diff --git a/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorRequestBus.h b/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorRequestBus.h
index 442ff90f5b..d9b626f631 100644
--- a/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorRequestBus.h
+++ b/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorRequestBus.h
@@ -47,8 +47,13 @@ namespace AtomToolsFramework
         //! Sets the visibility of a specific property group. This impacts both the header and the widget.
         virtual void SetGroupVisible(const AZStd::string& groupNameId, bool visible) = 0;
         
-        //! Returns the visibility of a specific property group.
+        //! Returns whether a specific property is visible.
+        //! Note this follows the same rules as QWidget::isVisible(), meaning a group could be not visible due to the widget's parents being not visible.
         virtual bool IsGroupVisible(const AZStd::string& groupNameId) const = 0;
+        
+        //! Returns whether a specific property is explicitly hidden.
+        //! Note this follows the same rules as QWidget::isHidden(), meaning a group that is hidden will not become visible automatically when the parent becomes visible.
+        virtual bool IsGroupHidden(const AZStd::string& groupNameId) const = 0;
 
         //! Calls Refresh for a specific InspectorGroupWidget, allowing for non-destructive UI changes
         virtual void RefreshGroup(const AZStd::string& groupNameId) = 0;
diff --git a/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorWidget.h b/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorWidget.h
index 4e94de952c..5e41121b37 100644
--- a/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorWidget.h
+++ b/Gems/Atom/Tools/AtomToolsFramework/Code/Include/AtomToolsFramework/Inspector/InspectorWidget.h
@@ -59,6 +59,7 @@ namespace AtomToolsFramework
 
         void SetGroupVisible(const AZStd::string& groupNameId, bool visible) override;
         bool IsGroupVisible(const AZStd::string& groupNameId) const override;
+        bool IsGroupHidden(const AZStd::string& groupNameId) const override;
 
         void RefreshGroup(const AZStd::string& groupNameId) override;
         void RebuildGroup(const AZStd::string& groupNameId) override;
@@ -82,6 +83,13 @@ namespace AtomToolsFramework
     private:
         QVBoxLayout* m_layout = nullptr;
         QScopedPointer<Ui::InspectorWidget> m_ui;
-        AZStd::unordered_map<AZStd::string, AZStd::pair<InspectorGroupHeaderWidget*, QWidget*>> m_groups;
+
+        struct GroupWidgetPair
+        {
+            InspectorGroupHeaderWidget* m_header;
+            QWidget* m_panel;
+        };
+
+        AZStd::unordered_map<AZStd::string, GroupWidgetPair> m_groups;
     };
 } // namespace AtomToolsFramework
diff --git a/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Inspector/InspectorWidget.cpp b/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Inspector/InspectorWidget.cpp
index 94d4d95c24..83aed3c2ae 100644
--- a/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Inspector/InspectorWidget.cpp
+++ b/Gems/Atom/Tools/AtomToolsFramework/Code/Source/Inspector/InspectorWidget.cpp
@@ -75,7 +75,7 @@ namespace AtomToolsFramework
         groupWidget->setParent(m_ui->m_propertyContent);
         m_layout->addWidget(groupWidget);
 
-        m_groups[groupNameId] = AZStd::make_pair(groupHeader, groupWidget);
+        m_groups[groupNameId] = {groupHeader, groupWidget};
 
         connect(groupHeader, &InspectorGroupHeaderWidget::clicked, this, [this, groupNameId](QMouseEvent* event) {
             OnHeaderClicked(groupNameId, event);
@@ -95,25 +95,31 @@ namespace AtomToolsFramework
     
     void InspectorWidget::SetGroupVisible(const AZStd::string& groupNameId, bool visible)
     {
-        for (size_t i = 0; i < m_groups.size(); ++i)
+        auto groupItr = m_groups.find(groupNameId);
+        if (groupItr != m_groups.end())
         {
-            if (m_groups[i]->objectName() == groupNameId.c_str())
-            {
-                m_headers[i]->setVisible(visible);
-                m_groups[i]->setVisible(visible && m_headers[i]->IsExpanded());
-                break;
-            }
+            groupItr->second.m_header->setVisible(visible);
+            groupItr->second.m_panel->setVisible(visible && groupItr->second.m_header->IsExpanded());
         }
     }
     
     bool InspectorWidget::IsGroupVisible(const AZStd::string& groupNameId) const
     {
-        for (auto& header : m_headers)
+        auto groupItr = m_groups.find(groupNameId);
+        if (groupItr != m_groups.end())
         {
-            if (header->objectName() == groupNameId.c_str())
-            {
-                return header->isVisible();
-            }
+            return groupItr->second.m_header->isVisible();
+        }
+
+        return false;
+    }
+    
+    bool InspectorWidget::IsGroupHidden(const AZStd::string& groupNameId) const
+    {
+        auto groupItr = m_groups.find(groupNameId);
+        if (groupItr != m_groups.end())
+        {
+            return groupItr->second.m_header->isHidden();
         }
 
         return false;
@@ -156,8 +162,8 @@ namespace AtomToolsFramework
         auto groupItr = m_groups.find(groupNameId);
         if (groupItr != m_groups.end())
         {
-            groupItr->second.first->SetExpanded(true);
-            groupItr->second.second->setVisible(true);
+            groupItr->second.m_header->SetExpanded(true);
+            groupItr->second.m_panel->setVisible(true);
         }
     }
 
