diff --git a/packages/lexical-playground/__tests__/e2e/Collaboration.spec.mjs b/packages/lexical-playground/__tests__/e2e/Collaboration.spec.mjs
index 296d9ac21a0..90d4edeefca 100644
--- a/packages/lexical-playground/__tests__/e2e/Collaboration.spec.mjs
+++ b/packages/lexical-playground/__tests__/e2e/Collaboration.spec.mjs
@@ -413,4 +413,256 @@ test.describe('Collaboration', () => {
       `,
     );
   });
+
+  test('Undo/redo where text node is split by formatting change', async ({
+    isRichText,
+    page,
+    isCollab,
+    browserName,
+  }) => {
+    test.skip(!isCollab);
+
+    // Left collaborator types two words, sets the second one to bold.
+    await focusEditor(page);
+    await page.keyboard.type('normal bold');
+
+    await sleep(1050);
+    await selectCharacters(page, 'left', 'bold'.length);
+    await toggleBold(page);
+
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">normal</span>
+          <strong
+            class="PlaygroundEditorTheme__textBold"
+            data-lexical-text="true">
+            bold
+          </strong>
+        </p>
+      `,
+    );
+
+    // Right collaborator types in the middle of the bold word.
+    await page
+      .frameLocator('iframe[name="right"]')
+      .locator('[data-lexical-editor="true"]')
+      .focus();
+    await page.keyboard.press('ArrowDown', {delay: 50});
+    await page.keyboard.press('ArrowLeft');
+    await page.keyboard.press('ArrowLeft');
+    await page.keyboard.type('BOLD');
+
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">normal</span>
+          <strong
+            class="PlaygroundEditorTheme__textBold"
+            data-lexical-text="true">
+            boBOLDld
+          </strong>
+        </p>
+      `,
+    );
+
+    // Left collaborator undoes their bold text.
+    await page.frameLocator('iframe[name="left"]').getByLabel('Undo').click();
+
+    // The undo causes the text to be appended to the original string, like in the above test.
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">normal boldBOLD</span>
+        </p>
+      `,
+    );
+
+    // Left collaborator redoes the bold text.
+    await page.frameLocator('iframe[name="left"]').getByLabel('Redo').click();
+
+    // The text should be back as it was prior to the undo.
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">normal</span>
+          <strong
+            class="PlaygroundEditorTheme__textBold"
+            data-lexical-text="true">
+            boBOLDld
+          </strong>
+        </p>
+      `,
+    );
+
+    // Collaboration should still work.
+    await page
+      .frameLocator('iframe[name="right"]')
+      .locator('[data-lexical-editor="true"]')
+      .focus();
+    await page.keyboard.press('ArrowDown', {delay: 50});
+    await page.keyboard.type(' text');
+
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">normal</span>
+          <strong
+            class="PlaygroundEditorTheme__textBold"
+            data-lexical-text="true">
+            boBOLDld text
+          </strong>
+        </p>
+      `,
+    );
+  });
+
+  test('Undo/redo where text node is split by inline element node', async ({
+    isRichText,
+    page,
+    isCollab,
+    browserName,
+  }) => {
+    test.skip(!isCollab);
+
+    // Left collaborator types some text, then splits the text nodes with an element node.
+    await focusEditor(page);
+    await page.keyboard.type('Check out the website!');
+
+    await sleep(1050);
+    await page.keyboard.press('ArrowLeft');
+    await selectCharacters(page, 'left', 'website'.length);
+    await page
+      .frameLocator('iframe[name="left"]')
+      .getByLabel('Insert link')
+      .first()
+      .click();
+
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">Check out the</span>
+          <a
+            class="PlaygroundEditorTheme__link PlaygroundEditorTheme__ltr"
+            dir="ltr"
+            href="https://"
+            rel="noreferrer">
+            <span data-lexical-text="true">website</span>
+          </a>
+          <span data-lexical-text="true">!</span>
+        </p>
+      `,
+    );
+
+    // Right collaborator adds some text.
