diff --git a/sycl/source/detail/scheduler/graph_builder.cpp b/sycl/source/detail/scheduler/graph_builder.cpp
index 5f27ca5c02559..1132d32b2f605 100644
--- a/sycl/source/detail/scheduler/graph_builder.cpp
+++ b/sycl/source/detail/scheduler/graph_builder.cpp
@@ -20,6 +20,7 @@
 #include <sycl/access/access.hpp>
 #include <sycl/exception.hpp>
 
+#include <algorithm>
 #include <cstdlib>
 #include <cstring>
 #include <fstream>
@@ -985,22 +986,6 @@ Scheduler::GraphBuilder::addCG(std::unique_ptr<detail::CG> CommandGroup,
     createGraphForCommand(NewCmd.get(), NewCmd->getCG(),
                           isInteropHostTask(NewCmd.get()), Reqs, Events, Queue,
                           FusionCmd->auxiliaryCommands());
-    // We need to check the commands that this kernel depends on for any other
-    // commands that have been submitted to another queue which is also in
-    // fusion mode. If we detect such another command, we cancel fusion for that
-    // other queue to avoid circular dependencies.
-    // Handle requirements on any commands part of another active fusion.
-    for (auto &Dep : NewCmd->MDeps) {
-      auto *DepCmd = Dep.MDepCommand;
-      if (!DepCmd) {
-        continue;
-      }
-      if (DepCmd->getQueue() != Queue && isPartOfActiveFusion(DepCmd)) {
-        printFusionWarning("Aborting fusion because of requirement from a "
-                           "different fusion process");
-        cancelFusion(DepCmd->getQueue(), ToEnqueue);
-      }
-    }
 
     // Set the fusion command, so we recognize when another command depends on a
     // kernel in the fusion list.
@@ -1431,6 +1416,63 @@ void Scheduler::GraphBuilder::cancelFusion(QueueImplPtr Queue,
   PlaceholderCmd->setFusionStatus(KernelFusionCommand::FusionStatus::CANCELLED);
 }
 
+static bool isPartOfFusion(Command *Cmd, KernelFusionCommand *Fusion) {
+  if (Cmd->getType() == Command::RUN_CG) {
+    return static_cast<ExecCGCommand *>(Cmd)->MFusionCmd == Fusion;
+  }
+  return false;
+}
+
+static bool checkForCircularDependency(Command *, bool, KernelFusionCommand *);
+
+static bool createsCircularDependency(Command *Cmd, bool PredPartOfFusion,
+                                      KernelFusionCommand *Fusion) {
+  if (isPartOfFusion(Cmd, Fusion)) {
+    // If this is part of the fusion and the predecessor also was, we can stop
+    // the traversal here. A direct dependency between two kernels in the same
+    // fusion will never form a cyclic dependency and by iterating over all
+    // commands in a fusion, we will detect any cycles originating from the
+    // current command.
+    // If the predecessor was not part of the fusion, but the current command
+    // is, we have found a potential cycle in the dependency graph.
+    return !PredPartOfFusion;
+  }
+  return checkForCircularDependency(Cmd, false, Fusion);
+}
+
+static bool checkForCircularDependency(Command *Cmd, bool IsPartOfFusion,
+                                       KernelFusionCommand *Fusion) {
+  // Check the requirement dependencies.
+  for (auto &Dep : Cmd->MDeps) {
+    auto *DepCmd = Dep.MDepCommand;
+    if (!DepCmd) {
+      continue;
+    }
+    if (createsCircularDependency(DepCmd, IsPartOfFusion, Fusion)) {
+      return true;
+    }
+  }
+  for (auto &Ev : Cmd->getPreparedDepsEvents()) {
+    auto *EvDepCmd = static_cast<Command *>(Ev->getCommand());
+    if (!EvDepCmd) {
+      continue;
+    }
+    if (createsCircularDependency(EvDepCmd, IsPartOfFusion, Fusion)) {
+      return true;
+    }
+  }
+  for (auto &Ev : Cmd->getPreparedHostDepsEvents()) {
+    auto *EvDepCmd = static_cast<Command *>(Ev->getCommand());
+    if (!EvDepCmd) {
+      continue;
+    }
+    if (createsCircularDependency(EvDepCmd, IsPartOfFusion, Fusion)) {
+      return true;
+    }
+  }
+  return false;
+}
+
 EventImplPtr
 Scheduler::GraphBuilder::completeFusion(QueueImplPtr Queue,
                                         std::vector<Command *> &ToEnqueue,
@@ -1451,8 +1493,26 @@ Scheduler::GraphBuilder::completeFusion(QueueImplPtr Queue,
   auto *PlaceholderCmd = FusionList->second.get();
   auto &CmdList = PlaceholderCmd->getFusionList();
 
-  // TODO: The logic to invoke the JIT compiler to create a fused kernel from
-  // the list will be added in a later PR.
+  // We need to check if fusing the kernel would create a circular dependency. A
+  // circular dependency would arise, if a kernel in the fusion list
+  // *indirectly* depends on another kernel in the fusion list. Here, indirectly
+  // means, that the dependency is created through a third command not part of
+  // the fusion, on which this kernel depends and which in turn depends on
+  // another kernel in fusion list.
+  bool CreatesCircularDep =
+      std::any_of(CmdList.begin(), CmdList.end(), [&](ExecCGCommand *Cmd) {
+        return checkForCircularDependency(Cmd, true, PlaceholderCmd);
+      });
+  if (CreatesCircularDep) {
+    // If fusing would create a fused kernel, cancel the fusion.
+    printFusionWarning(
+        "Aborting fusion because it would create a circular dependency");
+    auto LastEvent = PlaceholderCmd->getEvent();
+    this->cancelFusion(Queue, ToEnqueue);
+    return LastEvent;
+  }
+
+  // Call the JIT compiler to generate a new fused kernel.
   auto FusedCG = detail::jit_compiler::get_instance().fuseKernels(
       Queue, CmdList, PropList);