diff --git a/packages/orm/src/client/client-impl.ts b/packages/orm/src/client/client-impl.ts
index 439735d49..dff7f9c27 100644
--- a/packages/orm/src/client/client-impl.ts
+++ b/packages/orm/src/client/client-impl.ts
@@ -128,7 +128,14 @@ export class ClientImpl {
             });
         }
 
-        this.kysely = new Kysely(this.kyselyProps);
+        if (baseClient?.isTransaction && !executor) {
+            // if we're creating a derived client from a transaction client and not replacing
+            // the executor, reuse the current kysely instance to retain the transaction context
+            this.kysely = baseClient.$qb;
+        } else {
+            this.kysely = new Kysely(this.kyselyProps);
+        }
+
         this.inputValidator =
             baseClient?.inputValidator ??
             new InputValidator(this as any, { enabled: this.$options.validateInput !== false });
@@ -956,12 +963,7 @@ function collectExtResultFieldDefs(
  * - Injects `needs` fields into `select` when ext result fields are explicitly selected
  * - Recurses into `include` and `select` for nested relation fields
  */
-function prepareArgsForExtResult(
-    args: unknown,
-    model: string,
-    schema: SchemaDef,
-    plugins: AnyPlugin[],
-): unknown {
+function prepareArgsForExtResult(args: unknown, model: string, schema: SchemaDef, plugins: AnyPlugin[]): unknown {
     if (!args || typeof args !== 'object') {
         return args;
     }
diff --git a/tests/e2e/orm/client-api/transaction.test.ts b/tests/e2e/orm/client-api/transaction.test.ts
index e4f2192e8..84e267aad 100644
--- a/tests/e2e/orm/client-api/transaction.test.ts
+++ b/tests/e2e/orm/client-api/transaction.test.ts
@@ -101,6 +101,77 @@ describe('Client raw query tests', () => {
 
             await expect(client.user.findMany()).toResolveWithLength(0);
         });
+
+        it('$unuseAll preserves transaction isolation', async () => {
+            await expect(
+                client.$transaction(async (tx) => {
+                    await tx.$unuseAll().user.create({
+                        data: { email: 'u1@test.com' },
+                    });
+                    throw new Error('rollback');
+                }),
+            ).rejects.toThrow('rollback');
+
+            await expect(client.user.findMany()).toResolveWithLength(0);
+        });
+
+        it('$unuse preserves transaction isolation', async () => {
+            await expect(
+                client.$transaction(async (tx) => {
+                    await tx.$unuse('nonexistent').user.create({
+                        data: { email: 'u1@test.com' },
+                    });
+                    throw new Error('rollback');
+                }),
+            ).rejects.toThrow('rollback');
+
+            await expect(client.user.findMany()).toResolveWithLength(0);
+        });
+
+        it('$use preserves transaction isolation', async () => {
+            await expect(
+                client.$transaction(async (tx) => {
+                    await (tx as any)
+                        .$use({
+                            id: 'noop',
+                            onQuery: async ({ args, proceed }: { args: unknown; proceed: (args: unknown) => Promise<unknown> }) =>
+                                proceed(args),
+                        })
+                        .user.create({
+                            data: { email: 'u1@test.com' },
+                        });
+                    throw new Error('rollback');
+                }),
+            ).rejects.toThrow('rollback');
+
+            await expect(client.user.findMany()).toResolveWithLength(0);
+        });
+
+        it('$setAuth preserves transaction isolation', async () => {
+            await expect(
+                client.$transaction(async (tx) => {
+                    await tx.$setAuth(undefined).user.create({
+                        data: { email: 'u1@test.com' },
+                    });
+                    throw new Error('rollback');
+                }),
+            ).rejects.toThrow('rollback');
+
+            await expect(client.user.findMany()).toResolveWithLength(0);
+        });
+
+        it('$setOptions preserves transaction isolation', async () => {
+            await expect(
+                client.$transaction(async (tx) => {
+                    await (tx as any).$setOptions((tx as any).$options).user.create({
+                        data: { email: 'u1@test.com' },
+                    });
+                    throw new Error('rollback');
+                }),
+            ).rejects.toThrow('rollback');
+
+            await expect(client.user.findMany()).toResolveWithLength(0);
+        });
     });
 
     describe('sequential transaction', () => {