diff --git a/src/createInstance.ts b/src/createInstance.ts
index 468173313..bb79fe94c 100644
--- a/src/createInstance.ts
+++ b/src/createInstance.ts
@@ -307,6 +307,7 @@ export function createInstance(
   // stub out Transition and Transition Group by default.
   transformVNodeArgs(
     createVNodeTransformer({
+      rootComponents,
       transformers: [
         createStubComponentsTransformer({
           rootComponents,
diff --git a/src/vnodeTransformers/stubComponentsTransformer.ts b/src/vnodeTransformers/stubComponentsTransformer.ts
index 24c855c8a..6a5ce6c6b 100644
--- a/src/vnodeTransformers/stubComponentsTransformer.ts
+++ b/src/vnodeTransformers/stubComponentsTransformer.ts
@@ -1,4 +1,9 @@
-import { isKeepAlive, isTeleport, VTUVNodeTypeTransformer } from './util'
+import {
+  isKeepAlive,
+  isRootComponent,
+  isTeleport,
+  VTUVNodeTypeTransformer
+} from './util'
 import {
   Transition,
   TransitionGroup,
@@ -177,14 +182,8 @@ export function createStubComponentsTransformer({
       })
     }
 
-    if (
-      // Don't stub VTU_ROOT component
-      !instance ||
-      // Don't stub mounted component on root level
-      (rootComponents.component === type && !instance?.parent) ||
-      // Don't stub component with compat wrapper
-      (rootComponents.functional && rootComponents.functional === type)
-    ) {
+    // Don't stub root components
+    if (isRootComponent(rootComponents, type, instance)) {
       return type
     }
 
diff --git a/src/vnodeTransformers/util.ts b/src/vnodeTransformers/util.ts
index c79bccd86..85e443738 100644
--- a/src/vnodeTransformers/util.ts
+++ b/src/vnodeTransformers/util.ts
@@ -1,6 +1,6 @@
 import { isComponent } from '../utils'
 import { registerStub } from '../stubs'
-import { ConcreteComponent, transformVNodeArgs } from 'vue'
+import { Component, ConcreteComponent, transformVNodeArgs } from 'vue'
 
 type VNodeArgsTransformerFn = NonNullable<
   Parameters<typeof transformVNodeArgs>[0]
@@ -23,9 +23,30 @@ export type VTUVNodeTypeTransformer = (
 export const isTeleport = (type: any): boolean => type.__isTeleport
 export const isKeepAlive = (type: any): boolean => type.__isKeepAlive
 
+export interface RootComponents {
+  // Component which has been passed to mount. For functional components it contains a wrapper
+  component?: Component
+  // If component is functional then contains the original component otherwise empty
+  functional?: Component
+}
+export const isRootComponent = (
+  rootComponents: RootComponents,
+  type: VNodeTransformerInputComponentType,
+  instance: InstanceArgsType
+): boolean =>
+  !!(
+    !instance ||
+    // Don't stub mounted component on root level
+    (rootComponents.component === type && !instance?.parent) ||
+    // Don't stub component with compat wrapper
+    (rootComponents.functional && rootComponents.functional === type)
+  )
+
 export const createVNodeTransformer = ({
+  rootComponents,
   transformers
 }: {
+  rootComponents: RootComponents
   transformers: VTUVNodeTypeTransformer[]
 }): VNodeArgsTransformerFn => {
   const transformationCache: WeakMap<
@@ -40,8 +61,14 @@ export const createVNodeTransformer = ({
       return [originalType, props, children, ...restVNodeArgs]
     }
 
+    const componentType: VNodeTransformerInputComponentType = originalType
+
     const cachedTransformation = transformationCache.get(originalType)
-    if (cachedTransformation) {
+    if (
+      cachedTransformation &&
+      // Don't use cache for root component, as it could use stubbed recursive component
+      !isRootComponent(rootComponents, componentType, instance)
+    ) {
       // https://github.com/vuejs/test-utils/issues/1829 & https://github.com/vuejs/test-utils/issues/1888
       // Teleport/KeepAlive should return child nodes as a function
       if (isTeleport(originalType) || isKeepAlive(originalType)) {
@@ -50,8 +77,6 @@ export const createVNodeTransformer = ({
       return [cachedTransformation, props, children, ...restVNodeArgs]
     }
 
-    const componentType: VNodeTransformerInputComponentType = originalType
-
     const transformedType = transformers.reduce(
       (type, transformer) => transformer(type, instance),
       componentType
diff --git a/tests/components/RecursiveComponent.vue b/tests/components/RecursiveComponent.vue
index 63b34a344..a0a69d7a0 100644
--- a/tests/components/RecursiveComponent.vue
+++ b/tests/components/RecursiveComponent.vue
@@ -1,7 +1,15 @@
 <template>
   <div>
+    <h2>{{ name }}</h2>
     <Hello />
-    <RecursiveComponent v-if="first" />
+    <template
+      v-for="item in items"
+      :key="item"
+    >
+      <RecursiveComponent
+        :name="item"
+      />
+    </template>
   </div>
 </template>
 
@@ -9,6 +17,7 @@
 import Hello from './Hello.vue'
 
 defineProps<{
-  first?: boolean
+  name: string
+  items?: string[]
 }>()
 </script>
diff --git a/tests/shallowMount.spec.ts b/tests/shallowMount.spec.ts
index 21209f04e..2a2fba099 100644
--- a/tests/shallowMount.spec.ts
+++ b/tests/shallowMount.spec.ts
@@ -74,19 +74,29 @@ describe('shallowMount', () => {
     )
   })
 
-  it('stub instance of same component', () => {
+  it('stub instance of same component', async () => {
     const wrapper = mount(RecursiveComponent, {
       shallow: true,
       props: {
-        first: true
+        name: '1',
+        items: ['2']
       }
     })
     expect(wrapper.html()).toEqual(
       '<div>\n' +
+        '  <h2>1</h2>\n' +
         '  <hello-stub></hello-stub>\n' +
-        '  <recursive-component-stub first="false"></recursive-component-stub>\n' +
+        '  <recursive-component-stub name="2"></recursive-component-stub>\n' +
         '</div>'
     )
+
+    expect(wrapper.find('h2').text()).toBe('1')
+
+    await wrapper.setProps({
+      name: '3'
+    })
+
+    expect(wrapper.find('h2').text()).toBe('3')
   })
 
   it('correctly renders slot content', () => {