diff --git a/CHANGELOG.md b/CHANGELOG.md
index 23b7d535..38b5af2c 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -18,7 +18,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ### Fixed
 
--
+- Fixed issue with `is_overridden` falsely returning True when the parent method is wrapped ([#149](https://github.com/Lightning-AI/utilities/pull/149))
 
 
 ## [0.9.0] - 2023-06-29
diff --git a/src/lightning_utilities/core/overrides.py b/src/lightning_utilities/core/overrides.py
index f3eb5610..0eb74dcf 100644
--- a/src/lightning_utilities/core/overrides.py
+++ b/src/lightning_utilities/core/overrides.py
@@ -12,7 +12,7 @@ def is_overridden(method_name: str, instance: object, parent: Type[object]) -> b
     instance_attr = getattr(instance, method_name, None)
     if instance_attr is None:
         return False
-    # `functools.wraps()` support
+    # `functools.wraps()` and `@contextmanager` support
     if hasattr(instance_attr, "__wrapped__"):
         instance_attr = instance_attr.__wrapped__
     # `Mock(wraps=...)` support
@@ -28,5 +28,8 @@ def is_overridden(method_name: str, instance: object, parent: Type[object]) -> b
     parent_attr = getattr(parent, method_name, None)
     if parent_attr is None:
         raise ValueError("The parent should define the method")
+    # `@contextmanager` support
+    if hasattr(parent_attr, "__wrapped__"):
+        parent_attr = parent_attr.__wrapped__
 
     return instance_attr.__code__ != parent_attr.__code__
diff --git a/tests/unittests/core/test_overrides.py b/tests/unittests/core/test_overrides.py
index 9c580791..d1136b60 100644
--- a/tests/unittests/core/test_overrides.py
+++ b/tests/unittests/core/test_overrides.py
@@ -1,3 +1,4 @@
+from contextlib import contextmanager
 from functools import partial, wraps
 from typing import Any, Callable
 from unittest.mock import Mock
@@ -16,6 +17,16 @@ def training_step(self):
         ...
 
 
+class Strategy:
+    @contextmanager
+    def model_sharded_context():
+        ...
+
+
+class SingleDeviceStrategy(Strategy):
+    ...
+
+
 def test_is_overridden():
     assert not is_overridden("whatever", object(), parent=LightningModule)
 
@@ -65,3 +76,6 @@ def bar(self):
     model = BoringModel()
     model.training_step = partial(model.training_step)
     assert is_overridden("training_step", model, parent=LightningModule)
+
+    # `@contextmanager` support
+    assert not is_overridden("model_sharded_context", SingleDeviceStrategy(), Strategy)