diff --git a/src/corePlugins.js b/src/corePlugins.js
index 606cfd7bbecf..5db1fdb74e7b 100644
--- a/src/corePlugins.js
+++ b/src/corePlugins.js
@@ -22,6 +22,7 @@ import { formatBoxShadowValue, parseBoxShadowValue } from './util/parseBoxShadow
 import { removeAlphaVariables } from './util/removeAlphaVariables'
 import { flagEnabled } from './featureFlags'
 import { normalize } from './util/dataTypes'
+import { INTERNAL_FEATURES } from './lib/setupContextUtils'
 
 export let variantPlugins = {
   pseudoElementVariants: ({ addVariant }) => {
@@ -80,7 +81,7 @@ export let variantPlugins = {
     })
   },
 
-  pseudoClassVariants: ({ addVariant, matchVariant, config }) => {
+  pseudoClassVariants: ({ addVariant, matchVariant, config, prefix }) => {
     let pseudoVariants = [
       // Positional
       ['first', '&:first-child'],
@@ -151,12 +152,12 @@ export let variantPlugins = {
     let variants = {
       group: (_, { modifier }) =>
         modifier
-          ? [`:merge(.group\\/${escapeClassName(modifier)})`, ' &']
-          : [`:merge(.group)`, ' &'],
+          ? [`:merge(${prefix('.group')}\\/${escapeClassName(modifier)})`, ' &']
+          : [`:merge(${prefix('.group')})`, ' &'],
       peer: (_, { modifier }) =>
         modifier
-          ? [`:merge(.peer\\/${escapeClassName(modifier)})`, ' ~ &']
-          : [`:merge(.peer)`, ' ~ &'],
+          ? [`:merge(${prefix('.peer')}\\/${escapeClassName(modifier)})`, ' ~ &']
+          : [`:merge(${prefix('.peer')})`, ' ~ &'],
     }
 
     for (let [name, fn] of Object.entries(variants)) {
@@ -192,7 +193,12 @@ export let variantPlugins = {
 
           return result.slice(0, start) + a + result.slice(start + 1, end) + b + result.slice(end)
         },
-        { values: Object.fromEntries(pseudoVariants) }
+        {
+          values: Object.fromEntries(pseudoVariants),
+          [INTERNAL_FEATURES]: {
+            respectPrefix: false,
+          },
+        }
       )
     }
   },
diff --git a/src/lib/generateRules.js b/src/lib/generateRules.js
index cbd671075b29..6ced76937f1a 100644
--- a/src/lib/generateRules.js
+++ b/src/lib/generateRules.js
@@ -13,7 +13,7 @@ import {
 } from '../util/formatVariantSelector'
 import { asClass } from '../util/nameClass'
 import { normalize } from '../util/dataTypes'
-import { isValidVariantFormatString, parseVariant } from './setupContextUtils'
+import { isValidVariantFormatString, parseVariant, INTERNAL_FEATURES } from './setupContextUtils'
 import isValidArbitraryValue from '../util/isSyntacticallyValidPropertyValue'
 import { splitAtTopLevelOnly } from '../util/splitAtTopLevelOnly.js'
 import { flagEnabled } from '../featureFlags'
@@ -230,9 +230,16 @@ function applyVariant(variant, matches, context) {
 
   if (context.variantMap.has(variant)) {
     let isArbitraryVariant = isArbitraryValue(variant)
+    let internalFeatures = context.variantOptions.get(variant)?.[INTERNAL_FEATURES] ?? {}
     let variantFunctionTuples = context.variantMap.get(variant).slice()
     let result = []
 
+    let respectPrefix = (() => {
+      if (isArbitraryVariant) return false
+      if (internalFeatures.respectPrefix === false) return false
+      return true
+    })()
+
     for (let [meta, rule] of matches) {
       // Don't generate variants for user css
       if (meta.layer === 'user') {
@@ -293,7 +300,7 @@ function applyVariant(variant, matches, context) {
           format(selectorFormat) {
             collectedFormats.push({
               format: selectorFormat,
-              isArbitraryVariant,
+              respectPrefix,
             })
           },
           args,
@@ -322,7 +329,7 @@ function applyVariant(variant, matches, context) {
         if (typeof ruleWithVariant === 'string') {
           collectedFormats.push({
             format: ruleWithVariant,
-            isArbitraryVariant,
+            respectPrefix,
           })
         }
 
