diff --git a/libs/gui/LayerState.cpp b/libs/gui/LayerState.cpp
index 075bb52..6066421 100644
--- a/libs/gui/LayerState.cpp
+++ b/libs/gui/LayerState.cpp
@@ -245,6 +245,7 @@
     }
     if (other.what & eLayerChanged) {
         what |= eLayerChanged;
+        what &= ~eRelativeLayerChanged;
         z = other.z;
     }
     if (other.what & eSizeChanged) {
@@ -303,6 +304,7 @@
     }
     if (other.what & eRelativeLayerChanged) {
         what |= eRelativeLayerChanged;
+        what &= ~eLayerChanged;
         z = other.z;
         relativeLayerHandle = other.relativeLayerHandle;
     }
diff --git a/libs/gui/SurfaceComposerClient.cpp b/libs/gui/SurfaceComposerClient.cpp
index 5d4367d..d059861 100644
--- a/libs/gui/SurfaceComposerClient.cpp
+++ b/libs/gui/SurfaceComposerClient.cpp
@@ -611,6 +611,7 @@
         return *this;
     }
     s->what |= layer_state_t::eLayerChanged;
+    s->what &= ~layer_state_t::eRelativeLayerChanged;
     s->z = z;
 
     registerSurfaceControlForCallback(sc);
@@ -624,6 +625,7 @@
         mStatus = BAD_INDEX;
     }
     s->what |= layer_state_t::eRelativeLayerChanged;
+    s->what &= ~layer_state_t::eLayerChanged;
     s->relativeLayerHandle = relativeTo;
     s->z = z;
 
diff --git a/services/surfaceflinger/tests/Transaction_test.cpp b/services/surfaceflinger/tests/Transaction_test.cpp
index d03c25d..ec1ac4b 100644
--- a/services/surfaceflinger/tests/Transaction_test.cpp
+++ b/services/surfaceflinger/tests/Transaction_test.cpp
@@ -1056,6 +1056,53 @@
     screenshot->expectColor(Rect(0, 0, 32, 32), Color::BLUE);
 }
 
+TEST_P(LayerTypeTransactionTest, SetLayerAndRelative) {
+    sp<SurfaceControl> parent =
+            LayerTransactionTest::createLayer("Parent", 0 /* buffer width */, 0 /* buffer height */,
+                                              ISurfaceComposerClient::eFXSurfaceColor);
+
+    sp<SurfaceControl> childLayer;
+    ASSERT_NO_FATAL_FAILURE(
+            childLayer = LayerTransactionTest::createLayer("childLayer", 0 /* buffer width */,
+                                                           0 /* buffer height */,
+                                                           ISurfaceComposerClient::eFXSurfaceColor,
+                                                           parent.get()));
+    Transaction()
+            .setColor(childLayer, half3{1.0f, 0.0f, 0.0f})
+            .setColor(parent, half3{0.0f, 0.0f, 0.0f})
+            .show(childLayer)
+            .show(parent)
+            .setCrop_legacy(parent, Rect(0, 0, mDisplayWidth, mDisplayHeight))
+            .setCrop_legacy(childLayer, Rect(0, 0, 20, 30))
+            .apply();
+
+    Transaction()
+            .setRelativeLayer(childLayer, parent->getHandle(), -1)
+            .setLayer(childLayer, 1)
+            .apply();
+
+    {
+        SCOPED_TRACE("setLayer above");
+        // Set layer should get applied and place the child above.
+        std::unique_ptr<ScreenCapture> screenshot;
+        ScreenCapture::captureScreen(&screenshot);
+        screenshot->expectColor(Rect(0, 0, 20, 30), Color::RED);
+    }
+
+    Transaction()
+            .setLayer(childLayer, 1)
+            .setRelativeLayer(childLayer, parent->getHandle(), -1)
+            .apply();
+
+    {
+        SCOPED_TRACE("setRelative below");
+        // Set relative layer should get applied and place the child below.
+        std::unique_ptr<ScreenCapture> screenshot;
+        ScreenCapture::captureScreen(&screenshot);
+        screenshot->expectColor(Rect(0, 0, 20, 30), Color::BLACK);
+    }
+}
+
 void LayerRenderTypeTransactionTest::setRelativeZGroupHelper(uint32_t layerType) {
     sp<SurfaceControl> layerR;
     sp<SurfaceControl> layerG;