diff --git a/.changeset/eight-webs-buy.md b/.changeset/eight-webs-buy.md
new file mode 100644
index 0000000000..a49c41b912
--- /dev/null
+++ b/.changeset/eight-webs-buy.md
@@ -0,0 +1,18 @@
+---
+'@tanstack/query-broadcast-client-experimental': patch
+'@tanstack/query-async-storage-persister': patch
+'@tanstack/angular-query-persist-client': patch
+'@tanstack/query-sync-storage-persister': patch
+'@tanstack/svelte-query-persist-client': patch
+'@tanstack/angular-query-experimental': patch
+'@tanstack/react-query-persist-client': patch
+'@tanstack/solid-query-persist-client': patch
+'@tanstack/query-persist-client-core': patch
+'@tanstack/svelte-query': patch
+'@tanstack/react-query': patch
+'@tanstack/solid-query': patch
+'@tanstack/query-core': patch
+'@tanstack/vue-query': patch
+---
+
+Fixed isFetchedAfterMount in cases where initialData is applied
diff --git a/packages/query-core/src/__tests__/query.test.tsx b/packages/query-core/src/__tests__/query.test.tsx
index f11bf173d3..a33bf75cfc 100644
--- a/packages/query-core/src/__tests__/query.test.tsx
+++ b/packages/query-core/src/__tests__/query.test.tsx
@@ -1304,4 +1304,47 @@ describe('query', () => {
       data: 'data1',
     })
   })
+
+  test('should not increment dataUpdateCount when setting initialData on prefetched query', async () => {
+    const key = queryKey()
+    const queryFn = vi.fn().mockImplementation(() => 'fetched-data')
+
+    // First prefetch the query (creates query without data)
+    queryClient.prefetchQuery({
+      queryKey: key,
+      queryFn,
+    })
+
+    const query = queryCache.find({ queryKey: key })!
+    expect(query.state.data).toBeUndefined()
+    expect(query.state.dataUpdateCount).toBe(0)
+
+    // Now create an observer with initialData
+    const observer = new QueryObserver(queryClient, {
+      queryKey: key,
+      queryFn,
+      initialData: 'initial-data',
+    })
+
+    // The query should now have the initial data but dataUpdateCount should still be 0
+    // since this was not fetched data but initial data
+    expect(query.state.data).toBe('initial-data')
+    expect(query.state.dataUpdateCount).toBe(0)
+
+    // Get the initial state as captured by the observer
+    const result = observer.getCurrentResult()
+    expect(result.data).toBe('initial-data')
+    expect(result.isFetchedAfterMount).toBe(false) // This should be false since no actual fetch occurred
+
+    // Now trigger a refetch through the observer to simulate real-world usage
+    await observer.refetch()
+
+    // After actual fetch, dataUpdateCount should increment
+    expect(query.state.dataUpdateCount).toBe(1)
+    expect(query.state.data).toBe('fetched-data')
+
+    // And isFetchedAfterMount should now be true
+    const updatedResult = observer.getCurrentResult()
+    expect(updatedResult.isFetchedAfterMount).toBe(true)
+  })
 })
diff --git a/packages/query-core/src/query.ts b/packages/query-core/src/query.ts
index a34c8630dc..e033846601 100644
--- a/packages/query-core/src/query.ts
+++ b/packages/query-core/src/query.ts
@@ -210,9 +210,11 @@ export class Query<
     if (this.state && this.state.data === undefined) {
       const defaultState = getDefaultState(this.options)
       if (defaultState.data !== undefined) {
-        this.setData(defaultState.data, {
-          updatedAt: defaultState.dataUpdatedAt,
-          manual: true,
+        this.setState({
+          data: defaultState.data,
+          dataUpdatedAt: defaultState.dataUpdatedAt,
+          status: 'success',
+          error: null,
         })
         this.#initialState = defaultState
       }