diff --git a/.changeset/sweet-jars-shout.md b/.changeset/sweet-jars-shout.md
new file mode 100644
index 00000000..088b0c72
--- /dev/null
+++ b/.changeset/sweet-jars-shout.md
@@ -0,0 +1,5 @@
+---
+"@wpengine/wp-graphql-content-blocks": patch
+---
+
+Bug fix. Reusable block isn't resolved inside innerBlocks.
diff --git a/includes/Data/ContentBlocksResolver.php b/includes/Data/ContentBlocksResolver.php
index 14e98d7f..625a4372 100644
--- a/includes/Data/ContentBlocksResolver.php
+++ b/includes/Data/ContentBlocksResolver.php
@@ -7,6 +7,7 @@
 
 namespace WPGraphQL\ContentBlocks\Data;
 
+use WPGraphQL\ContentBlocks\Utilities\TraverseHelpers;
 use WPGraphQL\Model\Post;
 
 /**
@@ -54,23 +55,6 @@ public static function resolve_content_blocks( $node, $args, $allowed_block_name
 			return [];
 		}
 
-		// Resolve reusable blocks - replaces "core/block" with the corresponding block(s) from the reusable ref ID
-		$new_parsed_blocks = [];
-		foreach ( $parsed_blocks as $block ) {
-			if ( 'core/block' === $block['blockName'] && $block['attrs']['ref'] ) {
-				$post            = get_post( $block['attrs']['ref'] );
-				$reusable_blocks = ! empty( $post->post_content ) ? parse_blocks( $post->post_content ) : null;
-
-				if ( ! empty( $reusable_blocks ) ) {
-					array_push( $new_parsed_blocks, ...$reusable_blocks );
-				}
-			} else {
-				$new_parsed_blocks[] = $block;
-			}
-		}
-
-		$parsed_blocks = $new_parsed_blocks;
-
 		// 1st Level filtering of blocks that are empty
 		$parsed_blocks = array_filter(
 			$parsed_blocks,
@@ -99,12 +83,12 @@ static function ( $parsed_block ) {
 			},
 			$parsed_blocks
 		);
-
+		// Resolve reusable blocks - replaces "core/block" with the corresponding block(s) from the reusable ref ID
+		TraverseHelpers::traverse_blocks( $parsed_blocks, [ TraverseHelpers::class, 'replace_reusable_blocks' ], 0, PHP_INT_MAX );
 		// Flatten block list here if requested or if 'flat' value is not selected (default)
 		if ( ! isset( $args['flat'] ) || 'true' == $args['flat'] ) { // phpcs:ignore Universal.Operators.StrictComparisons.LooseEqual
 			$parsed_blocks = self::flatten_block_list( $parsed_blocks );
 		}
-
 		// Final level of filtering out blocks not in the allowed list
 		if ( ! empty( $allowed_block_names ) ) {
 			$parsed_blocks = array_filter(
diff --git a/includes/Utilities/TraverseHelpers.php b/includes/Utilities/TraverseHelpers.php
new file mode 100644
index 00000000..0df8868c
--- /dev/null
+++ b/includes/Utilities/TraverseHelpers.php
@@ -0,0 +1,48 @@
+<?php
+/**
+ * Helper functions for traversing the list of blocks
+ *
+ * @package WPGraphQL\ContentBlocks\Utilities
+ */
+
+namespace WPGraphQL\ContentBlocks\Utilities;
+
+/**
+ * Class TraverseHelpers
+ * 
+ * Provides utility functions to traverse and manipulate blocks.
+ */
+final class TraverseHelpers {
+	/**
+	 * Traverse blocks and apply a callback with optional depth limit.
+	 *
+	 * @param array    &$blocks The blocks to traverse.
+	 * @param callable $callback The callback function to apply to each block.
+	 * @param int      $depth The current depth of traversal.
+	 * @param int      $max_depth The maximum depth to traverse.
+	 */
+	public static function traverse_blocks( &$blocks, $callback, $depth = 0, $max_depth = PHP_INT_MAX ): void {
+		foreach ( $blocks as &$block ) {
+			$callback( $block );
+			if ( ! empty( $block['innerBlocks'] ) && $depth < $max_depth ) {
+				self::traverse_blocks( $block['innerBlocks'], $callback, $depth + 1, $max_depth );
+			}
+		}
+	}
+
+	/**
+	 * Example callback function to replace reusable blocks.
+	 *
