diff --git a/packages/transaction-controller/CHANGELOG.md b/packages/transaction-controller/CHANGELOG.md
index 42270b3aa93..76da75e00db 100644
--- a/packages/transaction-controller/CHANGELOG.md
+++ b/packages/transaction-controller/CHANGELOG.md
@@ -12,6 +12,10 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Calculate operator fee for OP stack networks and include it in `layer1GasFee` ([#6979](https://github.com/MetaMask/core/pull/6979))
 - Add support for `isGasFeeSponsored` field in transaction batch and add transaction options ([#7064](https://github.com/MetaMask/core/pull/7064))
 
+### Fixed
+
+- Prevent transactions marked as `dropped` if nonce matches incoming transaction ([#7097](https://github.com/MetaMask/core/pull/7097))
+
 ## [61.1.0]
 
 ### Added
diff --git a/packages/transaction-controller/src/helpers/PendingTransactionTracker.test.ts b/packages/transaction-controller/src/helpers/PendingTransactionTracker.test.ts
index b68df259442..a24e93f9e57 100644
--- a/packages/transaction-controller/src/helpers/PendingTransactionTracker.test.ts
+++ b/packages/transaction-controller/src/helpers/PendingTransactionTracker.test.ts
@@ -565,6 +565,38 @@ describe('PendingTransactionTracker', () => {
 
           expect(listener).not.toHaveBeenCalled();
         });
+
+        it('unless incoming transaction', async () => {
+          const listener = jest.fn();
+
+          const confirmedTransactionMetaMock = {
+            ...TRANSACTION_SUBMITTED_MOCK,
+            id: `${ID_MOCK}2`,
+            status: TransactionStatus.confirmed,
+            isTransfer: false,
+          } as unknown as TransactionMeta;
+
+          const submittedTransactionMetaMock = {
+            ...TRANSACTION_SUBMITTED_MOCK,
+          };
+
+          pendingTransactionTracker = new PendingTransactionTracker({
+            ...options,
+            getTransactions: () => [
+              confirmedTransactionMetaMock,
+              submittedTransactionMetaMock,
+            ],
+          });
+
+          pendingTransactionTracker.hub.addListener(
+            'transaction-dropped',
+            listener,
+          );
+
+          await onPoll();
+
+          expect(listener).not.toHaveBeenCalled();
+        });
       });
 
       describe('fires confirmed event', () => {
diff --git a/packages/transaction-controller/src/helpers/PendingTransactionTracker.ts b/packages/transaction-controller/src/helpers/PendingTransactionTracker.ts
index 9f1d4a7b503..4d2ddd9fe16 100644
--- a/packages/transaction-controller/src/helpers/PendingTransactionTracker.ts
+++ b/packages/transaction-controller/src/helpers/PendingTransactionTracker.ts
@@ -543,7 +543,8 @@ export class PendingTransactionTracker {
         tx.status === TransactionStatus.confirmed &&
         tx.txParams.nonce &&
         tx.txParams.nonce === txParams.nonce &&
-        tx.type !== TransactionType.incoming,
+        tx.type !== TransactionType.incoming &&
+        tx.isTransfer === undefined,
     );
   }