diff --git a/scene/3d/camera_3d.cpp b/scene/3d/camera_3d.cpp
index 9e3c445c65d..d607dc9a4c5 100644
--- a/scene/3d/camera_3d.cpp
+++ b/scene/3d/camera_3d.cpp
@@ -164,6 +164,7 @@ void Camera3D::_update_camera() {
 
 void Camera3D::_physics_interpolated_changed() {
 	_update_process_mode();
+	Node3D::_physics_interpolated_changed();
 }
 
 void Camera3D::set_desired_process_modes(bool p_process_internal, bool p_physics_process_internal) {
diff --git a/scene/3d/node_3d.cpp b/scene/3d/node_3d.cpp
index a00bdab66de..99f8812977c 100644
--- a/scene/3d/node_3d.cpp
+++ b/scene/3d/node_3d.cpp
@@ -1157,9 +1157,21 @@ Vector3 Node3D::to_global(Vector3 p_local) const {
 	return get_global_transform().xform(p_local);
 }
 
+void Node3D::_physics_interpolated_changed() {
+	ERR_THREAD_GUARD;
+	data.notify_transform = data.notify_transform_requested || (data.notify_transform_when_fti_off && !is_physics_interpolated_and_enabled());
+}
+
+void Node3D::_set_notify_transform_when_fti_off(bool p_enable) {
+	ERR_THREAD_GUARD;
+	data.notify_transform_when_fti_off = p_enable;
+	data.notify_transform = data.notify_transform_requested || (data.notify_transform_when_fti_off && !is_physics_interpolated_and_enabled());
+}
+
 void Node3D::set_notify_transform(bool p_enabled) {
 	ERR_THREAD_GUARD;
-	data.notify_transform = p_enabled;
+	data.notify_transform_requested = p_enabled;
+	data.notify_transform = data.notify_transform_requested || (data.notify_transform_when_fti_off && !is_physics_interpolated_and_enabled());
 }
 
 bool Node3D::is_transform_notification_enabled() const {
@@ -1441,6 +1453,8 @@ Node3D::Node3D() :
 	data.ignore_notification = false;
 	data.notify_local_transform = false;
 	data.notify_transform = false;
+	data.notify_transform_requested = false;
+	data.notify_transform_when_fti_off = false;
 
 	data.visible = true;
 	data.disable_scale = false;
diff --git a/scene/3d/node_3d.h b/scene/3d/node_3d.h
index d03884b09cd..930a174136d 100644
--- a/scene/3d/node_3d.h
+++ b/scene/3d/node_3d.h
@@ -134,6 +134,9 @@ private:
 		bool notify_local_transform : 1;
 		bool notify_transform : 1;
 
+		bool notify_transform_requested : 1;
+		bool notify_transform_when_fti_off : 1;
+
 		bool visible : 1;
 		bool disable_scale : 1;
 
@@ -199,6 +202,9 @@ protected:
 	// (e.g. changing Camera zoom even if position hasn't changed).
 	void fti_notify_node_changed(bool p_transform_changed = true);
 
+	void _set_notify_transform_when_fti_off(bool p_enable);
+	virtual void _physics_interpolated_changed() override;
+
 	// Opportunity after FTI to update the servers
 	// with global_transform_interpolated,
 	// and any custom interpolated data in derived classes.
diff --git a/scene/3d/visual_instance_3d.cpp b/scene/3d/visual_instance_3d.cpp
index 41903f208a1..32844531e35 100644
--- a/scene/3d/visual_instance_3d.cpp
+++ b/scene/3d/visual_instance_3d.cpp
@@ -88,7 +88,9 @@ void VisualInstance3D::_notification(int p_what) {
 		} break;
 
 		case NOTIFICATION_TRANSFORM_CHANGED: {
-			// ToDo : Can we turn off notify transform for physics interpolated cases?
+			// NOTIFICATION normally turned off for physics interpolated cases (via
+			// `notify_transform_when_fti_off`), however derived classes can still turn this back on,
+			// so always wrap with is_physics_interpolation_enabled().
 			if (_is_vi_visible() && !(is_inside_tree() && get_tree()->is_physics_interpolation_enabled()) && !_is_using_identity_transform()) {
 				// Physics interpolation global off, always send.
 				RenderingServer::get_singleton()->instance_set_transform(instance, get_global_transform());
@@ -204,7 +206,7 @@ RID VisualInstance3D::get_base() const {
 VisualInstance3D::VisualInstance3D() {
 	instance = RenderingServer::get_singleton()->instance_create();
 	RenderingServer::get_singleton()->instance_attach_object_instance_id(instance, get_instance_id());
-	set_notify_transform(true);
+	_set_notify_transform_when_fti_off(true);
 }
 
 VisualInstance3D::~VisualInstance3D() {