diff --git a/main/src/main/scala/sbt/Defaults.scala b/main/src/main/scala/sbt/Defaults.scala
index 1b149e855..594e9efb7 100644
--- a/main/src/main/scala/sbt/Defaults.scala
+++ b/main/src/main/scala/sbt/Defaults.scala
@@ -3827,7 +3827,7 @@ object Classpaths {
       substituteScalaFiles(scalaOrganization.value, _)(providedScalaJars),
       skip = (update / skip).value,
       force = shouldForce,
-      depsUpdated = transitiveUpdate.value.exists(!_.stats.cached),
+      transitiveUpdates = transitiveUpdate.value,
       uwConfig = (update / unresolvedWarningConfiguration).value,
       evictionLevel = evictionErrorLevel.value,
       versionSchemeOverrides = libraryDependencySchemes.value,
diff --git a/main/src/main/scala/sbt/internal/LibraryManagement.scala b/main/src/main/scala/sbt/internal/LibraryManagement.scala
index 750a51c9f..c50609ed8 100644
--- a/main/src/main/scala/sbt/internal/LibraryManagement.scala
+++ b/main/src/main/scala/sbt/internal/LibraryManagement.scala
@@ -26,7 +26,8 @@ import scala.compat.Platform.EOL
 private[sbt] object LibraryManagement {
   implicit val linter: sbt.dsl.LinterLevel.Ignore.type = sbt.dsl.LinterLevel.Ignore
 
-  private type UpdateInputs = (Long, ModuleSettings, UpdateConfiguration)
+  // The fourth element is transitive dependency stamps for cross-command cache invalidation
+  private type UpdateInputs = (Long, ModuleSettings, UpdateConfiguration, Vector[Long])
 
   def cachedUpdate(
       lm: DependencyResolution,
@@ -37,7 +38,7 @@ private[sbt] object LibraryManagement {
       transform: UpdateReport => UpdateReport,
       skip: Boolean,
       force: Boolean,
-      depsUpdated: Boolean,
+      transitiveUpdates: Seq[UpdateReport],
       uwConfig: UnresolvedWarningConfiguration,
       evictionLevel: Level.Value,
       versionSchemeOverrides: Seq[ModuleID],
@@ -102,8 +103,9 @@ private[sbt] object LibraryManagement {
 
     /* Check if a update report is still up to date or we must resolve again. */
     def upToDate(inChanged: Boolean, out: UpdateReport): Boolean = {
+      // Transitive dependency stamps are now part of UpdateInputs, so inChanged
+      // will be true if any transitive stamp changed (cross-command invalidation).
       !force &&
-      !depsUpdated &&
       !inChanged &&
       out.allFiles.forall(f => fileUptodate(f, out.stamps, log)) &&
       fileUptodate(out.cachedDescriptor, out.stamps, log)
@@ -166,7 +168,18 @@ private[sbt] object LibraryManagement {
     val handler = if (skip && !force) skipResolve(outStore)(_) else doResolve(outStore)
     // Remove clock for caching purpose
     val withoutClock = updateConfig.withLogicalClock(LogicalClock.unknown)
-    handler((extraInputHash, settings, withoutClock))
+    // Collect transitive stamps for cross-command cache invalidation.
+    // Hash the resolved module IDs (org, name, revision) from each transitive update.
+    // This changes when any transitive dependency's resolved versions change,
+    // enabling correct cache invalidation across commands.
+    val transitiveStamps = transitiveUpdates.map { ur =>
+      ur.configurations
+        .flatMap(_.modules.map(mr => (mr.module.organization, mr.module.name, mr.module.revision)))
+        .toSet
+        .hashCode
+        .toLong
+    }.toVector
+    handler((extraInputHash, settings, withoutClock, transitiveStamps))
   }
 
   private[this] def fileUptodate(file: File, stamps: Map[File, Long], log: Logger): Boolean = {
@@ -299,7 +312,7 @@ private[sbt] object LibraryManagement {
           identity,
           skip = (update / skip).value,
           force = shouldForce,
-          depsUpdated = transitiveUpdate.value.exists(!_.stats.cached),
+          transitiveUpdates = transitiveUpdate.value,
           uwConfig = (update / unresolvedWarningConfiguration).value,
           evictionLevel = Level.Debug,
           versionSchemeOverrides = Nil,
diff --git a/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/a/src/main/scala/A.scala b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/a/src/main/scala/A.scala
new file mode 100644
index 000000000..6c207ebdf
--- /dev/null
+++ b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/a/src/main/scala/A.scala
@@ -0,0 +1,2 @@
+package a
+object A
diff --git a/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/build.sbt b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/build.sbt
new file mode 100644
index 000000000..f4f04f021
--- /dev/null
+++ b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/build.sbt
@@ -0,0 +1,17 @@
+// Test for https://github.com/sbt/sbt/issues/8357
+// Verifies that transitiveUpdate correctly invalidates across command invocations
+// when a dependency's dependencies change.
+
+ThisBuild / scalaVersion := "2.12.21"
+
+// Use a setting to control library version - this can be changed via reload
+lazy val catsVersion = settingKey[String]("Cats version")
+
+lazy val a = project.in(file("a"))
+  .settings(
+    catsVersion := "2.8.0",
+    libraryDependencies += "org.typelevel" %% "cats-core" % catsVersion.value,
+  )
+
+lazy val itTests = project.in(file("itTests"))
+  .dependsOn(a % "test->test")
diff --git a/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/changes/build.sbt b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/changes/build.sbt
new file mode 100644
index 000000000..e5f859578
--- /dev/null
+++ b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/changes/build.sbt
@@ -0,0 +1,16 @@
+// Test for https://github.com/sbt/sbt/issues/8357
+// This is the changed build.sbt with different library version
+
+ThisBuild / scalaVersion := "2.12.21"
+
+lazy val catsVersion = settingKey[String]("Cats version")
+
+lazy val a = project.in(file("a"))
+  .settings(
+    // Changed from 2.8.0 to 2.9.0
+    catsVersion := "2.9.0",
+    libraryDependencies += "org.typelevel" %% "cats-core" % catsVersion.value,
+  )
+
+lazy val itTests = project.in(file("itTests"))
+  .dependsOn(a % "test->test")
diff --git a/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/itTests/src/test/scala/Test.scala b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/itTests/src/test/scala/Test.scala
new file mode 100644
index 000000000..ff241cbaa
--- /dev/null
+++ b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/itTests/src/test/scala/Test.scala
@@ -0,0 +1,2 @@
+package itTests
+class Test
diff --git a/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/test b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/test
new file mode 100644
index 000000000..4dc449c11
--- /dev/null
+++ b/sbt-app/src/sbt-test/dependency-management/i8357-transitive-update-invalidation/test
@@ -0,0 +1,20 @@
+# Test for https://github.com/sbt/sbt/issues/8357
+# Verifies that transitiveUpdate correctly invalidates across command invocations
+
+# Step 1: Run itTests/update to establish baseline with cats 2.8.0
+> itTests/update
+
+# Step 2: Change a's dependency version (cats 2.8.0 -> 2.9.0)
+$ copy-file changes/build.sbt build.sbt
+
+# Step 3: Reload to pick up the new settings
+> reload
+
+# Step 4: Run a/update in a SEPARATE command
+> a/update
+
+# Step 5: Now run itTests/update - should re-resolve with new dependencies
+> itTests/update
+
+# Compile to verify all dependencies are available
+> itTests/compile