diff --git a/Assets/Tests/InputSystem/Plugins/PlayerInputTests.cs b/Assets/Tests/InputSystem/Plugins/PlayerInputTests.cs
index 8c0606809c..be52673469 100644
--- a/Assets/Tests/InputSystem/Plugins/PlayerInputTests.cs
+++ b/Assets/Tests/InputSystem/Plugins/PlayerInputTests.cs
@@ -530,6 +530,91 @@ public void PlayerInput_CanAutoSwitchControlSchemesInSinglePlayer()
         Assert.That(listener.messages, Is.EquivalentTo(new[] {new Message("OnFire", 1f)}));
     }
 
+    // Test setup where two players both use the keyboard but with two different control
+    // schemes.
+    [Test]
+    [Category("PlayerInput")]
+    public void PlayerInput_CanSetUpSplitKeyboardPlay()
+    {
+        var keyboard = InputSystem.AddDevice<Keyboard>();
+
+        // We add a gamepad device and scheme just to add noise and make sure
+        // this isn't throwing the thing off the rails.
+        InputSystem.AddDevice<Gamepad>();
+
+        const string kActions = @"
+        {
+            ""maps"" : [
+                {
+                    ""name"" : ""gameplay"",
+                    ""actions"" : [
+                        { ""name"" : ""fire"", ""type"" : ""button"" }
+                    ],
+                    ""bindings"" : [
+                        { ""path"" : ""<Gamepad>/buttonSouth"", ""action"" : ""fire"", ""groups"" : ""Gamepad"" },
+                        { ""path"" : ""<Keyboard>/leftCtrl"", ""action"" : ""fire"", ""groups"" : ""KeyboardWASD"" },
+                        { ""path"" : ""<Keyboard>/rightCtrl"", ""action"" : ""fire"", ""groups"" : ""KeyboardArrows"" }
+                    ]
+                }
+            ],
+            ""controlSchemes"" : [
+                {
+                    ""name"" : ""Gamepad"",
+                    ""bindingGroup"" : ""Gamepad"",
+                    ""devices"" : [
+                        { ""devicePath"" : ""<Gamepad>"" }
+                    ]
+                },
+                {
+                    ""name"" : ""Keyboard WASD"",
+                    ""bindingGroup"" : ""KeyboardWASD"",
+                    ""devices"" : [
+                        { ""devicePath"" : ""<Keyboard>"" }
+                    ]
+                },
+                {
+                    ""name"" : ""Keyboard Arrows"",
+                    ""bindingGroup"" : ""KeyboardArrows"",
+                    ""devices"" : [
+                        { ""devicePath"" : ""<Keyboard>"" }
+                    ]
+                }
+            ]
+        }";
+
+        var prefab = new GameObject();
+        prefab.SetActive(false);
+        prefab.AddComponent<MessageListener>();
+        prefab.AddComponent<PlayerInput>();
+        prefab.GetComponent<PlayerInput>().actions = InputActionAsset.FromJson(kActions);
+        prefab.GetComponent<PlayerInput>().defaultActionMap = "gameplay";
+
+        var player1 = PlayerInput.Instantiate(prefab, controlScheme: "Keyboard WASD", pairWithDevice: keyboard);
+        var player2 = PlayerInput.Instantiate(prefab, controlScheme: "Keyboard Arrows", pairWithDevice: keyboard);
+
+        Assert.That(player1.devices, Is.EquivalentTo(new[] { keyboard }));
+        Assert.That(player2.devices, Is.EquivalentTo(new[] { keyboard }));
+        Assert.That(player1.controlScheme, Is.EqualTo("Keyboard WASD"));
+        Assert.That(player2.controlScheme, Is.EqualTo("Keyboard Arrows"));
+        Assert.That(player1.actions["fire"].controls, Is.EquivalentTo(new[] { keyboard.leftCtrlKey }));
+        Assert.That(player2.actions["fire"].controls, Is.EquivalentTo(new[] { keyboard.rightCtrlKey }));
+
+        Press(keyboard.leftCtrlKey);
+
+        Assert.That(player1.GetComponent<MessageListener>().messages,
+            Is.EquivalentTo(new[] {new Message { name = "OnFire", value = 1f }}));
+        Assert.That(player2.GetComponent<MessageListener>().messages, Is.Empty);
+
+        Release(keyboard.leftCtrlKey);
+        player1.GetComponent<MessageListener>().messages.Clear();
+
+        Press(keyboard.rightCtrlKey);
+
+        Assert.That(player1.GetComponent<MessageListener>().messages, Is.Empty);
+        Assert.That(player2.GetComponent<MessageListener>().messages,
+            Is.EquivalentTo(new[] {new Message { name = "OnFire", value = 1f }}));
+    }
+
     [Test]
     [Category("PlayerInput")]
     public void PlayerInput_CanAutoSwitchControlSchemesInSinglePlayer_WithDevicePluggedInAfterStart()
diff --git a/Packages/com.unity.inputsystem/CHANGELOG.md b/Packages/com.unity.inputsystem/CHANGELOG.md
index 200f3f64d0..6c93cc51a6 100755
--- a/Packages/com.unity.inputsystem/CHANGELOG.md
+++ b/Packages/com.unity.inputsystem/CHANGELOG.md
@@ -15,6 +15,9 @@ however, it has to be formatted properly to pass verification tests.
 
