diff --git a/com.unity.netcode.gameobjects/Runtime/Core/NetworkObject.cs b/com.unity.netcode.gameobjects/Runtime/Core/NetworkObject.cs
index 73cc6c7e2d..ddca7c9e72 100644
--- a/com.unity.netcode.gameobjects/Runtime/Core/NetworkObject.cs
+++ b/com.unity.netcode.gameobjects/Runtime/Core/NetworkObject.cs
@@ -2368,11 +2368,22 @@ internal bool InternalTrySetParent(NetworkObject parent, bool worldPositionStays
         private void OnTransformParentChanged()
         {
             var networkManager = NetworkManager;
-            if (!AutoObjectParentSync || (networkManager != null && networkManager.ShutdownInProgress))
+            if (networkManager != null && networkManager.ShutdownInProgress)
             {
                 return;
             }
 
+            if (!AutoObjectParentSync)
+            {
+                // If this setting is off, we shouldn't be tracking parenting changes
+                // Ensure any tracking we do have is cleared.
+                if (m_CachedParent != null)
+                {
+                    SetCachedParent(null);
+                }
+                return;
+            }
+
             if (transform.parent == m_CachedParent)
             {
                 return;
@@ -2388,7 +2399,6 @@ private void OnTransformParentChanged()
 
             if (!IsSpawned)
             {
-                AuthorityAppliedParenting = false;
                 // and we are removing the parent, then go ahead and allow parenting to occur
                 if (transform.parent == null)
                 {
@@ -2398,6 +2408,7 @@ private void OnTransformParentChanged()
                 }
                 else
                 {
+                    AuthorityAppliedParenting = false;
                     transform.parent = m_CachedParent;
                     if (networkManager.LogLevel <= LogLevel.Error)
                     {