diff --git a/packages/query-core/src/queryObserver.ts b/packages/query-core/src/queryObserver.ts
index 6d8685e705..33f837eef6 100644
--- a/packages/query-core/src/queryObserver.ts
+++ b/packages/query-core/src/queryObserver.ts
@@ -64,10 +64,12 @@ export class QueryObserver<
     TQueryData,
     TQueryKey
   >
-  #previousQueryResult?: QueryObserverResult<TData, TError>
   #selectError: TError | null
   #selectFn?: (data: TQueryData) => TData
   #selectResult?: TData
+  // This property keeps track of the last defined query data.
+  // It will be used to pass the previous data to the placeholder function between renders.
+  #lastDefinedQueryData?: TQueryData
   #staleTimeoutId?: ReturnType<typeof setTimeout>
   #refetchIntervalId?: ReturnType<typeof setInterval>
   #currentRefetchInterval?: number | false
@@ -414,9 +416,6 @@ export class QueryObserver<
     const queryInitialState = queryChange
       ? query.state
       : this.#currentQueryInitialState
-    const prevQueryResult = queryChange
-      ? this.#currentResult
-      : this.#previousQueryResult
 
     const { state } = query
     let { error, errorUpdatedAt, fetchStatus, status } = state
@@ -490,7 +489,7 @@ export class QueryObserver<
           typeof options.placeholderData === 'function'
             ? (
                 options.placeholderData as unknown as PlaceholderDataFunction<TQueryData>
-              )(prevQueryResult?.data as TQueryData | undefined)
+              )(this.#lastDefinedQueryData)
             : options.placeholderData
         if (options.select && typeof placeholderData !== 'undefined') {
           try {
@@ -504,7 +503,11 @@ export class QueryObserver<
 
       if (typeof placeholderData !== 'undefined') {
         status = 'success'
-        data = replaceData(prevResult?.data, placeholderData, options) as TData
+        data = replaceData(
+          prevResult?.data,
+          placeholderData as unknown,
+          options,
+        ) as TData
         isPlaceholderData = true
       }
     }
@@ -568,6 +571,9 @@ export class QueryObserver<
       return
     }
 
+    if (this.#currentResultState.data !== undefined) {
+      this.#lastDefinedQueryData = this.#currentResultState.data
+    }
     this.#currentResult = nextResult
 
     // Determine which callbacks to trigger
@@ -619,7 +625,6 @@ export class QueryObserver<
       | undefined
     this.#currentQuery = query
     this.#currentQueryInitialState = query.state
-    this.#previousQueryResult = this.#currentResult
 
     if (this.hasListeners()) {
       prevQuery?.removeObserver(this)
diff --git a/packages/query-core/src/tests/queryObserver.test.tsx b/packages/query-core/src/tests/queryObserver.test.tsx
index 47d1567402..1311966132 100644
--- a/packages/query-core/src/tests/queryObserver.test.tsx
+++ b/packages/query-core/src/tests/queryObserver.test.tsx
@@ -691,6 +691,61 @@ describe('queryObserver', () => {
     expect(observer.getCurrentResult().isPlaceholderData).toBe(false)
   })
 
+  test('should pass the correct previous data to placeholderData function params when select function is used in conjunction', async () => {
+    const results: QueryObserverResult[] = []
+
+    const key1 = queryKey()
+    const key2 = queryKey()
+
+    const data1 = { value: 'data1' }
+    const data2 = { value: 'data2' }
+
+    const observer = new QueryObserver(queryClient, {
+      queryKey: key1,
+      queryFn: () => data1,
+      placeholderData: (prev) => prev,
+      select: (data) => data.value,
+    })
+
+    const unsubscribe = observer.subscribe((result) => {
+      results.push(result)
+    })
+
+    await sleep(1)
+
+    observer.setOptions({
+      queryKey: key2,
+      queryFn: () => data2,
+      placeholderData: (prev) => prev,
+      select: (data) => data.value,
+    })
+
+    await sleep(1)
+    unsubscribe()
+
+    expect(results.length).toBe(4)
+    expect(results[0]).toMatchObject({
+      data: undefined,
+      status: 'pending',
+      fetchStatus: 'fetching',
+    }) // Initial fetch
+    expect(results[1]).toMatchObject({
+      data: 'data1',
+      status: 'success',
+      fetchStatus: 'idle',
+    }) // Successful fetch
+    expect(results[2]).toMatchObject({
+      data: 'data1',
+      status: 'success',
+      fetchStatus: 'fetching',
+    }) // Fetch for new key, but using previous data as placeholder
+    expect(results[3]).toMatchObject({
+      data: 'data2',
+      status: 'success',
+      fetchStatus: 'idle',
+    }) // Successful fetch for new key
+  })
+
   test('setOptions should notify cache listeners', async () => {
     const key = queryKey()
 
diff --git a/packages/react-query/src/__tests__/useQuery.test.tsx b/packages/react-query/src/__tests__/useQuery.test.tsx
index 58bb17457e..eb0294438d 100644
--- a/packages/react-query/src/__tests__/useQuery.test.tsx
+++ b/packages/react-query/src/__tests__/useQuery.test.tsx
@@ -1728,6 +1728,159 @@ describe('useQuery', () => {
     })
   })
 
