diff --git a/packages/src/context/provider/index.tsx b/packages/src/context/provider/index.tsx
index 0e6e38f..0da91e8 100644
--- a/packages/src/context/provider/index.tsx
+++ b/packages/src/context/provider/index.tsx
@@ -1,4 +1,4 @@
-import { useCallback, useEffect, useReducer, useRef, type PropsWithChildren } from 'react';
+import { useCallback, useEffect, useLayoutEffect, useReducer, useRef, type PropsWithChildren } from 'react';
 import { ContentOverlayController } from './content-overlay-controller';
 import { type OverlayEvent, createOverlay } from '../../event';
 import { randomId } from '../../utils/random-id';
@@ -10,7 +10,24 @@ export function createOverlayProvider() {
   const { useOverlayEvent, ...overlay } = createOverlay(overlayId);
   const { OverlayContextProvider, useCurrentOverlay, useOverlayData } = createOverlaySafeContext();
 
+  let instanceCounter = 0;
+  const mountedInstances: number[] = [];
+
   function OverlayProvider({ children }: PropsWithChildren) {
+    const instanceIdRef = useRef<number>(0);
+
+    // Must run before useOverlayEvent so instanceIdRef is set when first event fires
+    useLayoutEffect(() => {
+      const id = ++instanceCounter;
+      instanceIdRef.current = id;
+      mountedInstances.push(id);
+
+      return () => {
+        const idx = mountedInstances.indexOf(id);
+        if (idx !== -1) mountedInstances.splice(idx, 1);
+      };
+    }, []);
+
     const [overlayState, overlayDispatch] = useReducer(overlayReducer, {
       current: null,
       overlayOrderList: [],
@@ -18,7 +35,12 @@ export function createOverlayProvider() {
     });
     const prevOverlayState = useRef(overlayState);
 
+    const isLatestInstance = useCallback(() => {
+      return mountedInstances[mountedInstances.length - 1] === instanceIdRef.current;
+    }, []);
+
     const open: OverlayEvent['open'] = useCallback(({ controller, overlayId, componentKey }) => {
+      if (!isLatestInstance()) return;
       overlayDispatch({
         type: 'ADD',
         overlay: {
@@ -29,7 +51,7 @@ export function createOverlayProvider() {
           controller: controller,
         },
       });
-    }, []);
+    }, [isLatestInstance]);
     const close: OverlayEvent['close'] = useCallback((overlayId: string) => {
       overlayDispatch({ type: 'CLOSE', overlayId });
     }, []);
diff --git a/packages/src/event.test.tsx b/packages/src/event.test.tsx
index ac4e84d..601efad 100644
--- a/packages/src/event.test.tsx
+++ b/packages/src/event.test.tsx
@@ -1,6 +1,6 @@
 import { act, render, screen, waitFor } from '@testing-library/react';
 import userEvent from '@testing-library/user-event';
-import React, { useEffect, type PropsWithChildren } from 'react';
+import React, { useEffect, useState, type PropsWithChildren } from 'react';
 import { describe, expect, it, vi } from 'vitest';
 import { OverlayProvider, overlay, useCurrentOverlay, useOverlayData } from './utils/create-overlay-context';
 
@@ -487,6 +487,58 @@ describe('overlay object', () => {
     });
   });
 
+  it('should only open overlay in the last mounted OverlayProvider when multiple are present', async () => {
+    const overlayContent = 'multiple-providers-overlay-content';
+
+    function Component() {
+      useEffect(() => {
+        overlay.open(({ isOpen }) => isOpen && <div data-testid="overlay-1">{overlayContent}</div>);
+      }, []);
+      return <div>Component</div>;
+    }
+
+    render(
+      <OverlayProvider>
+        <OverlayProvider>
+          <Component />
+        </OverlayProvider>
+      </OverlayProvider>
+    );
+
+    await waitFor(() => {
+      const overlayElements = screen.getAllByTestId('overlay-1');
+      expect(overlayElements).toHaveLength(1);
+    });
+  });
+
+  it('should fall back to previous OverlayProvider after the last one unmounts', async () => {
+    const overlayContent = 'fallback-provider-overlay-content';
+
+    function App() {
+      const [showSecond, setShowSecond] = useState(true);
+
+      return (
+        <OverlayProvider>
+          <button onClick={() => setShowSecond(false)}>remove</button>
+          {showSecond && <OverlayProvider />}
+        </OverlayProvider>
+      );
+    }
+
+    const user = userEvent.setup();
+    render(<App />);
+
+    await user.click(screen.getByRole('button', { name: 'remove' }));
+
+    act(() => {
+      overlay.open(({ isOpen }) => isOpen && <div data-testid="overlay-1">{overlayContent}</div>);
+    });
+
+    await waitFor(() => {
+      expect(screen.getByTestId('overlay-1')).toBeInTheDocument();
+    });
+  });
+
   it('should be able to open an overlay after closing it', async () => {
     const overlayId = 'overlay-content-1';