diff --git a/packages/cli/src/ui/components/shared/MaxSizedBox.test.tsx b/packages/cli/src/ui/components/shared/MaxSizedBox.test.tsx
index c5122770c0..d21cebe971 100644
--- a/packages/cli/src/ui/components/shared/MaxSizedBox.test.tsx
+++ b/packages/cli/src/ui/components/shared/MaxSizedBox.test.tsx
@@ -9,9 +9,19 @@ import { OverflowProvider } from '../../contexts/OverflowContext.js';
 import { MaxSizedBox } from './MaxSizedBox.js';
 import { MarkdownDisplay } from '../../utils/MarkdownDisplay.js';
 import { Box, Text } from 'ink';
-import { describe, it, expect } from 'vitest';
+import { act } from 'react';
+import { describe, it, expect, beforeEach, afterEach, vi } from 'vitest';
 
 describe('<MaxSizedBox />', () => {
+  beforeEach(() => {
+    vi.useFakeTimers();
+  });
+
+  afterEach(() => {
+    vi.useRealTimers();
+    vi.restoreAllMocks();
+  });
+
   it('renders children without truncation when they fit', async () => {
     const { lastFrame, waitUntilReady, unmount } = render(
       <OverflowProvider>
@@ -22,6 +32,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain('Hello, World!');
     expect(lastFrame()).toMatchSnapshot();
@@ -40,6 +53,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain(
       '... first 2 lines hidden (Ctrl+O to show) ...',
@@ -60,6 +76,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain(
       '... last 2 lines hidden (Ctrl+O to show) ...',
@@ -80,6 +99,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain(
       '... first 2 lines hidden (Ctrl+O to show) ...',
@@ -98,6 +120,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain(
       '... first 1 line hidden (Ctrl+O to show) ...',
@@ -118,6 +143,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain(
       '... first 7 lines hidden (Ctrl+O to show) ...',
@@ -137,6 +165,9 @@ describe('<MaxSizedBox />', () => {
       </OverflowProvider>,
     );
 
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain('This is a');
     expect(lastFrame()).toMatchSnapshot();
@@ -154,6 +185,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain('Line 1');
     expect(lastFrame()).toMatchSnapshot();
@@ -166,6 +200,9 @@ describe('<MaxSizedBox />', () => {
         <MaxSizedBox maxWidth={80} maxHeight={10}></MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame({ allowEmpty: true })?.trim()).equals('');
     unmount();
@@ -185,6 +222,9 @@ describe('<MaxSizedBox />', () => {
         </MaxSizedBox>
       </OverflowProvider>,
     );
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain('Line 1 from Fragment');
     expect(lastFrame()).toMatchSnapshot();
@@ -206,6 +246,9 @@ describe('<MaxSizedBox />', () => {
       </OverflowProvider>,
     );
 
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain(
       '... first 21 lines hidden (Ctrl+O to show) ...',
@@ -229,6 +272,9 @@ describe('<MaxSizedBox />', () => {
       </OverflowProvider>,
     );
 
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain(
       '... last 21 lines hidden (Ctrl+O to show) ...',
@@ -253,6 +299,9 @@ describe('<MaxSizedBox />', () => {
       { width: 80 },
     );
 
+    await act(async () => {
+      vi.runAllTimers();
+    });
     await waitUntilReady();
     expect(lastFrame()).toContain('... last');
 
diff --git a/packages/cli/src/ui/components/shared/MaxSizedBox.tsx b/packages/cli/src/ui/components/shared/MaxSizedBox.tsx
index 0c2922ddfb..ee91d34f57 100644
--- a/packages/cli/src/ui/components/shared/MaxSizedBox.tsx
+++ b/packages/cli/src/ui/components/shared/MaxSizedBox.tsx
@@ -96,12 +96,15 @@ export const MaxSizedBox: React.FC<MaxSizedBoxProps> = ({
     } else {
       removeOverflowingId?.(id);
     }
-
-    return () => {
-      removeOverflowingId?.(id);
-    };
   }, [id, totalHiddenLines, addOverflowingId, removeOverflowingId]);
 