+	 * @param array $block The block to potentially replace.
+	 */
+	public static function replace_reusable_blocks( &$block ): void {
+		if ( 'core/block' === $block['blockName'] && isset( $block['attrs']['ref'] ) ) {
+			$post            = get_post( $block['attrs']['ref'] );
+			$reusable_blocks = ! empty( $post->post_content ) ? parse_blocks( $post->post_content ) : null;
+
+			if ( ! empty( $reusable_blocks ) ) {
+				$block = array_merge( ...$reusable_blocks );
+			}
+		}
+	}
+}
diff --git a/tests/unit/ContentBlocksResolverTest.php b/tests/unit/ContentBlocksResolverTest.php
index ba002923..c8cc3e40 100644
--- a/tests/unit/ContentBlocksResolverTest.php
+++ b/tests/unit/ContentBlocksResolverTest.php
@@ -95,7 +95,7 @@ public function tearDown(): void {
     public function test_resolve_content_blocks_resolves_reusable_blocks() {
         $post_model = new Post( get_post( $this->reusable_post_id ) );
         $actual     = $this->instance->resolve_content_blocks( $post_model, array( 'flat' => true ) );
-
+		
         // There should return only the non-empty blocks
 		$this->assertEquals( 3, count( $actual ) );
 		$this->assertEquals( 'core/columns', $actual[0]['blockName'] );
diff --git a/tests/unit/TraverseHelpersTest.php b/tests/unit/TraverseHelpersTest.php
new file mode 100644
index 00000000..ec710462
--- /dev/null
+++ b/tests/unit/TraverseHelpersTest.php
@@ -0,0 +1,85 @@
+<?php
+
+namespace WPGraphQL\ContentBlocks\Unit;
+
+use PHPUnit\Framework\TestCase;
+use WPGraphQL\ContentBlocks\Utilities\TraverseHelpers;
+
+class TraverseHelpersTest extends PluginTestCase {
+    public $post_id;
+    public function setUp(): void {
+		parent::setUp();
+		global $wpdb;
+
+		$this->post_id = wp_insert_post(
+			array(
+				'post_title'   => 'Post Title',
+				'post_content' => preg_replace(
+					'/\s+/',
+					' ',
+					trim(
+						'
+				<!-- wp:paragraph -->
+				<p class="has-background" style="background-color:#a62929">Test</p>
+				<!-- /wp:paragraph -->'
+					)
+				),
+				'post_status'  => 'publish',
+			)
+		);
+	}
+
+	public function tearDown(): void {
+		// your tear down methods here
+		parent::tearDown();
+		wp_delete_post( $this->post_id, true );
+	}
+	public function testTraverseBlocks() {
+		// Sample blocks data
+		$blocks = [ 
+			[ 
+				'blockName' => 'core/group',
+				'attrs' => [],
+				'innerBlocks' => [ 
+					[ 
+						'blockName' => 'core/block',
+						'attrs' => [ 'ref' => $this->post_id ],
+						'innerBlocks' => []
+					]
+				]
+			],
+			[ 
+				'blockName' => 'core/block',
+				'attrs' => [ 'ref' => $this->post_id ],
+				'innerBlocks' => []
+			]
+		];
+
+		// Expected result after replacing reusable blocks
+		$expected = [ 
+			[ 
+				'blockName' => 'core/group',
+				'attrs' => [],
+				'innerBlocks' => [ 
+					[ 
+						'blockName' => 'core/paragraph',
+						'attrs' => [],
+						'innerBlocks' => [],
+						'innerHTML' => ' <p class="has-background" style="background-color:#a62929">Test</p> ',
+						'innerContent' => [ 0 => ' <p class="has-background" style="background-color:#a62929">Test</p> ']
+					]
+				]
+			],
+			[ 
+				'blockName' => 'core/paragraph',
+				'attrs' => [],
+				'innerBlocks' => [],
+				'innerHTML' => ' <p class="has-background" style="background-color:#a62929">Test</p> ',
+				'innerContent' => [ 0 => ' <p class="has-background" style="background-color:#a62929">Test</p> ']
+			]
+		];
+
+		TraverseHelpers::traverse_blocks( $blocks, [ TraverseHelpers::class, 'replace_reusable_blocks' ], 0, PHP_INT_MAX );
+		$this->assertEquals( $expected, $blocks );
+	}
+}
\ No newline at end of file