diff --git a/CHANGELOG.md b/CHANGELOG.md
index 9f69170b7b78..034560528f46 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -18,6 +18,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Ensure that CSS inside Svelte `<style>` blocks always run the expected Svelte processors when using the Vite extension ([#14981](https://github.com/tailwindlabs/tailwindcss/pull/14981))
 - _Upgrade (experimental)_: Ensure it's safe to migrate `blur`, `rounded`, or `shadow` ([#14979](https://github.com/tailwindlabs/tailwindcss/pull/14979))
 - _Upgrade (experimental)_: Do not rename classes using custom defined theme values ([#14976](https://github.com/tailwindlabs/tailwindcss/pull/14976))
+- _Upgrade (experimental)_: Ensure `@config` is injected in nearest common ancestor stylesheet ([#14989](https://github.com/tailwindlabs/tailwindcss/pull/14989))
 
 ## [4.0.0-alpha.33] - 2024-11-11
 
diff --git a/integrations/upgrade/index.test.ts b/integrations/upgrade/index.test.ts
index bc1450b5240c..41519acf7a0d 100644
--- a/integrations/upgrade/index.test.ts
+++ b/integrations/upgrade/index.test.ts
@@ -1467,6 +1467,276 @@ test(
   },
 )
 
+test(
+  'injecting `@config` in the shared root, when a tailwind.config.{js,ts,…} is detected',
+  {
+    fs: {
+      'package.json': json`
+        {
+          "dependencies": {
+            "@tailwindcss/upgrade": "workspace:^"
+          }
+        }
+      `,
+      'tailwind.config.ts': js`
+        export default {
+          content: ['./src/**/*.{html,js}'],
+          plugins: [
+            () => {
+              // custom stuff which is too complicated to migrate to CSS
+            },
+          ],
+        }
+      `,
+      'src/index.html': html`
+        <div
+          class="!flex sm:!block bg-gradient-to-t bg-[--my-red]"
+        ></div>
+      `,
+      'src/index.css': css`@import './tailwind-setup.css';`,
+      'src/tailwind-setup.css': css`
+        @import './base.css';
+        @import './components.css';
+        @import './utilities.css';
+      `,
+      'src/base.css': css`
+        html {
+          color: red;
+        }
+        @tailwind base;
+      `,
+      'src/components.css': css`
+        @import './typography.css';
+        @layer components {
+          .foo {
+            color: red;
+          }
+        }
+        @tailwind components;
+      `,
+      'src/typography.css': css`
+        .typography {
+          color: red;
+        }
+      `,
+      'src/utilities.css': css`
+        @layer utilities {
+          .bar {
+            color: red;
+          }
+        }
+        @tailwind utilities;
+      `,
+    },
+  },
+  async ({ exec, fs }) => {
+    await exec('npx @tailwindcss/upgrade --force')
+
+    expect(await fs.dumpFiles('./src/**/*.{html,css}')).toMatchInlineSnapshot(`
+      "
+      --- ./src/index.html ---
+      <div
+        class="flex! sm:block! bg-linear-to-t bg-[var(--my-red)]"
+      ></div>
+
+      --- ./src/index.css ---
+      @import './tailwind-setup.css';
+
+      --- ./src/base.css ---
+      @import 'tailwindcss/theme' layer(theme);
+      @import 'tailwindcss/preflight' layer(base);
+
+      /*
+        The default border color has changed to \`currentColor\` in Tailwind CSS v4,
+        so we've added these compatibility styles to make sure everything still
+        looks the same as it did with Tailwind CSS v3.
+
+        If we ever want to remove these styles, we need to add an explicit border
+        color utility to any element that depends on these defaults.
+      */
+      @layer base {
+        *,
+        ::after,
+        ::before,
+        ::backdrop,
+        ::file-selector-button {
+          border-color: var(--color-gray-200, currentColor);
+        }
+      }
+
+      @layer base {
+        html {
+          color: red;
+        }
+      }
+
+      --- ./src/components.css ---
+      @import './typography.css';
+
+      @utility foo {
+        color: red;
+      }
+
+      --- ./src/tailwind-setup.css ---
+      @import './base.css';
+      @import './components.css';
+      @import './utilities.css';
+
+      @config '../tailwind.config.ts';
+
+      --- ./src/typography.css ---
+      .typography {
+        color: red;
+      }
+
+      --- ./src/utilities.css ---
+      @import 'tailwindcss/utilities' layer(utilities);
+
+      @utility bar {
+        color: red;
+      }
+      "
+    `)
+  },
+)
+
+test(
+  'injecting `@config` in the shared root (+ migrating), when a tailwind.config.{js,ts,…} is detected',