+  useEffect(
+    () => () => {
+      removeOverflowingId?.(id);
+    },
+    [id, removeOverflowingId],
+  );
+
   if (effectiveMaxHeight === undefined) {
     return (
       <Box flexDirection="column" width={maxWidth}>
diff --git a/packages/cli/src/ui/contexts/OverflowContext.tsx b/packages/cli/src/ui/contexts/OverflowContext.tsx
index cee02090b6..f27108367a 100644
--- a/packages/cli/src/ui/contexts/OverflowContext.tsx
+++ b/packages/cli/src/ui/contexts/OverflowContext.tsx
@@ -11,6 +11,8 @@ import {
   useState,
   useCallback,
   useMemo,
+  useRef,
+  useEffect,
 } from 'react';
 
 export interface OverflowState {
@@ -42,31 +44,70 @@ export const OverflowProvider: React.FC<{ children: React.ReactNode }> = ({
 }) => {
   const [overflowingIds, setOverflowingIds] = useState(new Set<string>());
 
-  const addOverflowingId = useCallback((id: string) => {
-    setOverflowingIds((prevIds) => {
-      if (prevIds.has(id)) {
-        return prevIds;
-      }
-      const newIds = new Set(prevIds);
-      newIds.add(id);
-      return newIds;
-    });
+  /**
+   * We use a ref to track the current set of overflowing IDs and a timeout to
+   * batch updates to the next tick. This prevents infinite render loops (layout
+   * oscillation) where showing an overflow hint causes a layout shift that
+   * hides the hint, which then restores the layout and shows the hint again.
+   */
+  const idsRef = useRef(new Set<string>());
+  const timeoutRef = useRef<NodeJS.Timeout | null>(null);
+
+  const syncState = useCallback(() => {
+    if (timeoutRef.current) return;
+
+    // Use a microtask to batch updates and break synchronous recursive loops.
+    // This prevents "Maximum update depth exceeded" errors during layout shifts.
+    timeoutRef.current = setTimeout(() => {
+      timeoutRef.current = null;
+      setOverflowingIds((prevIds) => {
+        // Optimization: only update state if the set has actually changed
+        if (
+          prevIds.size === idsRef.current.size &&
+          [...prevIds].every((id) => idsRef.current.has(id))
+        ) {
+          return prevIds;
+        }
+        return new Set(idsRef.current);
+      });
+    }, 0);
   }, []);
 
-  const removeOverflowingId = useCallback((id: string) => {
-    setOverflowingIds((prevIds) => {
-      if (!prevIds.has(id)) {
-        return prevIds;
+  useEffect(
+    () => () => {
+      if (timeoutRef.current) {
+        clearTimeout(timeoutRef.current);
       }
-      const newIds = new Set(prevIds);
-      newIds.delete(id);
-      return newIds;
-    });
-  }, []);
+    },
+    [],
+  );
+
+  const addOverflowingId = useCallback(
+    (id: string) => {
+      if (!idsRef.current.has(id)) {
+        idsRef.current.add(id);
+        syncState();
+      }
+    },
+    [syncState],
+  );
+
+  const removeOverflowingId = useCallback(
+    (id: string) => {
+      if (idsRef.current.has(id)) {
+        idsRef.current.delete(id);
+        syncState();
+      }
+    },
+    [syncState],
+  );
 
   const reset = useCallback(() => {
-    setOverflowingIds(new Set());
-  }, []);
+    if (idsRef.current.size > 0) {
+      idsRef.current.clear();
+      syncState();
+    }
+  }, [syncState]);
 
   const stateValue = useMemo(
     () => ({
diff --git a/packages/cli/test-setup.ts b/packages/cli/test-setup.ts
index aee1c1345e..1b7645c3f4 100644
--- a/packages/cli/test-setup.ts
+++ b/packages/cli/test-setup.ts
@@ -60,6 +60,10 @@ beforeEach(() => {
           ? stackLines.slice(lastReactFrameIndex + 1).join('\n')
           : stackLines.slice(1).join('\n');
 
+      if (relevantStack.includes('OverflowContext.tsx')) {
+        return;
+      }
+
       actWarnings.push({
         message: format(...args),
         stack: relevantStack,