diff --git a/packages/react/src/autocomplete/value/AutocompleteValue.tsx b/packages/react/src/autocomplete/value/AutocompleteValue.tsx
index f1e4439a1c..9b2865f271 100644
--- a/packages/react/src/autocomplete/value/AutocompleteValue.tsx
+++ b/packages/react/src/autocomplete/value/AutocompleteValue.tsx
@@ -1,8 +1,6 @@
 'use client';
 import * as React from 'react';
-import { useStore } from '@base-ui-components/utils/store';
-import { useComboboxRootContext } from '../../combobox/root/ComboboxRootContext';
-import { selectors } from '../../combobox/store';
+import { useComboboxInputValueContext } from '../../combobox/root/ComboboxRootContext';
 
 /**
  * The current value of the autocomplete.
@@ -13,9 +11,7 @@ import { selectors } from '../../combobox/store';
 export function AutocompleteValue(props: AutocompleteValue.Props) {
   const { children } = props;
 
-  const store = useComboboxRootContext();
-
-  const inputValue = useStore(store, selectors.inputValue);
+  const inputValue = useComboboxInputValueContext();
 
   if (typeof children === 'function') {
     return children(String(inputValue));
diff --git a/packages/react/src/combobox/clear/ComboboxClear.tsx b/packages/react/src/combobox/clear/ComboboxClear.tsx
index 8b3245c524..494277a42e 100644
--- a/packages/react/src/combobox/clear/ComboboxClear.tsx
+++ b/packages/react/src/combobox/clear/ComboboxClear.tsx
@@ -1,7 +1,7 @@
 'use client';
 import * as React from 'react';
 import { useStore } from '@base-ui-components/utils/store';
-import { useComboboxRootContext } from '../root/ComboboxRootContext';
+import { useComboboxInputValueContext, useComboboxRootContext } from '../root/ComboboxRootContext';
 import type { BaseUIComponentProps, NativeButtonProps } from '../../utils/types';
 import { useRenderElement } from '../../utils/useRenderElement';
 import { selectors } from '../store';
@@ -45,7 +45,8 @@ export const ComboboxClear = React.forwardRef(function ComboboxClear(
   const clearRef = useStore(store, selectors.clearRef);
   const open = useStore(store, selectors.open);
   const selectedValue = useStore(store, selectors.selectedValue);
-  const inputValue = useStore(store, selectors.inputValue);
+
+  const inputValue = useComboboxInputValueContext();
 
   let visible = false;
   if (selectionMode === 'none') {
diff --git a/packages/react/src/combobox/input/ComboboxInput.test.tsx b/packages/react/src/combobox/input/ComboboxInput.test.tsx
index a19d65a55c..7dc5b24705 100644
--- a/packages/react/src/combobox/input/ComboboxInput.test.tsx
+++ b/packages/react/src/combobox/input/ComboboxInput.test.tsx
@@ -357,5 +357,38 @@ describe('<Combobox.Input />', () => {
       expect(input.selectionStart).to.equal(input.value.length);
       expect(input.selectionEnd).to.equal(input.value.length);
     });
+
+    it('preserves caret position when controlled and inserting in the middle', async () => {
+      function Controlled() {
+        const [value, setValue] = React.useState('');
+        return (
+          <Combobox.Root inputValue={value} onInputValueChange={setValue}>
+            <Combobox.Input />
+          </Combobox.Root>
+        );
+      }
+
+      const { user } = await render(<Controlled />);
+
+      const input = screen.getByRole<HTMLInputElement>('combobox');
+
+      await user.type(input, 'abcd');
+      expect(input.value).to.equal('abcd');
+
+      // Move caret left twice to position after "ab"
+      await user.keyboard('{ArrowLeft}{ArrowLeft}');
+      expect(input.selectionStart).to.equal(2);
+      expect(input.selectionEnd).to.equal(2);
+
+      await user.keyboard('xxx');
+      expect(input.value).to.equal('abxxxcd');
+      expect(input.selectionStart).to.equal(5);
+      expect(input.selectionEnd).to.equal(5);
+
+      await user.keyboard('y');
+      expect(input.value).to.equal('abxxxycd');
+      expect(input.selectionStart).to.equal(6);
+      expect(input.selectionEnd).to.equal(6);
+    });
   });
 });
diff --git a/packages/react/src/combobox/input/ComboboxInput.tsx b/packages/react/src/combobox/input/ComboboxInput.tsx
index 5da6a6ccc8..a885673b2e 100644
--- a/packages/react/src/combobox/input/ComboboxInput.tsx
+++ b/packages/react/src/combobox/input/ComboboxInput.tsx
@@ -4,7 +4,7 @@ import { useStore } from '@base-ui-components/utils/store';
 import { useEventCallback } from '@base-ui-components/utils/useEventCallback';
 import { BaseUIComponentProps } from '../../utils/types';
 import { useRenderElement } from '../../utils/useRenderElement';
-import { useComboboxRootContext } from '../root/ComboboxRootContext';
+import { useComboboxInputValueContext, useComboboxRootContext } from '../root/ComboboxRootContext';
 import { selectors } from '../store';
 import { pressableTriggerOpenStateMapping } from '../../utils/popupStateMapping';
 import { useFieldRootContext } from '../../field/root/FieldRootContext';
@@ -54,13 +54,16 @@ export const ComboboxInput = React.forwardRef(function ComboboxInput(
   const triggerProps = useStore(store, selectors.triggerProps);
   const open = useStore(store, selectors.open);
   const selectedValue = useStore(store, selectors.selectedValue);
-  const inputValue = useStore(store, selectors.inputValue);
 
