contract
+    name: ExampleContract
+    source:
+      address: '22843e74c59580b3eaf6c233fa67d8b7c561a835'
+      abi: ExampleEvent
+    mapping:
+      kind: ethereum/events
+      apiVersion: 0.0.5
+      language: wasm/assemblyscript
+      file: ./mapping.ts
+      entities:
+        - EntityA
+        - EntityB
+        - EntityC
+        - EntityD
+      abis:
+        - name: ExampleEvent
+          file: ./Abi.json
+      eventHandlers:
+        - event: ExampleEvent(string)
+          handler: handleExampleEvent
diff --git a/packages/cli/tests/cli/validation/source-without-address-is-valid/schema.graphql b/packages/cli/tests/cli/validation/source-without-address-is-valid/schema.graphql
index 2fa61d542..d5a41952b 100644
--- a/packages/cli/tests/cli/validation/source-without-address-is-valid/schema.graphql
+++ b/packages/cli/tests/cli/validation/source-without-address-is-valid/schema.graphql
@@ -1,3 +1,3 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
 }
diff --git a/packages/cli/tests/cli/validation/topic0-is-valid/schema.graphql b/packages/cli/tests/cli/validation/topic0-is-valid/schema.graphql
index 218c5b9c2..1edfc3c6c 100644
--- a/packages/cli/tests/cli/validation/topic0-is-valid/schema.graphql
+++ b/packages/cli/tests/cli/validation/topic0-is-valid/schema.graphql
@@ -1,4 +1,4 @@
-type MyEntity @entity {
+type MyEntity @entity(immutable: true) {
   id: ID!
   x: BigDecimal!
 }