diff --git a/.changeset/hydrated-rejection-retry.md b/.changeset/hydrated-rejection-retry.md
new file mode 100644
index 00000000000..b4cd974cc81
--- /dev/null
+++ b/.changeset/hydrated-rejection-retry.md
@@ -0,0 +1,5 @@
+---
+'@tanstack/query-core': patch
+---
+
+When a query hydrated while pending rejects, its retries now take `retry` and `retryDelay` from the options an observer set itself, if one mounted before the promise settled. Otherwise they use the hydration options, and then the client's defaults, as before.
diff --git a/packages/query-core/src/__tests__/hydration.test.tsx b/packages/query-core/src/__tests__/hydration.test.tsx
index ee037a11afe..eb48fd484db 100644
--- a/packages/query-core/src/__tests__/hydration.test.tsx
+++ b/packages/query-core/src/__tests__/hydration.test.tsx
@@ -5,6 +5,7 @@ import { QueryCache } from '../queryCache'
 import { dehydrate, hydrate } from '../hydration'
 import { dehydrateQuery } from '../index'
 import { MutationCache } from '../mutationCache'
+import { QueryObserver } from '../queryObserver'
 import { noop } from '../utils'
 import { executeMutation, mockOnlineManagerIsOnline } from './utils'
 import type { MutationFunction, MutationFunctionContext } from '../index'
@@ -1096,6 +1097,100 @@ describe('dehydration and rehydration', () => {
     })
   })
 
+  it("should use the observer's retryDelay when a hydrated query rejects", async () => {
+    const key = createKey()
+    const serverClient = new QueryClient({
+      defaultOptions: { dehydrate: { shouldDehydrateQuery: () => true } },
+    })
+    void serverClient
+      .query({
+        queryKey: key,
+        queryFn: () => sleep(10).then(() => Promise.reject(new Error('error'))),
+        retry: false,
+      })
+      .catch(noop)
+    const queryClient = new QueryClient()
+    hydrate(queryClient, dehydrate(serverClient))
+
+    const observer = new QueryObserver(queryClient, {
+      queryKey: key,
+      queryFn: () => sleep(10).then(() => 'data'),
+      retry: 1,
+      retryDelay: 10,
+    })
+    const unsubscribe = observer.subscribe(noop)
+
+    await vi.advanceTimersByTimeAsync(30)
+    expect(queryClient.getQueryData(key)).toBe('data')
+
+    unsubscribe()
+    queryClient.clear()
+    serverClient.clear()
+  })
+
+  it("should use the observer's retry when a hydrated query rejects", async () => {
+    const key = createKey()
+    const serverClient = new QueryClient({
+      defaultOptions: { dehydrate: { shouldDehydrateQuery: () => true } },
+    })
+    void serverClient
+      .query({
+        queryKey: key,
+        queryFn: () => sleep(10).then(() => Promise.reject(new Error('error'))),
+        retry: false,
+      })
+      .catch(noop)
+    const queryClient = new QueryClient()
+    hydrate(queryClient, dehydrate(serverClient))
+
+    const observer = new QueryObserver(queryClient, {
+      queryKey: key,
+      queryFn: () => sleep(10).then(() => 'data'),
+      retry: false,
+    })
+    const unsubscribe = observer.subscribe(noop)
+
+    await vi.advanceTimersByTimeAsync(10)
+    expect(queryClient.getQueryState(key)?.status).toBe('error')
+
+    unsubscribe()
+    queryClient.clear()
+    serverClient.clear()
+  })
+
+  it("should use the hydrate retry over the client's default retry when a hydrated query rejects", async () => {
+    const key = createKey()
+    const serverClient = new QueryClient({
+      defaultOptions: { dehydrate: { shouldDehydrateQuery: () => true } },
+    })
+    void serverClient
+      .query({
+        queryKey: key,
+        queryFn: () => sleep(10).then(() => Promise.reject(new Error('error'))),
+        retry: false,
+      })
+      .catch(noop)
+    const queryClient = new QueryClient({
+      defaultOptions: { queries: { retry: 1, retryDelay: 10 } },
+    })
+    hydrate(queryClient, dehydrate(serverClient), {
+      defaultOptions: { queries: { retry: false } },
+    })
+
+    const observer = new QueryObserver(queryClient, {
+      queryKey: key,
+      queryFn: () => sleep(10).then(() => 'data'),
+    })
+    const unsubscribe = observer.subscribe(noop)
+
+    await vi.advanceTimersByTimeAsync(10)
+    expect(queryClient.getQueryState(key)?.status).toBe('error')
+
+    unsubscribe()
+    queryClient.clear()
+    serverClient.clear()
+  })
+
   it('should transform promise result', async () => {
     const key = createKey()
     const queryClient = new QueryClient({
diff --git a/packages/query-core/src/query.ts b/packages/query-core/src/query.ts
index af9a81baebd..dfac1131433 100644
--- a/packages/query-core/src/query.ts
+++ b/packages/query-core/src/query.ts
@@ -2,6 +2,7 @@ import {
   ensureQueryFn,
   fetchSignal,
   noop,
+  ownQueryOptions,
   replaceData,
   resolveQueryValue,
   skipToken,
@@ -829,6 +830,19 @@ export class Query<
         : this.options.behavior
     behavior?.onFetch(context, this as unknown as Query)
 