@@ -366,7 +373,7 @@ function applyVariant(variant, matches, context) {
             //                    format: .foo &
             collectedFormats.push({
               format: modified.replace(rebuiltBase, '&'),
-              isArbitraryVariant,
+              respectPrefix,
             })
             rule.selector = before
           })
diff --git a/src/lib/setupContextUtils.js b/src/lib/setupContextUtils.js
index 7844627fea73..4d85e9d8ce67 100644
--- a/src/lib/setupContextUtils.js
+++ b/src/lib/setupContextUtils.js
@@ -24,6 +24,8 @@ import { Offsets } from './offsets.js'
 import { flagEnabled } from '../featureFlags.js'
 import { finalizeSelector, formatVariantSelector } from '../util/formatVariantSelector'
 
+export const INTERNAL_FEATURES = Symbol()
+
 const VARIANT_TYPES = {
   AddVariant: Symbol.for('ADD_VARIANT'),
   MatchVariant: Symbol.for('MATCH_VARIANT'),
@@ -1123,17 +1125,24 @@ function registerPlugins(plugins, context) {
           }
 
           let isArbitraryVariant = !(value in (options.values ?? {}))
+          let internalFeatures = options[INTERNAL_FEATURES] ?? {}
+
+          let respectPrefix = (() => {
+            if (isArbitraryVariant) return false
+            if (internalFeatures.respectPrefix === false) return false
+            return true
+          })()
 
           formatStrings = formatStrings.map((format) =>
             format.map((str) => ({
               format: str,
-              isArbitraryVariant,
+              respectPrefix,
             }))
           )
 
           manualFormatStrings = manualFormatStrings.map((format) => ({
             format,
-            isArbitraryVariant,
+            respectPrefix,
           }))
 
           let opts = {
diff --git a/src/util/formatVariantSelector.js b/src/util/formatVariantSelector.js
index e3016e804779..d2594358e494 100644
--- a/src/util/formatVariantSelector.js
+++ b/src/util/formatVariantSelector.js
@@ -9,7 +9,7 @@ import { movePseudos } from './pseudoElements'
 /** @typedef {import('postcss-selector-parser').Pseudo} Pseudo */
 /** @typedef {import('postcss-selector-parser').Node} Node */
 
-/** @typedef {{format: string, isArbitraryVariant: boolean}[]} RawFormats */
+/** @typedef {{format: string, respectPrefix: boolean}[]} RawFormats */
 /** @typedef {import('postcss-selector-parser').Root} ParsedFormats */
 /** @typedef {RawFormats | ParsedFormats} AcceptedFormats */
 
@@ -29,7 +29,7 @@ export function formatVariantSelector(formats, { context, candidate }) {
 
     return {
       ...format,
-      ast: format.isArbitraryVariant ? ast : prefixSelector(prefix, ast),
+      ast: format.respectPrefix ? prefixSelector(prefix, ast) : ast,
     }
   })
 
diff --git a/src/util/prefixSelector.js b/src/util/prefixSelector.js
index 0e7bb445bdd9..93cbeb957682 100644
--- a/src/util/prefixSelector.js
+++ b/src/util/prefixSelector.js
@@ -17,6 +17,7 @@ export default function (prefix, selector, prependNegative = false) {
     return selector
   }
 
+  /** @type {import('postcss-selector-parser').Root} */
   let ast = typeof selector === 'string' ? parser().astSync(selector) : selector
 
   ast.walkClasses((classSelector) => {
diff --git a/tests/format-variant-selector.test.js b/tests/format-variant-selector.test.js
index 9a53f3aacbeb..c94fb95f615c 100644
--- a/tests/format-variant-selector.test.js
+++ b/tests/format-variant-selector.test.js
@@ -6,7 +6,7 @@ crosscheck(() => {
     let selector = '.text-center'
     let candidate = 'hover:text-center'
 
-    let formats = [{ format: '&:hover', isArbitraryVariant: false }]
+    let formats = [{ format: '&:hover', respectPrefix: true }]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual('.hover\\:text-center:hover')
   })
@@ -16,8 +16,8 @@ crosscheck(() => {
     let candidate = 'focus:hover:text-center'
 
     let formats = [
-      { format: '&:hover', isArbitraryVariant: false },
-      { format: '&:focus', isArbitraryVariant: false },
+      { format: '&:hover', respectPrefix: true },
+      { format: '&:focus', respectPrefix: true },
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -29,7 +29,7 @@ crosscheck(() => {
     let selector = '.bg-\\[rgba\\(0\\,0\\,0\\)\\]'
     let candidate = 'hover:bg-[rgba(0,0,0)]'
 
