diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.cpp
index 766a293b4a..83a76aeb01 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.cpp
@@ -187,13 +187,14 @@ namespace AzToolsFramework
             return removedEntity;
         }
 
-        void Instance::DetachNestedEntities(const AZStd::function<void(AZStd::unique_ptr<AZ::Entity>)>& callback)
+        void Instance::DetachAllEntitiesInHierarchy(const AZStd::function<void(AZStd::unique_ptr<AZ::Entity>)>& callback)
         {
+            callback(AZStd::move(DetachContainerEntity()));
             DetachEntities(callback);
 
             for (const auto& [instanceAlias, instance] : m_nestedInstances)
             {
-                instance->DetachNestedEntities(callback);
+                instance->DetachAllEntitiesInHierarchy(callback);
             }
         }
 
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.h b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.h
index d14203e2e5..5f36ac10dc 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.h
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Instance/Instance.h
@@ -87,7 +87,15 @@ namespace AzToolsFramework
             bool AddEntity(AZ::Entity& entity, EntityAlias entityAlias);
             AZStd::unique_ptr<AZ::Entity> DetachEntity(const AZ::EntityId& entityId);
             void DetachEntities(const AZStd::function<void(AZStd::unique_ptr<AZ::Entity>)>& callback);
-            void DetachNestedEntities(const AZStd::function<void(AZStd::unique_ptr<AZ::Entity>)>& callback);
+
+            /**
+            * Detaches all entities in the instance hierarchy.
+            * Includes all direct entities, all nested entities, and all container entities.
+            * Note that without container entities the hierarchy that remains cannot be used further without restoring new ones.
+            * @param callback A user provided callback that can be used to capture ownership and manipulate the detached entities.
+            */
+            void DetachAllEntitiesInHierarchy(const AZStd::function<void(AZStd::unique_ptr<AZ::Entity>)>& callback);
+
             void RemoveNestedEntities(const AZStd::function<bool(const AZStd::unique_ptr<AZ::Entity>&)>& filter);
 
             void Reset();
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Spawnable/SpawnableUtils.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Spawnable/SpawnableUtils.cpp
index 3c91f99b05..241d2a3bd5 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Spawnable/SpawnableUtils.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Spawnable/SpawnableUtils.cpp
@@ -38,11 +38,7 @@ namespace AzToolsFramework::Prefab::SpawnableUtils
                                                                               // going to be used to create clones of the entities.
         {
             AzFramework::Spawnable::EntityList& entities = spawnable.GetEntities();
-            if (instance.HasContainerEntity())
-            {
-                entities.emplace_back(AZStd::move(instance.DetachContainerEntity()));
-            }
-            instance.DetachNestedEntities(
+            instance.DetachAllEntitiesInHierarchy(
                 [&entities](AZStd::unique_ptr<AZ::Entity> entity)
                 {
                     entities.emplace_back(AZStd::move(entity));
diff --git a/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableCreateTests.cpp b/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableCreateTests.cpp
index af178ec7a4..14bd977318 100644
--- a/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableCreateTests.cpp
+++ b/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableCreateTests.cpp
@@ -71,24 +71,29 @@ namespace UnitTest
             m_prefabSystemComponent->CreatePrefab({ entitiesCreated[0] }, {}, "test/path1"));
         ASSERT_TRUE(firstInstance);
 
+        ASSERT_TRUE(firstInstance->HasContainerEntity());
+        expectedEntityNameSet.insert(firstInstance->GetContainerEntity()->get().GetName());
+
         AZStd::unique_ptr<AzToolsFramework::Prefab::Instance> secondInstance(
             m_prefabSystemComponent->CreatePrefab({ entitiesCreated[1] }, MakeInstanceList(AZStd::move(firstInstance)), "test/path2"));
         ASSERT_TRUE(secondInstance);
 
+        ASSERT_TRUE(secondInstance->HasContainerEntity());
+        expectedEntityNameSet.insert(secondInstance->GetContainerEntity()->get().GetName());
+
         AZStd::unique_ptr<AzToolsFramework::Prefab::Instance> thirdInstance(
             m_prefabSystemComponent->CreatePrefab({ entitiesCreated[2] }, MakeInstanceList(AZStd::move(secondInstance)), "test/path3"));
         ASSERT_TRUE(thirdInstance);
 
         ASSERT_TRUE(thirdInstance->HasContainerEntity());
-        auto& containerEntity = thirdInstance->GetContainerEntity()->get();
-        expectedEntityNameSet.insert(containerEntity.GetName());
+        expectedEntityNameSet.insert(thirdInstance->GetContainerEntity()->get().GetName());
 
         //Create Spawnable
         auto& prefabDom = m_prefabSystemComponent->FindTemplateDom(thirdInstance->GetTemplateId());
         AzFramework::Spawnable spawnable;
         AzToolsFramework::Prefab::SpawnableUtils::CreateSpawnable(spawnable, prefabDom);
 
-        EXPECT_EQ(spawnable.GetEntities().size() - 1, normalEntityCount); // 1 for container entity
+        EXPECT_EQ(spawnable.GetEntities().size(), normalEntityCount + 3); // +1 for each container entity
         const auto& spawnableEntities = spawnable.GetEntities();
         AZStd::unordered_set<AZStd::string> actualEntityNameSet;
 
@@ -97,6 +102,6 @@ namespace UnitTest
             actualEntityNameSet.insert(spawnableEntity->GetName());
         }
 
-        EXPECT_EQ(expectedEntityNameSet, actualEntityNameSet);
+        EXPECT_EQ(actualEntityNameSet, expectedEntityNameSet);
     }
 }
diff --git a/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableRemoveEditorInfoTestFixture.cpp b/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableRemoveEditorInfoTestFixture.cpp
index 152d09e9b7..03ce52cfd0 100644
--- a/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableRemoveEditorInfoTestFixture.cpp
+++ b/Code/Framework/AzToolsFramework/Tests/Prefab/SpawnableRemoveEditorInfoTestFixture.cpp
@@ -213,7 +213,7 @@ namespace UnitTest
         AZStd::unique_ptr<Instance> convertedInstance(aznew Instance());
         ASSERT_TRUE(AzToolsFramework::Prefab::PrefabDomUtils::LoadInstanceFromPrefabDom(*convertedInstance, m_prefabDom));
 
-        convertedInstance->DetachNestedEntities(
+        convertedInstance->DetachAllEntitiesInHierarchy(
             [this](AZStd::unique_ptr<AZ::Entity> entity)
             {
                 m_runtimeEntities.emplace_back(entity.release());