diff --git a/servers/visual/visual_server_scene.cpp b/servers/visual/visual_server_scene.cpp
index 2d3ba6601..4defbc2f3 100644
--- a/servers/visual/visual_server_scene.cpp
+++ b/servers/visual/visual_server_scene.cpp
@@ -989,6 +989,25 @@ void VisualServerScene::instance_set_visible(RID p_instance, bool p_visible) {
 
 	instance->visible = p_visible;
 
+	// Special case for physics interpolation, we want to ensure the interpolated data is up to date
+	if (instance->scenario->_interpolation_data.interpolation_enabled && p_visible && instance->interpolated && instance->scenario && !instance->on_interpolate_list) {
+		// Do all the extra work we normally do on instance_set_transform(), because this is optimized out for hidden instances.
+		// This prevents a glitch of stale interpolation transform data when unhiding before the next physics tick.
+		instance->interpolation_method = TransformInterpolator::find_method(instance->transform_prev.basis, instance->transform_curr.basis);
+		instance->scenario->_interpolation_data.instance_interpolate_update_list.push_back(p_instance);
+		instance->on_interpolate_list = true;
+		_instance_queue_update(instance, true);
+
+		// We must also place on the transform update list for a tick, so the system
+		// can auto-detect if the instance is no longer moving, and remove from the interpolate lists again.
+		// If this step is ignored, an unmoving instance could remain on the interpolate lists indefinitely
+		// (or rather until the object is deleted) and cause unnecessary updates and drawcalls.
+		if (!instance->on_interpolate_transform_list) {
+			instance->scenario->_interpolation_data.instance_transform_update_list_curr->push_back(p_instance);
+			instance->on_interpolate_transform_list = true;
+		}
+	}
+
 	// give the opportunity for the spatial partitioning scene to use a special implementation of visibility
 	// for efficiency (supported in BVH but not octree)