diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 106863c020c5d..ed4c83cdf1431 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -7,6 +7,10 @@
 -   `FormToggle`: fix sass deprecation warning ([#56672](https://github.com/WordPress/gutenberg/pull/56672)).
 -   `QueryControls`: Add opt-in prop for 40px default size ([#56576](https://github.com/WordPress/gutenberg/pull/56576)).
 
+### Bug Fix
+
+-   `ToggleGroupControl`: react correctly to external controlled updates ([#56678](https://github.com/WordPress/gutenberg/pull/56678)).
+
 ## 25.13.0 (2023-11-29)
 
 ### Enhancements
diff --git a/packages/components/src/toggle-group-control/test/index.tsx b/packages/components/src/toggle-group-control/test/index.tsx
index 78be0e89fc0bb..b54b5764d4e0f 100644
--- a/packages/components/src/toggle-group-control/test/index.tsx
+++ b/packages/components/src/toggle-group-control/test/index.tsx
@@ -25,8 +25,11 @@ import cleanupTooltip from '../../tooltip/test/utils';
 const ControlledToggleGroupControl = ( {
 	value: valueProp,
 	onChange,
+	extraButtonOptions,
 	...props
-}: ToggleGroupControlProps ) => {
+}: ToggleGroupControlProps & {
+	extraButtonOptions?: { name: string; value: string }[];
+} ) => {
 	const [ value, setValue ] = useState( valueProp );
 
 	return (
@@ -40,6 +43,14 @@ const ControlledToggleGroupControl = ( {
 				value={ value }
 			/>
 			<Button onClick={ () => setValue( undefined ) }>Reset</Button>
+			{ extraButtonOptions?.map( ( obj ) => (
+				<Button
+					key={ obj.value }
+					onClick={ () => setValue( obj.value ) }
+				>
+					{ obj.name }
+				</Button>
+			) ) }
 		</>
 	);
 };
@@ -192,6 +203,48 @@ describe.each( [
 			expect( rigasOption ).not.toBeChecked();
 			expect( jackOption ).not.toBeChecked();
 		} );
+
+		it( 'should update correctly when triggered by external updates', async () => {
+			const user = userEvent.setup();
+
+			render(
+				<Component
+					value="rigas"
+					label="Test Toggle Group Control"
+					extraButtonOptions={ [
+						{ name: 'Rigas', value: 'rigas' },
+						{ name: 'Jack', value: 'jack' },
+					] }
+				>
+					{ options }
+				</Component>
+			);
+
+			expect( screen.getByRole( 'radio', { name: 'R' } ) ).toBeChecked();
+			expect(
+				screen.getByRole( 'radio', { name: 'J' } )
+			).not.toBeChecked();
+
+			await user.click( screen.getByRole( 'button', { name: 'Jack' } ) );
+			expect( screen.getByRole( 'radio', { name: 'J' } ) ).toBeChecked();
+			expect(
+				screen.getByRole( 'radio', { name: 'R' } )
+			).not.toBeChecked();
+
+			await user.click( screen.getByRole( 'button', { name: 'Rigas' } ) );
+			expect( screen.getByRole( 'radio', { name: 'R' } ) ).toBeChecked();
+			expect(
+				screen.getByRole( 'radio', { name: 'J' } )
+			).not.toBeChecked();
+
+			await user.click( screen.getByRole( 'button', { name: 'Reset' } ) );
+			expect(
+				screen.getByRole( 'radio', { name: 'R' } )
+			).not.toBeChecked();
+			expect(
+				screen.getByRole( 'radio', { name: 'J' } )
+			).not.toBeChecked();
+		} );
 	}
 
 	describe( 'isDeselectable', () => {
diff --git a/packages/components/src/toggle-group-control/toggle-group-control/utils.ts b/packages/components/src/toggle-group-control/toggle-group-control/utils.ts
index 1a012e6efe00d..3f6d6e135a0df 100644
--- a/packages/components/src/toggle-group-control/toggle-group-control/utils.ts
+++ b/packages/components/src/toggle-group-control/toggle-group-control/utils.ts
@@ -21,30 +21,25 @@ type ValueProp = ToggleGroupControlProps[ 'value' ];
 export function useComputeControlledOrUncontrolledValue(
 	valueProp: ValueProp
 ): { value: ValueProp; defaultValue: ValueProp } {
-	const hasEverBeenUsedInControlledMode = useRef( false );
-	const previousValueProp = usePrevious( valueProp );
+	const prevValueProp = usePrevious( valueProp );
+	const prevIsControlled = useRef( false );
 
+	// Assume the component is being used in controlled mode on the first re-render
+	// that has a different `valueProp` from the previous render.
+	const isControlled =
+		prevIsControlled.current ||
+		( prevValueProp !== undefined &&
+			valueProp !== undefined &&
+			prevValueProp !== valueProp );
 	useEffect( () => {
-		if ( ! hasEverBeenUsedInControlledMode.current ) {
-			// Assume the component is being used in controlled mode if:
-			// - the `value` prop is not `undefined`
-			// - the `value` prop was not previously `undefined` and was given a new value
-			hasEverBeenUsedInControlledMode.current =
-				valueProp !== undefined &&
-				previousValueProp !== undefined &&
-				valueProp !== previousValueProp;
-		}
-	}, [ valueProp, previousValueProp ] );
+		prevIsControlled.current = isControlled;
+	}, [ isControlled ] );
 
-	let value, defaultValue;
-
-	if ( hasEverBeenUsedInControlledMode.current ) {
+	if ( isControlled ) {
 		// When in controlled mode, use `''` instead of `undefined`
-		value = valueProp ?? '';
-	} else {
-		// When in uncontrolled mode, the `value` should be intended as the initial value
-		defaultValue = valueProp;
+		return { value: valueProp ?? '', defaultValue: undefined };
 	}
 
-	return { value, defaultValue };
+	// When in uncontrolled mode, the `value` should be intended as the initial value
+	return { value: undefined, defaultValue: valueProp };
 }