+  {
+    fs: {
+      'package.json': json`
+        {
+          "dependencies": {
+            "@tailwindcss/upgrade": "workspace:^"
+          }
+        }
+      `,
+      'tailwind.config.ts': js`
+        export default {
+          content: ['./src/**/*.{html,js}'],
+          theme: {
+            extend: {
+              colors: {
+                'my-red': 'red',
+              },
+            },
+          },
+        }
+      `,
+      'src/index.html': html`
+        <div
+          class="!flex sm:!block bg-gradient-to-t bg-[--my-red]"
+        ></div>
+      `,
+      'src/index.css': css`@import './tailwind-setup.css';`,
+      'src/tailwind-setup.css': css`
+        @import './base.css';
+        @import './components.css';
+        @import './utilities.css';
+      `,
+      'src/base.css': css`
+        html {
+          color: red;
+        }
+        @tailwind base;
+      `,
+      'src/components.css': css`
+        @import './typography.css';
+        @layer components {
+          .foo {
+            color: red;
+          }
+        }
+        @tailwind components;
+      `,
+      'src/typography.css': css`
+        .typography {
+          color: red;
+        }
+      `,
+      'src/utilities.css': css`
+        @layer utilities {
+          .bar {
+            color: red;
+          }
+        }
+        @tailwind utilities;
+      `,
+    },
+  },
+  async ({ exec, fs }) => {
+    await exec('npx @tailwindcss/upgrade --force')
+
+    expect(await fs.dumpFiles('./src/**/*.{html,css}')).toMatchInlineSnapshot(`
+      "
+      --- ./src/index.html ---
+      <div
+        class="flex! sm:block! bg-linear-to-t bg-[var(--my-red)]"
+      ></div>
+
+      --- ./src/index.css ---
+      @import './tailwind-setup.css';
+
+      --- ./src/base.css ---
+      @import 'tailwindcss/theme' layer(theme);
+      @import 'tailwindcss/preflight' layer(base);
+
+      /*
+        The default border color has changed to \`currentColor\` in Tailwind CSS v4,
+        so we've added these compatibility styles to make sure everything still
+        looks the same as it did with Tailwind CSS v3.
+
+        If we ever want to remove these styles, we need to add an explicit border
+        color utility to any element that depends on these defaults.
+      */
+      @layer base {
+        *,
+        ::after,
+        ::before,
+        ::backdrop,
+        ::file-selector-button {
+          border-color: var(--color-gray-200, currentColor);
+        }
+      }
+
+      @layer base {
+        html {
+          color: red;
+        }
+      }
+
+      --- ./src/components.css ---
+      @import './typography.css';
+
+      @utility foo {
+        color: red;
+      }
+
+      --- ./src/tailwind-setup.css ---
+      @import './base.css';
+      @import './components.css';
+      @import './utilities.css';
+
+      @theme {
+        --color-my-red: red;
+      }
+
+      --- ./src/typography.css ---
+      .typography {
+        color: red;
+      }
+
+      --- ./src/utilities.css ---
+      @import 'tailwindcss/utilities' layer(utilities);
+
+      @utility bar {
+        color: red;
+      }
+      "
+    `)
+  },
+)
+
 test(
   'relative imports without a relative path prefix are migrated to include a relative path prefix',
   {
diff --git a/packages/@tailwindcss-upgrade/src/codemods/migrate-config.ts b/packages/@tailwindcss-upgrade/src/codemods/migrate-config.ts
index d5557ec997bd..b54fec34c828 100644
--- a/packages/@tailwindcss-upgrade/src/codemods/migrate-config.ts
+++ b/packages/@tailwindcss-upgrade/src/codemods/migrate-config.ts
@@ -1,5 +1,5 @@
 import path from 'node:path'
-import postcss, { AtRule, type Plugin, Root } from 'postcss'
+import postcss, { AtRule, type Plugin } from 'postcss'
 import { normalizePath } from '../../../@tailwindcss-node/src/normalize-path'
 import type { JSConfigMigration } from '../migrate-js-config'
 import type { Stylesheet } from '../stylesheet'
@@ -13,7 +13,9 @@ export function migrateConfig(
     jsConfigMigration,
   }: { configFilePath: string; jsConfigMigration: JSConfigMigration },
 ): Plugin {
-  function injectInto(sheet: Stylesheet) {
+  function migrate() {
+    if (!sheet.isTailwindRoot) return
+
     let alreadyInjected = ALREADY_INJECTED.get(sheet)
     if (alreadyInjected && alreadyInjected.includes(configFilePath)) {
       return
@@ -82,41 +84,6 @@ export function migrateConfig(
     root.append(cssConfig.nodes)
   }
 