@@ -166,23 +172,23 @@ namespace AtomToolsFramework
         auto groupItr = m_groups.find(groupNameId);
         if (groupItr != m_groups.end())
         {
-            groupItr->second.first->SetExpanded(false);
-            groupItr->second.second->setVisible(false);
+            groupItr->second.m_header->SetExpanded(false);
+            groupItr->second.m_panel->setVisible(false);
         }
     }
 
     bool InspectorWidget::IsGroupExpanded(const AZStd::string& groupNameId) const
     {
         auto groupItr = m_groups.find(groupNameId);
-        return groupItr != m_groups.end() ? groupItr->second.first->IsExpanded() : false;
+        return groupItr != m_groups.end() ? groupItr->second.m_header->IsExpanded() : false;
     }
 
     void InspectorWidget::ExpandAll()
     {
         for (auto& groupPair : m_groups)
         {
-            groupPair.second.first->SetExpanded(true);
-            groupPair.second.second->setVisible(true);
+            groupPair.second.m_header->SetExpanded(true);
+            groupPair.second.m_panel->setVisible(true);
         }
     }
 
@@ -190,8 +196,8 @@ namespace AtomToolsFramework
     {
         for (auto& groupPair : m_groups)
         {
-            groupPair.second.first->SetExpanded(false);
-            groupPair.second.second->setVisible(false);
+            groupPair.second.m_header->SetExpanded(false);
+            groupPair.second.m_panel->setVisible(false);
         }
     }
 
diff --git a/Gems/Atom/Tools/MaterialEditor/Code/Source/Window/MaterialInspector/MaterialInspector.cpp b/Gems/Atom/Tools/MaterialEditor/Code/Source/Window/MaterialInspector/MaterialInspector.cpp
index 0492c9c150..19dfc6154c 100644
--- a/Gems/Atom/Tools/MaterialEditor/Code/Source/Window/MaterialInspector/MaterialInspector.cpp
+++ b/Gems/Atom/Tools/MaterialEditor/Code/Source/Window/MaterialInspector/MaterialInspector.cpp
@@ -198,6 +198,11 @@ namespace MaterialEditor
                 &group, &group, group.TYPEINFO_Uuid(), this, this, GetGroupSaveStateKey(groupNameId),
                 [this](const auto source, const auto target) { return CompareInstanceNodeProperties(source, target); });
             AddGroup(groupNameId, groupDisplayName, groupDescription, propertyGroupWidget);
+            
+            bool isGroupVisible = false;
+            MaterialDocumentRequestBus::EventResult(
+                isGroupVisible, m_documentId, &MaterialDocumentRequestBus::Events::IsPropertyGroupVisible, AZ::Name{groupNameId});
+            SetGroupVisible(groupNameId, isGroupVisible);
         }
     }
 
diff --git a/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/EditorMaterialComponentInspector.cpp b/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/EditorMaterialComponentInspector.cpp
index 59e29d29f1..31d69569db 100644
--- a/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/EditorMaterialComponentInspector.cpp
+++ b/Gems/AtomLyIntegration/CommonFeatures/Code/Source/Material/EditorMaterialComponentInspector.cpp
@@ -305,8 +305,11 @@ namespace AZ
                 {
                     AZ::RPI::MaterialPropertyGroupDynamicMetadata& metadata = propertyGroupDynamicMetadata[AZ::Name{groupPair.first}];
 
-                    metadata.m_visibility = IsGroupVisible(groupPair.first) ?
-                        AZ::RPI::MaterialPropertyGroupVisibility::Enabled : AZ::RPI::MaterialPropertyGroupVisibility::Hidden;
+                    // It's significant that we check IsGroupHidden rather than IsGroupVisisble, because it follows the same rules as QWidget::isHidden().
+                    // We don't care whether the widget and all its parents are visible, we only care about whether the group was hidden within the context
+                    // of the material property inspector.
+                    metadata.m_visibility = IsGroupHidden(groupPair.first) ?
+                        AZ::RPI::MaterialPropertyGroupVisibility::Hidden : AZ::RPI::MaterialPropertyGroupVisibility::Enabled;
                 }
 
                 for (AZ::RPI::Ptr<AZ::RPI::MaterialFunctor>& functor : m_editorFunctors)