diff --git a/.changeset/yellow-coins-draw.md b/.changeset/yellow-coins-draw.md
new file mode 100644
index 0000000000..e15965e892
--- /dev/null
+++ b/.changeset/yellow-coins-draw.md
@@ -0,0 +1,5 @@
+---
+"@zag-js/combobox": patch
+---
+
+Fix a case where item highlight was looping even though loop property was false
diff --git a/.xstate/combobox.js b/.xstate/combobox.js
index dd3410f354..72716bb824 100644
--- a/.xstate/combobox.js
+++ b/.xstate/combobox.js
@@ -129,7 +129,7 @@ const fetchMachine = createMachine({
           actions: ["highlightFirstSelectedItem", "invokeOnOpen"]
         }, {
           target: "interacting",
-          actions: ["highlightNextItem", "invokeOnOpen"]
+          actions: ["highlightFirstItem", "invokeOnOpen"]
         }],
         "INPUT.ARROW_DOWN+ALT": {
           target: "interacting",
diff --git a/e2e/combobox.e2e.ts b/e2e/combobox.e2e.ts
index ab50efcbec..0dd5dccaf9 100644
--- a/e2e/combobox.e2e.ts
+++ b/e2e/combobox.e2e.ts
@@ -78,7 +78,7 @@ test.describe("combobox", () => {
     await expect(page.locator(content)).toBeHidden()
   })
 
-  test("[keyboard] on arrow down, open and highlight first enabled option", async ({ page }) => {
+  test("[keyboard / loop] on arrow down, open and highlight first enabled option", async ({ page }) => {
     await page.focus(input)
     await page.keyboard.press("ArrowDown")
     const option = page.locator(options).first()
@@ -86,7 +86,27 @@ test.describe("combobox", () => {
     await expectToBeHighlighted(option)
   })
 
-  test("[keyboard] on arrow up, open and highlight last enabled option", async ({ page }) => {
+  test("[keyboard / no-loop] on arrow down, open and highlight first enabled option", async ({ page }) => {
+    await controls(page).bool("loop", false)
+
+    await page.focus(input)
+    await page.keyboard.press("ArrowDown")
+    const option = page.locator(options).first()
+    await expect(page.locator(content)).toBeVisible()
+    await expectToBeHighlighted(option)
+  })
+
+  test("[keyboard / loop] on arrow up, open and highlight last enabled option", async ({ page }) => {
+    await page.focus(input)
+    await page.keyboard.press("ArrowUp")
+    const option = page.locator(options).last()
+    await expect(page.locator(content)).toBeVisible()
+    await expectToBeHighlighted(option)
+  })
+
+  test("[keyboard / no-loop] on arrow up, open and highlight last enabled option", async ({ page }) => {
+    await controls(page).bool("loop", false)
+
     await page.focus(input)
     await page.keyboard.press("ArrowUp")
     const option = page.locator(options).last()
@@ -137,6 +157,20 @@ test.describe("combobox", () => {
     await expectToBeHighlighted(option_els.first())
   })
 
+  test("[keyboard / arrowdown / no-loop]", async ({ page }) => {
+    await controls(page).bool("loop", false)
+
+    await page.type(input, "mal")
+
+    const option_els = page.locator(options)
+
+    await repeat(4, () => page.keyboard.press("ArrowDown"))
+
+    await expectToBeHighlighted(option_els.last())
+    await page.keyboard.press("ArrowDown")
+    await expectToBeHighlighted(option_els.last())
+  })
+
   test("[keyboard / arrowup / loop]", async ({ page }) => {
     await page.type(input, "mal")
     const option_els = page.locator(options)
@@ -144,6 +178,15 @@ test.describe("combobox", () => {
     await expectToBeHighlighted(option_els.last())
   })
 
+  test("[keyboard / arrowup / no-loop]", async ({ page }) => {
+    await controls(page).bool("loop", false)
+
+    await page.type(input, "mal")
+    const option_els = page.locator(options)
+    await page.keyboard.press("ArrowUp")
+    await expectToBeHighlighted(option_els.first())
+  })
+
   test("[pointer / open-on-click]", async ({ page }) => {
     await controls(page).bool("openOnClick")
     await page.click(input, { force: true })
diff --git a/packages/machines/combobox/src/combobox.machine.ts b/packages/machines/combobox/src/combobox.machine.ts
index a2092861d7..d8b84c06c2 100644
--- a/packages/machines/combobox/src/combobox.machine.ts
+++ b/packages/machines/combobox/src/combobox.machine.ts
@@ -157,7 +157,7 @@ export function machine<T extends CollectionItem>(userContext: UserDefinedContex
               },
               {
                 target: "interacting",
-                actions: ["highlightNextItem", "invokeOnOpen"],
+                actions: ["highlightFirstItem", "invokeOnOpen"],
               },
             ],
             "INPUT.ARROW_DOWN+ALT": {
@@ -558,11 +558,11 @@ export function machine<T extends CollectionItem>(userContext: UserDefinedContex
           set.highlightedItem(ctx, value)
         },
         highlightNextItem(ctx) {
-          const value = ctx.collection.next(ctx.highlightedValue) ?? ctx.collection.first()
+          const value = ctx.collection.next(ctx.highlightedValue) ?? (ctx.loop ? ctx.collection.first() : null)
           set.highlightedItem(ctx, value)
         },
         highlightPrevItem(ctx) {
-          const value = ctx.collection.prev(ctx.highlightedValue) ?? ctx.collection.last()
+          const value = ctx.collection.prev(ctx.highlightedValue) ?? (ctx.loop ? ctx.collection.last() : null)
           set.highlightedItem(ctx, value)
         },
         highlightFirstSelectedItem(ctx) {
diff --git a/shared/src/data.ts b/shared/src/data.ts
index a6c7ee8cfe..30925847c6 100644
--- a/shared/src/data.ts
+++ b/shared/src/data.ts
@@ -36,7 +36,7 @@ export const comboboxData = [
   { label: "Albania", code: "AL" },
   { label: "Algeria", code: "DZ" },
   { label: "American Samoa", code: "AS" },
-  { label: "AndorrA", code: "AD" },
+  { label: "Andorra", code: "AD" },
   { label: "Angola", code: "AO" },
   // { label: "Angola", code: "AO" },
   { label: "Anguilla", code: "AI" },
diff --git a/website/components/machines/combobox.tsx b/website/components/machines/combobox.tsx
index 8780045788..18f940b2c1 100644
--- a/website/components/machines/combobox.tsx
+++ b/website/components/machines/combobox.tsx
@@ -22,8 +22,7 @@ const comboboxData = [
   { label: "Albania", code: "AL" },
   { label: "Algeria", code: "DZ" },
   { label: "American Samoa", code: "AS" },
-  { label: "AndorrA", code: "AD" },
-  { label: "Angola", code: "AO" },
+  { label: "Andorra", code: "AD" },
   { label: "Angola", code: "AO" },
   { label: "Anguilla", code: "AI" },
   { label: "Antarctica", code: "AQ" },