-  function migrate(root: Root) {
-    // We can only migrate if there is an `@import "tailwindcss"` (or sub-import)
-    let hasTailwindImport = false
-    let hasFullTailwindImport = false
-    root.walkAtRules('import', (node) => {
-      if (node.params.match(/['"]tailwindcss['"]/)) {
-        hasTailwindImport = true
-        hasFullTailwindImport = true
-        return false
-      } else if (node.params.match(/['"]tailwindcss\/.*?['"]/)) {
-        hasTailwindImport = true
-      }
-    })
-
-    if (!hasTailwindImport) return
-
-    // If a full `@import "tailwindcss"` is present or this is the root
-    // stylesheet, we can inject the `@config` directive directly into this
-    // file.
-    if (hasFullTailwindImport || sheet.parents.size <= 0) {
-      injectInto(sheet)
-      return
-    }
-
-    // Otherwise, if we are not the root file, we need to inject the `@config`
-    // into the root file.
-    if (sheet.parents.size > 0) {
-      for (let parent of sheet.ancestors()) {
-        if (parent.parents.size === 0) {
-          injectInto(parent)
-        }
-      }
-    }
-  }
-
   return {
     postcssPlugin: '@tailwindcss/upgrade/migrate-config',
     OnceExit: migrate,
diff --git a/packages/@tailwindcss-upgrade/src/migrate.ts b/packages/@tailwindcss-upgrade/src/migrate.ts
index e75dd3328d65..5b481335aab4 100644
--- a/packages/@tailwindcss-upgrade/src/migrate.ts
+++ b/packages/@tailwindcss-upgrade/src/migrate.ts
@@ -253,22 +253,38 @@ export async function analyze(stylesheets: Stylesheet[]) {
           for (let [sheetB, childrenB] of commonParents) {
             if (sheetA === sheetB) continue
 
-            for (let parentA of sheetA.ancestors()) {
-              for (let parentB of sheetB.ancestors()) {
+            // Ancestors from self to root. Reversed order so we find the
+            // nearest common parent first
+            //
+            // Including self because if you compare a sheet with its parent,
+            // then the parent is still the common sheet between the two. In
+            // this case, the parent is the root file.
+            let ancestorsA = [sheetA].concat(Array.from(sheetA.ancestors()).reverse())
+            let ancestorsB = [sheetB].concat(Array.from(sheetB.ancestors()).reverse())
+
+            for (let parentA of ancestorsA) {
+              for (let parentB of ancestorsB) {
                 if (parentA !== parentB) continue
 
+                // Found the parent
+                let parent = parentA
+
                 commonParents.delete(sheetA)
                 commonParents.delete(sheetB)
 
                 for (let child of childrenA) {
-                  commonParents.get(parentA).add(child)
+                  commonParents.get(parent).add(child)
                 }
 
                 for (let child of childrenB) {
-                  commonParents.get(parentA).add(child)
+                  commonParents.get(parent).add(child)
                 }
 
-                repeat = true
+                repeat = parent !== sheetA && parent !== sheetB
+
+                // Found a common parent between sheet A and sheet B. We can
+                // stop looking for more common parents between A and B, and
+                // continue with the next sheet.
                 break outer
               }
             }
diff --git a/packages/tailwindcss/src/compat/plugin-api.test.ts b/packages/tailwindcss/src/compat/plugin-api.test.ts
index 6a3062ad224f..6aabab529865 100644
--- a/packages/tailwindcss/src/compat/plugin-api.test.ts
+++ b/packages/tailwindcss/src/compat/plugin-api.test.ts
@@ -2973,8 +2973,7 @@ describe('matchUtilities()', () => {
       return compiled.build(candidates)
     }
 
-    expect(optimizeCss(await run(['@w-1','hover:@w-1'])).trim())
-      .toMatchInlineSnapshot(`
+    expect(optimizeCss(await run(['@w-1', 'hover:@w-1'])).trim()).toMatchInlineSnapshot(`
         ".\\@w-1 {
           width: 1px;
         }