diff --git a/Cargo.lock b/Cargo.lock
index 0d4eddf4f954d..7dc6dc0617b42 100644
--- a/Cargo.lock
+++ b/Cargo.lock
@@ -6552,9 +6552,9 @@ dependencies = [
 
 [[package]]
 name = "frame-decode"
-version = "0.7.0"
+version = "0.7.1"
 source = "registry+https://github.com/rust-lang/crates.io-index"
-checksum = "50c554ce2394e2c04426a070b4cb133c72f6f14c86b665f4e13094addd8e8958"
+checksum = "a7cb8796f93fa038f979a014234d632e9688a120e745f936e2635123c77537f7"
 dependencies = [
  "frame-metadata 20.0.0",
  "parity-scale-codec",
@@ -20601,9 +20601,9 @@ dependencies = [
 
 [[package]]
 name = "scale-typegen"
-version = "0.11.0"
+version = "0.11.1"
 source = "registry+https://github.com/rust-lang/crates.io-index"
-checksum = "6aebea322734465f39e4ad8100e1f9708c6c6c325d92b8780015d30c44fae791"
+checksum = "05c61b6b706a3eaad63b506ab50a1d2319f817ae01cf753adcc3f055f9f0fcd6"
 dependencies = [
  "proc-macro2 1.0.95",
  "quote 1.0.40",
@@ -24871,7 +24871,7 @@ dependencies = [
  "proc-macro2 1.0.95",
  "quote 1.0.40",
  "scale-info",
- "scale-typegen 0.11.0",
+ "scale-typegen 0.11.1",
  "subxt-metadata 0.41.0",
  "syn 2.0.98",
  "thiserror 2.0.12",
@@ -24915,7 +24915,7 @@ dependencies = [
  "base58",
  "blake2 0.10.6",
  "derive-where",
- "frame-decode 0.7.0",
+ "frame-decode 0.7.1",
  "frame-metadata 20.0.0",
  "hashbrown 0.14.5",
  "hex",
@@ -24996,7 +24996,7 @@ dependencies = [
  "parity-scale-codec",
  "proc-macro-error2",
  "quote 1.0.40",
- "scale-typegen 0.11.0",
+ "scale-typegen 0.11.1",
  "subxt-codegen 0.41.0",
  "subxt-utils-fetchmetadata 0.41.0",
  "syn 2.0.98",
@@ -25022,7 +25022,7 @@ version = "0.41.0"
 source = "registry+https://github.com/rust-lang/crates.io-index"
 checksum = "fff4591673600c4388e21305788282414d26c791b4dee21b7cb0b19c10076f98"
 dependencies = [
- "frame-decode 0.7.0",
+ "frame-decode 0.7.1",
  "frame-metadata 20.0.0",
  "hashbrown 0.14.5",
  "parity-scale-codec",
diff --git a/prdoc/pr_8500.prdoc b/prdoc/pr_8500.prdoc
new file mode 100644
index 0000000000000..b08333ef2e08a
--- /dev/null
+++ b/prdoc/pr_8500.prdoc
@@ -0,0 +1,9 @@
+title: 'txpool: fix tx removal from unlocks set'
+doc:
+- audience: Node Dev 
+  description: |-
+    Now removing a tx subtree will correctly remove it from the transactions that would unlock it. 
+
+crates:
+- name: sc-transaction-pool
+  bump: major
diff --git a/substrate/client/transaction-pool/src/graph/ready.rs b/substrate/client/transaction-pool/src/graph/ready.rs
index 3e52d3e4d9c0f..88986baa88ed1 100644
--- a/substrate/client/transaction-pool/src/graph/ready.rs
+++ b/substrate/client/transaction-pool/src/graph/ready.rs
@@ -298,8 +298,8 @@ impl<Hash: hash::Hash + Member + Serialize, Ex> ReadyTransactions<Hash, Ex> {
 				// remove from unlocks
 				for tag in &tx.transaction.transaction.requires {
 					if let Some(hash) = self.provided_tags.get(tag) {
-						if let Some(tx) = ready.get_mut(hash) {
-							remove_item(&mut tx.unlocks, hash);
+						if let Some(tx_unlocking) = ready.get_mut(hash) {
+							remove_item(&mut tx_unlocking.unlocks, &tx_hash);
 						}
 					}
 				}
@@ -788,4 +788,40 @@ mod tests {
 		assert_eq!(it.next().as_ref().map(data), Some(7));
 		assert_eq!(it.next().as_ref().map(data), None);
 	}
+
+	#[test]
+	fn should_remove_tx_from_unlocks_set_of_its_parent() {
+		// given
+		let mut ready = ReadyTransactions::default();
+		populate_pool(&mut ready);
+
+		// when
+		let mut it = ready.get();
+		let tx1 = it.next().unwrap();
+		let tx2 = it.next().unwrap();
+		let tx3 = it.next().unwrap();
+		let tx4 = it.next().unwrap();
+		let lock = ready.ready.read();
+		let tx1_unlocks = &lock.get(&tx1.hash).unwrap().unlocks;
+
+		// There are two tags provided by tx1 and required by tx2.
+		assert_eq!(tx1_unlocks[0], tx2.hash);
+		assert_eq!(tx1_unlocks[1], tx2.hash);
+		assert_eq!(tx1_unlocks[2], tx3.hash);
+		assert_eq!(tx1_unlocks[4], tx4.hash);
+		drop(lock);
+
+		// then consider tx2 invalid, and hence, remove it.
+		let removed = ready.remove_subtree(&[tx2.hash]);
+		assert_eq!(removed.len(), 2);
+		assert_eq!(removed[0].hash, tx2.hash);
+		// tx3 is removed too, since it requires tx2 provides tags.
+		assert_eq!(removed[1].hash, tx3.hash);
+
+		let lock = ready.ready.read();
+		let tx1_unlocks = &lock.get(&tx1.hash).unwrap().unlocks;
+		assert!(!tx1_unlocks.contains(&tx2.hash));
+		assert!(!tx1_unlocks.contains(&tx3.hash));
+		assert!(tx1_unlocks.contains(&tx4.hash));
+	}
 }