 #### Actions
 
+- `PlayerInput.Instantiate` now correctly sets up a given control scheme, if specified.
+  * When passing a `controlScheme:` argument, the result used to be a correctly assigned control scheme at the `InputUser` level but no restrictions being actually applied to the bindings, i.e. every single binding was active regardless of the specified control scheme.
+
 ### Changed
 
 - `InputUser.onUnpairedDeviceUsed` now receives a 2nd argument which is the event that triggered the callback.
diff --git a/Packages/com.unity.inputsystem/InputSystem/Plugins/Users/InputUser.cs b/Packages/com.unity.inputsystem/InputSystem/Plugins/Users/InputUser.cs
index ca7028c9e8..72de46082b 100644
--- a/Packages/com.unity.inputsystem/InputSystem/Plugins/Users/InputUser.cs
+++ b/Packages/com.unity.inputsystem/InputSystem/Plugins/Users/InputUser.cs
@@ -469,7 +469,7 @@ public void AssociateActionsWithUser(IInputActionCollection actions)
             {
                 actions.devices = pairedDevices;
                 if (s_AllUserData[userIndex].controlScheme != null)
-                    ActivateControlScheme(s_AllUserData[userIndex].controlScheme.Value);
+                    ActivateControlSchemeInternal(userIndex, s_AllUserData[userIndex].controlScheme.Value);
             }
         }
 
@@ -508,34 +508,40 @@ public ControlSchemeChangeSyntax ActivateControlScheme(string schemeName)
         public ControlSchemeChangeSyntax ActivateControlScheme(InputControlScheme scheme)
         {
             var userIndex = index; // Throws if user is invalid.
+
+            if (s_AllUserData[userIndex].controlScheme != scheme ||
+                (scheme == default && s_AllUserData[userIndex].controlScheme != null))
+            {
+                ActivateControlSchemeInternal(userIndex, scheme);
+                Notify(userIndex, InputUserChange.ControlSchemeChanged, null);
+            }
+
+            return new ControlSchemeChangeSyntax {m_UserIndex = userIndex};
+        }
+
+        private void ActivateControlSchemeInternal(int userIndex, InputControlScheme scheme)
+        {
             var isEmpty = scheme == default;
 
-            if (s_AllUserData[userIndex].controlScheme != scheme || (isEmpty && s_AllUserData[userIndex].controlScheme != null))
+            if (isEmpty)
+                s_AllUserData[userIndex].controlScheme = null;
+            else
+                s_AllUserData[userIndex].controlScheme = scheme;
+
+            if (s_AllUserData[userIndex].actions != null)
             {
                 if (isEmpty)
-                    s_AllUserData[userIndex].controlScheme = null;
+                {
+                    s_AllUserData[userIndex].actions.bindingMask = null;
+                    s_AllUserData[userIndex].controlSchemeMatch.Dispose();
+                    s_AllUserData[userIndex].controlSchemeMatch = new InputControlScheme.MatchResult();
+                }
                 else
-                    s_AllUserData[userIndex].controlScheme = scheme;
-
-                if (s_AllUserData[userIndex].actions != null)
                 {
-                    if (isEmpty)
-                    {
-                        s_AllUserData[userIndex].actions.bindingMask = null;
-                        s_AllUserData[userIndex].controlSchemeMatch.Dispose();
-                        s_AllUserData[userIndex].controlSchemeMatch = new InputControlScheme.MatchResult();
-                    }
-                    else
-                    {
-                        s_AllUserData[userIndex].actions.bindingMask = new InputBinding {groups = scheme.bindingGroup};
-                        UpdateControlSchemeMatch(userIndex);
-                    }
+                    s_AllUserData[userIndex].actions.bindingMask = new InputBinding {groups = scheme.bindingGroup};
+                    UpdateControlSchemeMatch(userIndex);
                 }
-
-                Notify(userIndex, InputUserChange.ControlSchemeChanged, null);
             }
-
-            return new ControlSchemeChangeSyntax {m_UserIndex = userIndex};
         }
 
         public void PauseHaptics()