diff --git a/.changeset/fix-hydrated-atom-reactivity.md b/.changeset/fix-hydrated-atom-reactivity.md
new file mode 100644
index 00000000000..8846b187d6b
--- /dev/null
+++ b/.changeset/fix-hydrated-atom-reactivity.md
@@ -0,0 +1,5 @@
+---
+"effect": patch
+---
+
+Fix hydrated serializable atoms with reactivity so their invalidation callbacks are registered before mutations.
diff --git a/packages/effect/src/unstable/reactivity/AtomRegistry.ts b/packages/effect/src/unstable/reactivity/AtomRegistry.ts
index 0747de7bdb1..358fc2992dc 100644
--- a/packages/effect/src/unstable/reactivity/AtomRegistry.ts
+++ b/packages/effect/src/unstable/reactivity/AtomRegistry.ts
@@ -317,6 +317,14 @@ const SerializableTypeId: Atom.SerializableTypeId = "~effect-atom/atom/Atom/Seri
 const atomKey = <A>(atom: Atom.Atom<A>): Atom.Atom<A> | string =>
   SerializableTypeId in atom ? (atom as Atom.Serializable<any>)[SerializableTypeId].key : atom
 
+const initialValueTarget = <A>(atom: Atom.Atom<A>): Atom.Atom<A> => {
+  let target = atom
+  while (target.initialValueTarget) {
+    target = target.initialValueTarget
+  }
+  return target
+}
+
 class RegistryImpl implements AtomRegistry {
   readonly [TypeId]: TypeId
   readonly timeoutResolution: number
@@ -346,11 +354,7 @@ class RegistryImpl implements AtomRegistry {
     }
     if (initialValues !== undefined) {
       for (const [atom, value] of initialValues) {
-        let target = atom
-        while (target.initialValueTarget) {
-          target = target.initialValueTarget
-        }
-        this.ensureNode(target).setInitialValue(value)
+        this.ensureNode(initialValueTarget(atom)).setInitialValue(value)
       }
     }
   }
@@ -435,7 +439,12 @@ class RegistryImpl implements AtomRegistry {
       const encoded = this.preloadedSerializable.get(key)
       this.preloadedSerializable.delete(key)
       const decoded = (atom as any as Atom.Serializable<any>)[SerializableTypeId].decode(encoded)
-      node.setValue(decoded)
+      const target = initialValueTarget(atom)
+      if (target === atom) {
+        node.setInitialValue(decoded)
+      } else {
+        this.ensureNode(target).setInitialValue(decoded)
+      }
     }
     return node
   }
diff --git a/packages/effect/test/reactivity/Atom.test.ts b/packages/effect/test/reactivity/Atom.test.ts
index 3ded384d86f..bd54d1816b6 100644
--- a/packages/effect/test/reactivity/Atom.test.ts
+++ b/packages/effect/test/reactivity/Atom.test.ts
@@ -15,7 +15,7 @@ import {
 } from "effect"
 import { TestClock } from "effect/testing"
 import { KeyValueStore } from "effect/unstable/persistence"
-import { AsyncResult, Atom, AtomRegistry } from "effect/unstable/reactivity"
+import { AsyncResult, Atom, AtomRegistry, Hydration } from "effect/unstable/reactivity"
 
 declare const global: any
 
@@ -2249,6 +2249,43 @@ describe.sequential("Atom", () => {
       assert.strictEqual(r.get(atom), 11)
       assert.strictEqual(rebuilds, 2)
     })
+
+    it("rebuilds on mutation with a hydrated serializable initial value", async () => {
+      let rebuilds = 0
+      let value = 0
+      const atom = Atom.make(() => {
+        rebuilds++
+        return value
+      }).pipe(
+        Atom.withReactivity(["counter"]),
+        Atom.serializable({ key: "hydrated-counter", schema: Schema.Number }),
+        Atom.keepAlive
+      )
+      const r = AtomRegistry.make()
+      const fn = counterRuntime.fn(
+        Effect.fn(function*() {
+        }),
+        { reactivityKeys: ["counter"] }
+      )
+      const state = [{
+        "~effect/reactivity/DehydratedAtom": true as const,
+        key: "hydrated-counter",
+        value: 10,
+        dehydratedAt: 0
+      }]
+
+      Hydration.hydrate(r, state)
+      r.mount(atom)
+
+      assert.strictEqual(r.get(atom), 10)
+      assert.strictEqual(rebuilds, 1)
+
+      value = 11
+      r.set(fn, void 0)
+
+      assert.strictEqual(r.get(atom), 11)
+      assert.strictEqual(rebuilds, 2)
+    })
   })
 
   it("Atom.Interrupt", async () => {