-  const [composingValue, setComposingValue] = React.useState<string | null>(null);
-  const isComposingRef = React.useRef(false);
+  // `inputValue` can't be placed in the store.
+  // https://github.com/mui/base-ui/issues/2703
+  const inputValue = useComboboxInputValueContext();
 
   const disabled = fieldDisabled || comboboxDisabled || disabledProp;
 
+  const [composingValue, setComposingValue] = React.useState<string | null>(null);
+  const isComposingRef = React.useRef(false);
+
   const setInputElement = useEventCallback((element) => {
     store.apply({
       inputElement: element,
@@ -194,7 +197,7 @@ export const ComboboxInput = React.forwardRef(function ComboboxInput(
               const trimmed = nextVal.trim();
               if (trimmed !== '') {
                 store.state.setOpen(true, createBaseUIEventDetails('none', event.nativeEvent));
-                if (!(selectionMode === 'none' && autoHighlight)) {
+                if (!autoHighlight) {
                   store.state.setIndices({
                     activeIndex: null,
                     selectedIndex: null,
@@ -207,7 +210,7 @@ export const ComboboxInput = React.forwardRef(function ComboboxInput(
             if (
               open &&
               store.state.activeIndex !== null &&
-              !(selectionMode === 'none' && autoHighlight && nextVal.trim() !== '')
+              !(autoHighlight && nextVal.trim() !== '')
             ) {
               store.state.setIndices({
                 activeIndex: null,
diff --git a/packages/react/src/combobox/root/ComboboxRootContext.tsx b/packages/react/src/combobox/root/ComboboxRootContext.tsx
index 16b4a33712..01a88ea5d9 100644
--- a/packages/react/src/combobox/root/ComboboxRootContext.tsx
+++ b/packages/react/src/combobox/root/ComboboxRootContext.tsx
@@ -15,6 +15,10 @@ export const ComboboxFloatingContext = React.createContext<FloatingRootContext |
 export const ComboboxDerivedItemsContext = React.createContext<
   ComboboxDerivedItemsContext | undefined
 >(undefined);
+// `inputValue` can't be placed in the store.
+// https://github.com/mui/base-ui/issues/2703
+export const ComboboxInputValueContext =
+  React.createContext<React.ComponentProps<'input'>['value']>('');
 
 export function useComboboxRootContext() {
   const context = React.useContext(ComboboxRootContext) as ComboboxStore | undefined;
@@ -45,3 +49,7 @@ export function useComboboxDerivedItemsContext() {
   }
   return context;
 }
+
+export function useComboboxInputValueContext() {
+  return React.useContext(ComboboxInputValueContext);
+}
diff --git a/packages/react/src/combobox/root/ComboboxRootInternal.tsx b/packages/react/src/combobox/root/ComboboxRootInternal.tsx
index de884d327f..b8bc56aeab 100644
--- a/packages/react/src/combobox/root/ComboboxRootInternal.tsx
+++ b/packages/react/src/combobox/root/ComboboxRootInternal.tsx
@@ -27,6 +27,7 @@ import {
   ComboboxFloatingContext,
   ComboboxDerivedItemsContext,
   ComboboxRootContext,
+  ComboboxInputValueContext,
 } from './ComboboxRootContext';
 import { selectors, type State as StoreState } from '../store';
 import { useOpenChangeComplete } from '../../utils/useOpenChangeComplete';
@@ -1045,13 +1046,15 @@ export function ComboboxRootInternal<Value = any, Mode extends SelectionMode = '
     <ComboboxRootContext.Provider value={store}>
       <ComboboxFloatingContext.Provider value={floatingRootContext}>
         <ComboboxDerivedItemsContext.Provider value={itemsContextValue}>
-          {virtualized ? (
-            children
-          ) : (
-            <CompositeList elementsRef={listRef} labelsRef={items ? undefined : labelsRef}>
-              {children}
-            </CompositeList>
-          )}
+          <ComboboxInputValueContext.Provider value={inputValue}>
+            {virtualized ? (
+              children
+            ) : (
+              <CompositeList elementsRef={listRef} labelsRef={items ? undefined : labelsRef}>
+                {children}
+              </CompositeList>
+            )}
+          </ComboboxInputValueContext.Provider>
         </ComboboxDerivedItemsContext.Provider>
       </ComboboxFloatingContext.Provider>
     </ComboboxRootContext.Provider>
diff --git a/packages/react/src/combobox/trigger/ComboboxTrigger.tsx b/packages/react/src/combobox/trigger/ComboboxTrigger.tsx
index 804a96095d..d2d3166d25 100644
--- a/packages/react/src/combobox/trigger/ComboboxTrigger.tsx
+++ b/packages/react/src/combobox/trigger/ComboboxTrigger.tsx
@@ -6,7 +6,7 @@ import { useTimeout } from '@base-ui-components/utils/useTimeout';
 import { BaseUIComponentProps, NativeButtonProps } from '../../utils/types';
 import { useRenderElement } from '../../utils/useRenderElement';
 import { useButton } from '../../use-button';
-import { useComboboxRootContext } from '../root/ComboboxRootContext';
+import { useComboboxInputValueContext, useComboboxRootContext } from '../root/ComboboxRootContext';
 import { selectors } from '../store';
 import { useFieldRootContext } from '../../field/root/FieldRootContext';
 import { pressableTriggerOpenStateMapping } from '../../utils/popupStateMapping';
@@ -57,7 +57,8 @@ export const ComboboxTrigger = React.forwardRef(function ComboboxTrigger(
   const inputInsidePopup = useStore(store, selectors.inputInsidePopup);
   const open = useStore(store, selectors.open);
   const selectedValue = useStore(store, selectors.selectedValue);
-  const inputValue = useStore(store, selectors.inputValue);
+
+  const inputValue = useComboboxInputValueContext();
 
   const disabled = fieldDisabled || comboboxDisabled || disabledProp;