diff --git a/packages/e2e-tests/plugins/interactive-blocks/tovdom-islands/render.php b/packages/e2e-tests/plugins/interactive-blocks/tovdom-islands/render.php
index 7b1bc6513977b..1f53ca1331a37 100644
--- a/packages/e2e-tests/plugins/interactive-blocks/tovdom-islands/render.php
+++ b/packages/e2e-tests/plugins/interactive-blocks/tovdom-islands/render.php
@@ -68,4 +68,16 @@
 			</div>
 		</div>
 	</div>
+
+
+
+	<div data-wp-interactive='{ "namespace": "tovdom-islands" }'>
+		<div data-wp-interactive='{ "namespace": "something-new" }'></div>
+		<div data-wp-show-mock="state.falseValue">
+			<span data-testid="directive after different namespace">
+				The directive above should keep the `tovdom-island` namespace,
+				so this message should not be visible.
+			</span>
+		</div>
+	</div>
 </div>
diff --git a/packages/interactivity/CHANGELOG.md b/packages/interactivity/CHANGELOG.md
index ce90835dda23d..8c03cfc314efe 100644
--- a/packages/interactivity/CHANGELOG.md
+++ b/packages/interactivity/CHANGELOG.md
@@ -2,6 +2,10 @@
 
 ## Unreleased
 
+### Bug Fix
+
+-   Fix namespaces when there are nested interactive regions. ([#57029](https://github.com/WordPress/gutenberg/pull/57029))
+
 ## 3.1.0 (2023-12-13)
 
 ## 3.0.0 (2023-11-29)
diff --git a/packages/interactivity/src/vdom.js b/packages/interactivity/src/vdom.js
index b1342ac271a8e..860a3149e6ffd 100644
--- a/packages/interactivity/src/vdom.js
+++ b/packages/interactivity/src/vdom.js
@@ -10,7 +10,8 @@ import { directivePrefix as p } from './constants';
 const ignoreAttr = `data-${ p }-ignore`;
 const islandAttr = `data-${ p }-interactive`;
 const fullPrefix = `data-${ p }-`;
-let namespace = null;
+const namespaces = [];
+const currentNamespace = () => namespaces[ namespaces.length - 1 ] ?? null;
 
 // Regular expression for directive parsing.
 const directiveParser = new RegExp(
@@ -79,7 +80,7 @@ export function toVdom( root ) {
 					} catch ( e ) {}
 					if ( n === islandAttr ) {
 						island = true;
-						namespace = value?.namespace ?? null;
+						namespaces.push( value?.namespace ?? null );
 					} else {
 						directives.push( [ n, ns, value ] );
 					}
@@ -107,7 +108,7 @@ export function toVdom( root ) {
 						directiveParser.exec( name );
 					if ( ! obj[ prefix ] ) obj[ prefix ] = [];
 					obj[ prefix ].push( {
-						namespace: ns ?? namespace,
+						namespace: ns ?? currentNamespace(),
 						value,
 						suffix,
 					} );
@@ -127,6 +128,9 @@ export function toVdom( root ) {
 			treeWalker.parentNode();
 		}
 
+		// Restore previous namespace.
+		if ( island ) namespaces.pop();
+
 		return [ h( node.localName, props, children ) ];
 	}
 
diff --git a/test/e2e/specs/interactivity/tovdom-islands.spec.ts b/test/e2e/specs/interactivity/tovdom-islands.spec.ts
index fcc7c6081077a..257b0a0fc94b8 100644
--- a/test/e2e/specs/interactivity/tovdom-islands.spec.ts
+++ b/test/e2e/specs/interactivity/tovdom-islands.spec.ts
@@ -55,4 +55,11 @@ test.describe( 'toVdom - islands', () => {
 		);
 		await expect( el ).toBeHidden();
 	} );
+
+	test( 'islands should recover their namespace if an inner island has changed it', async ( {
+		page,
+	} ) => {
+		const el = page.getByTestId( 'directive after different namespace' );
+		await expect( el ).toBeHidden();
+	} );
 } );