diff --git a/src/libs/ReportUtils.ts b/src/libs/ReportUtils.ts
index 7b226b2e5c8e..fa365867044b 100644
--- a/src/libs/ReportUtils.ts
+++ b/src/libs/ReportUtils.ts
@@ -7218,7 +7218,7 @@ function shouldDisableThread(reportAction: OnyxInputOrEntry<ReportAction>, repor
     );
 }
 
-function getAllAncestorReportActions(report: Report | null | undefined): Ancestor[] {
+function getAllAncestorReportActions(report: Report | null | undefined, currentUpdatedReport?: OnyxEntry<Report>): Ancestor[] {
     if (!report) {
         return [];
     }
@@ -7227,7 +7227,7 @@ function getAllAncestorReportActions(report: Report | null | undefined): Ancesto
     let parentReportActionID = report.parentReportActionID;
 
     while (parentReportID) {
-        const parentReport = getReportOrDraftReport(parentReportID);
+        const parentReport = currentUpdatedReport && currentUpdatedReport.reportID === parentReportID ? currentUpdatedReport : getReportOrDraftReport(parentReportID);
         const parentReportAction = ReportActionsUtils.getReportAction(parentReportID, parentReportActionID ?? '-1');
 
         if (
diff --git a/src/pages/home/report/ReportActionItemParentAction.tsx b/src/pages/home/report/ReportActionItemParentAction.tsx
index ff7e9d4d7027..d3842786b162 100644
--- a/src/pages/home/report/ReportActionItemParentAction.tsx
+++ b/src/pages/home/report/ReportActionItemParentAction.tsx
@@ -77,7 +77,11 @@ function ReportActionItemParentAction({
                     key: `${ONYXKEYS.COLLECTION.REPORT}${ancestorReportID}`,
                     callback: (val) => {
                         ancestorReports.current[ancestorReportID] = val;
-                        setAllAncestors(ReportUtils.getAllAncestorReportActions(report));
+                        //  getAllAncestorReportActions use getReportOrDraftReport to get parent reports which gets the report from allReports that
+                        // holds the report collection. However, allReports is not updated by the time this current callback is called.
+                        // Therefore we need to pass the up-to-date report to getAllAncestorReportActions so that it uses the up-to-date report value
+                        // to calculate, for instance, unread marker.
+                        setAllAncestors(ReportUtils.getAllAncestorReportActions(report, val));
                     },
                 }),
             );