+    // A hydrated promise starts fetching before any observer mounts. Its
+    // retries use the options an observer set itself, then the options the
+    // fetch started with, which put hydration options over client defaults
+    const getRetryOption = <TKey extends 'retry' | 'retryDelay'>(key: TKey) => {
+      if (fetchOptions?.initialPromise) {
+        for (const observer of this.observers) {
+          const value = ownQueryOptions.get(observer.options)?.[key]
+          if (value !== undefined) return value
+        }
+      }
+      return context.options[key]
+    }
+
     // Store state in case the current fetch needs to be reverted
     this.#revertState = this.state
 
@@ -864,8 +878,12 @@ export class Query<
       onContinue: () => {
         this.#dispatch({ type: 'continue' })
       },
-      retry: context.options.retry,
-      retryDelay: context.options.retryDelay,
+      get retry() {
+        return getRetryOption('retry')
+      },
+      get retryDelay() {
+        return getRetryOption('retryDelay')
+      },
       networkMode: context.options.networkMode,
       canRun: () => true,
     }))
diff --git a/packages/query-core/src/queryClient.ts b/packages/query-core/src/queryClient.ts
index faa0b130ab2..c3b0d6772af 100644
--- a/packages/query-core/src/queryClient.ts
+++ b/packages/query-core/src/queryClient.ts
@@ -3,6 +3,7 @@ import {
   hashKey,
   hashQueryKeyByOptions,
   noop,
+  ownQueryOptions,
   partialMatchKey,
   resolveQueryValue,
   skipToken,
@@ -1102,6 +1103,7 @@ export class QueryClient {
       ...options,
       _defaulted: true,
     }
+    ownQueryOptions.set(defaultedOptions, options)
 
     if (!defaultedOptions.queryHash) {
       defaultedOptions.queryHash = hashQueryKeyByOptions(
diff --git a/packages/query-core/src/utils.ts b/packages/query-core/src/utils.ts
index 64e6a664ab5..0fb321d8dff 100644
--- a/packages/query-core/src/utils.ts
+++ b/packages/query-core/src/utils.ts
@@ -629,6 +629,15 @@ export const skipToken = Symbol()
  */
 export type SkipToken = typeof skipToken
 
+/**
+ * The options each `defaultQueryOptions` result was made from, before client defaults filled them in.
+ * @internal
+ */
+export const ownQueryOptions = new WeakMap<
+  object,
+  Pick<QueryOptions<any, any, any, any>, 'retry' | 'retryDelay'>
+>()
+
 /**
  * Returns the function to call for a fetch. If there is no `queryFn` but the fetch was started from
  * an `initialPromise`, that promise is returned instead. If there is no usable `queryFn` (missing or