diff --git a/packages/e2e-tests/plugins/interactive-blocks/directive-context/render.php b/packages/e2e-tests/plugins/interactive-blocks/directive-context/render.php
index 25d2bbc692efdf..6b20b2dba8376e 100644
--- a/packages/e2e-tests/plugins/interactive-blocks/directive-context/render.php
+++ b/packages/e2e-tests/plugins/interactive-blocks/directive-context/render.php
@@ -170,3 +170,29 @@
 	<button data-testid="select 2" data-wp-on--click="actions.selectItem" value=2>Select 2</button>
 	<div data-testid="selected" data-wp-text="state.selected"></div>
 </div>
+
+<div
+	data-wp-interactive="directive-context-watch"
+	data-wp-context='{"counter":0}'
+>
+	<button
+		data-testid="counter parent"
+		data-wp-on--click="actions.increment"
+		data-wp-text="context.counter"
+	></button>
+	<div
+		data-wp-context='{"counter":0, "changes":0}'
+		data-wp-watch="callbacks.countChanges"
+	>
+		<button
+			data-testid="counter child"
+			data-wp-on--click="actions.increment"
+			data-wp-text="context.counter"
+		>
+		</button>
+		<span
+			data-testid="counter changes"
+			data-wp-text="context.changes"
+		></span>
+	</div>
+</div>
diff --git a/packages/e2e-tests/plugins/interactive-blocks/directive-context/view.js b/packages/e2e-tests/plugins/interactive-blocks/directive-context/view.js
index 0fab8b1862c608..9437edced74a44 100644
--- a/packages/e2e-tests/plugins/interactive-blocks/directive-context/view.js
+++ b/packages/e2e-tests/plugins/interactive-blocks/directive-context/view.js
@@ -88,3 +88,21 @@ const { actions } = store( 'directive-context-navigate', {
 		},
 	},
 } );
+
+store( 'directive-context-watch', {
+	actions: {
+		increment: () => {
+			const ctx = getContext();
+			ctx.counter = ctx.counter + 1;
+		},
+	},
+	callbacks: {
+		countChanges: () => {
+			const ctx = getContext();
+			// Subscribe to changes in counter.
+			// eslint-disable-next-line no-unused-expressions
+			ctx.counter;
+			ctx.changes = ctx.changes + 1;
+		},
+	},
+});
diff --git a/packages/interactivity/src/directives.js b/packages/interactivity/src/directives.js
index 67ad50a4595807..d04c1a1f74d3ed 100644
--- a/packages/interactivity/src/directives.js
+++ b/packages/interactivity/src/directives.js
@@ -39,13 +39,12 @@ const descriptor = Reflect.getOwnPropertyDescriptor;
 const proxifyContext = ( current, inherited = {} ) =>
 	new Proxy( current, {
 		get: ( target, k ) => {
-			// Subscribe to the inherited and current props.
-			const inheritedProp = inherited[ k ];
+			// Always subscribe to prop changes in the current context.
 			const currentProp = target[ k ];
 
 			// Return the inherited prop when missing in target.
 			if ( ! ( k in target ) && k in inherited ) {
-				return inheritedProp;
+				return inherited[ k ];
 			}
 
 			// Proxify plain objects that are not listed in `ignore`.
@@ -54,11 +53,15 @@ const proxifyContext = ( current, inherited = {} ) =>
 				! contextAssignedObjects.get( target )?.has( k ) &&
 				isPlainObject( peek( target, k ) )
 			) {
-				return proxifyContext( currentProp, inheritedProp );
+				return proxifyContext( currentProp, inherited[ k ] );
 			}
 
-			// For other cases, return the value from target.
-			return currentProp;
+			/*
+			 * For other cases, return the value from target, also subscribing
+			 * to changes in the parent context when the current prop is
+			 * not defined.
+			 */
+			return k in target ? currentProp : inherited[ k ];
 		},
 		set: ( target, k, value ) => {
 			const obj =
diff --git a/test/e2e/specs/interactivity/directive-context.spec.ts b/test/e2e/specs/interactivity/directive-context.spec.ts
index 3a566e7c2d9619..85341774c2af4e 100644
--- a/test/e2e/specs/interactivity/directive-context.spec.ts
+++ b/test/e2e/specs/interactivity/directive-context.spec.ts
@@ -313,4 +313,27 @@ test.describe( 'data-wp-context', () => {
 		await select2.click();
 		await expect( selected ).toHaveText( 'Text 2' );
 	} );
+
+	test( 'should not subscribe to parent context props if those also exist in child', async ( {
+		page,
+	} ) => {
+		const counterParent = page.getByTestId( 'counter parent' );
+		const counterChild = page.getByTestId( 'counter child' );
+		const changes = page.getByTestId( 'counter changes' );
+
+		await expect( counterParent ).toHaveText( '0' );
+		await expect( counterChild ).toHaveText( '0' );
+		// The first render counts, so the changes counter starts at 1.
+		await expect( changes ).toHaveText( '1' );
+
+		await counterParent.click();
+		await expect( counterParent ).toHaveText( '1' );
+		await expect( counterChild ).toHaveText( '0' );
+		await expect( changes ).toHaveText( '1' );
+
+		await counterChild.click();
+		await expect( counterParent ).toHaveText( '1' );
+		await expect( counterChild ).toHaveText( '1' );
+		await expect( changes ).toHaveText( '2' );
+	} );
 } );