+    await page
+      .frameLocator('iframe[name="right"]')
+      .locator('[data-lexical-editor="true"]')
+      .focus();
+    await page.keyboard.press('ArrowDown', {delay: 50});
+    await page.keyboard.press('ArrowLeft');
+    await page.keyboard.type(' now');
+
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">Check out the</span>
+          <a
+            class="PlaygroundEditorTheme__link PlaygroundEditorTheme__ltr"
+            dir="ltr"
+            href="https://"
+            rel="noreferrer">
+            <span data-lexical-text="true">website</span>
+          </a>
+          <span data-lexical-text="true">now!</span>
+        </p>
+      `,
+    );
+
+    // Left collaborator undoes the link.
+    await page.frameLocator('iframe[name="left"]').getByLabel('Undo').click();
+
+    // The undo causes the text to be appended to the original string, like in the above test.
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">Check out the website! now</span>
+        </p>
+      `,
+    );
+
+    // Left collaborator redoes the link.
+    await page.frameLocator('iframe[name="left"]').getByLabel('Redo').click();
+
+    // The text should be back as it was prior to the undo.
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">Check out the</span>
+          <a
+            class="PlaygroundEditorTheme__link PlaygroundEditorTheme__ltr"
+            dir="ltr"
+            href="https://"
+            rel="noreferrer">
+            <span data-lexical-text="true">website</span>
+          </a>
+          <span data-lexical-text="true">now!</span>
+        </p>
+      `,
+    );
+
+    // Collaboration should still work.
+    await page
+      .frameLocator('iframe[name="right"]')
+      .locator('[data-lexical-editor="true"]')
+      .focus();
+    await page.keyboard.press('ArrowDown', {delay: 50});
+    await page.keyboard.type(' Check it out.');
+
+    await assertHTML(
+      page,
+      html`
+        <p
+          class="PlaygroundEditorTheme__paragraph PlaygroundEditorTheme__ltr"
+          dir="ltr">
+          <span data-lexical-text="true">Check out the</span>
+          <a
+            class="PlaygroundEditorTheme__link PlaygroundEditorTheme__ltr"
+            dir="ltr"
+            href="https://"
+            rel="noreferrer">
+            <span data-lexical-text="true">website</span>
+          </a>
+          <span data-lexical-text="true">now! Check it out.</span>
+        </p>
+      `,
+    );
+  });
 });
diff --git a/packages/lexical-yjs/src/CollabElementNode.ts b/packages/lexical-yjs/src/CollabElementNode.ts
index c38171af0e8..14fd1fbf0c8 100644
--- a/packages/lexical-yjs/src/CollabElementNode.ts
+++ b/packages/lexical-yjs/src/CollabElementNode.ts
@@ -129,6 +129,7 @@ export class CollabElementNode {
   ): void {
     const children = this._children;
     let currIndex = 0;
+    let pendingSplitText = null;
 
     for (let i = 0; i < deltas.length; i++) {
       const delta = deltas[i];
@@ -211,7 +212,7 @@ export class CollabElementNode {
           currIndex += insertDelta.length;
         } else {
           const sharedType = insertDelta;
-          const {nodeIndex} = getPositionFromElementAndOffset(
+          const {node, nodeIndex, length} = getPositionFromElementAndOffset(
             this,
             currIndex,
             false,
@@ -221,7 +222,30 @@ export class CollabElementNode {
             sharedType as XmlText | YMap<unknown> | XmlElement,
             this,
           );
-          children.splice(nodeIndex, 0, collabNode);
+          if (
+            node instanceof CollabTextNode &&
+            length > 0 &&
+            length < node._text.length
+          ) {
+            // Trying to insert in the middle of a text node; split the text.
+            const text = node._text;
+            const splitIdx = text.length - length;
+            node._text = spliceString(text, splitIdx, length, '');
+            children.splice(nodeIndex + 1, 0, collabNode);
+            // The insert that triggers the text split might not be a text node. Need to keep a
+            // reference to the remaining text so that it can be added when we do create one.
+            pendingSplitText = spliceString(text, 0, splitIdx, '');
+          } else {
+            children.splice(nodeIndex, 0, collabNode);
+          }
+          if (
+            pendingSplitText !== null &&
+            collabNode instanceof CollabTextNode
+          ) {
+            // Found a text node to insert the pending text into.
+            collabNode._text = pendingSplitText + collabNode._text;
+            pendingSplitText = null;
+          }
           currIndex += 1;
         }
       } else {