+  it('should keep the previous data when placeholderData is set and select fn transform is used', async () => {
+    const key = queryKey()
+    const states: UseQueryResult<number>[] = []
+
+    function Page() {
+      const [count, setCount] = React.useState(0)
+
+      const state = useQuery({
+        queryKey: [key, count],
+        queryFn: async () => {
+          await sleep(10)
+          return {
+            count,
+          }
+        },
+        select(data) {
+          return data.count
+        },
+        placeholderData: keepPreviousData,
+      })
+
+      states.push(state)
+
+      return (
+        <div>
+          <div>data: {state.data}</div>
+          <button onClick={() => setCount(1)}>setCount</button>
+        </div>
+      )
+    }
+
+    const rendered = renderWithClient(queryClient, <Page />)
+
+    await waitFor(() => rendered.getByText('data: 0'))
+
+    fireEvent.click(rendered.getByRole('button', { name: 'setCount' }))
+
+    await waitFor(() => rendered.getByText('data: 1'))
+
+    // Initial
+    expect(states[0]).toMatchObject({
+      data: undefined,
+      isFetching: true,
+      isSuccess: false,
+      isPlaceholderData: false,
+    })
+    // Fetched
+    expect(states[1]).toMatchObject({
+      data: 0,
+      isFetching: false,
+      isSuccess: true,
+      isPlaceholderData: false,
+    })
+    // Set state
+    expect(states[2]).toMatchObject({
+      data: 0,
+      isFetching: true,
+      isSuccess: true,
+      isPlaceholderData: true,
+    })
+    // New data
+    expect(states[3]).toMatchObject({
+      data: 1,
+      isFetching: false,
+      isSuccess: true,
+      isPlaceholderData: false,
+    })
+  })
+
+  it('should show placeholderData between multiple pending queries when select fn transform is used', async () => {
+    const key = queryKey()
+    const states: UseQueryResult<number>[] = []
+
+    function Page() {
+      const [count, setCount] = React.useState(0)
+
+      const state = useQuery({
+        queryKey: [key, count],
+        queryFn: async () => {
+          await sleep(10)
+          return {
+            count,
+          }
+        },
+        select(data) {
+          return data.count
+        },
+        placeholderData: keepPreviousData,
+      })
+
+      states.push(state)
+
+      return (
+        <div>
+          <div>data: {state.data}</div>
+          <button onClick={() => setCount((prev) => prev + 1)}>setCount</button>
+        </div>
+      )
+    }
+
+    const rendered = renderWithClient(queryClient, <Page />)
+
+    await waitFor(() => rendered.getByText('data: 0'))
+
+    fireEvent.click(rendered.getByRole('button', { name: 'setCount' }))
+    fireEvent.click(rendered.getByRole('button', { name: 'setCount' }))
+    fireEvent.click(rendered.getByRole('button', { name: 'setCount' }))
+
+    await waitFor(() => rendered.getByText('data: 3'))
+    // Initial
+    expect(states[0]).toMatchObject({
+      data: undefined,
+      isFetching: true,
+      isSuccess: false,
+      isPlaceholderData: false,
+    })
+    // Fetched
+    expect(states[1]).toMatchObject({
+      data: 0,
+      isFetching: false,
+      isSuccess: true,
+      isPlaceholderData: false,
+    })
+    // Set state -> count = 1
+    expect(states[2]).toMatchObject({
+      data: 0,
+      isFetching: true,
+      isSuccess: true,
+      isPlaceholderData: true,
+    })
+    // Set state -> count = 2
+    expect(states[3]).toMatchObject({
+      data: 0,
+      isFetching: true,
+      isSuccess: true,
+      isPlaceholderData: true,
+    })
+    // Set state -> count = 3
+    expect(states[4]).toMatchObject({
+      data: 0,
+      isFetching: true,
+      isSuccess: true,
+      isPlaceholderData: true,
+    })
+    // New data
+    expect(states[5]).toMatchObject({
+      data: 3,
+      isFetching: false,
+      isSuccess: true,
+      isPlaceholderData: false,
+    })
+  })
+
   it('should transition to error state when placeholderData is set', async () => {
     const key = queryKey()
     const states: UseQueryResult<number>[] = []