-    let formats = [{ format: '&:hover', isArbitraryVariant: false }]
+    let formats = [{ format: '&:hover', respectPrefix: true }]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
       '.hover\\:bg-\\[rgba\\(0\\2c 0\\2c 0\\)\\]:hover'
@@ -40,7 +40,7 @@ crosscheck(() => {
     let selector = '.bg-\\[rgba\\(0\\2c 0\\2c 0\\)\\]'
     let candidate = 'hover:bg-[rgba(0,0,0)]'
 
-    let formats = [{ format: '&:hover', isArbitraryVariant: false }]
+    let formats = [{ format: '&:hover', respectPrefix: true }]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
       '.hover\\:bg-\\[rgba\\(0\\2c 0\\2c 0\\)\\]:hover'
@@ -51,7 +51,7 @@ crosscheck(() => {
     let selector = '.space-x-4 > :not([hidden]) ~ :not([hidden])'
     let candidate = 'hover:space-x-4'
 
-    let formats = [{ format: '&:hover', isArbitraryVariant: false }]
+    let formats = [{ format: '&:hover', respectPrefix: true }]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
       '.hover\\:space-x-4:hover > :not([hidden]) ~ :not([hidden])'
@@ -63,9 +63,9 @@ crosscheck(() => {
     let candidate = 'disabled:focus:hover:space-x-4'
 
     let formats = [
-      { format: '&:hover', isArbitraryVariant: false },
-      { format: '&:focus', isArbitraryVariant: false },
-      { format: '&:disabled', isArbitraryVariant: false },
+      { format: '&:hover', respectPrefix: true },
+      { format: '&:focus', respectPrefix: true },
+      { format: '&:disabled', respectPrefix: true },
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -77,7 +77,7 @@ crosscheck(() => {
     let selector = '.text-center'
     let candidate = 'group-hover:text-center'
 
-    let formats = [{ format: ':merge(.group):hover &', isArbitraryVariant: false }]
+    let formats = [{ format: ':merge(.group):hover &', respectPrefix: true }]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
       '.group:hover .group-hover\\:text-center'
@@ -89,8 +89,8 @@ crosscheck(() => {
     let candidate = 'group-focus:group-hover:text-center'
 
     let formats = [
-      { format: ':merge(.group):hover &', isArbitraryVariant: false },
-      { format: ':merge(.group):focus &', isArbitraryVariant: false },
+      { format: ':merge(.group):hover &', respectPrefix: true },
+      { format: ':merge(.group):focus &', respectPrefix: true },
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -102,7 +102,7 @@ crosscheck(() => {
     let selector = '.space-x-4 ~ :not([hidden]) ~ :not([hidden])'
     let candidate = 'group-hover:space-x-4'
 
-    let formats = [{ format: ':merge(.group):hover &', isArbitraryVariant: false }]
+    let formats = [{ format: ':merge(.group):hover &', respectPrefix: true }]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
       '.group:hover .group-hover\\:space-x-4 ~ :not([hidden]) ~ :not([hidden])'
@@ -114,8 +114,8 @@ crosscheck(() => {
     let candidate = 'group-focus:group-hover:space-x-4'
 
     let formats = [
-      { format: ':merge(.group):hover &', isArbitraryVariant: false },
-      { format: ':merge(.group):focus &', isArbitraryVariant: false },
+      { format: ':merge(.group):hover &', respectPrefix: true },
+      { format: ':merge(.group):focus &', respectPrefix: true },
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -128,7 +128,7 @@ crosscheck(() => {
     let candidate = 'peer-focus:group-hover:text-center'
 
     let formats = [
-      { format: ':merge(.group):hover &', isArbitraryVariant: false },
+      { format: ':merge(.group):hover &', respectPrefix: true },
       { format: ':merge(.peer):focus ~ &' },
     ]
 
@@ -142,8 +142,8 @@ crosscheck(() => {
     let candidate = 'group-hover:peer-focus:text-center'
 
     let formats = [
-      { format: ':merge(.peer):focus ~ &', isArbitraryVariant: false },
-      { format: ':merge(.group):hover &', isArbitraryVariant: false },
+      { format: ':merge(.peer):focus ~ &', respectPrefix: true },
+      { format: ':merge(.group):hover &', respectPrefix: true },
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -156,10 +156,10 @@ crosscheck(() => {
     let candidate = 'peer-focus:group-focus:peer-hover:group-hover:foo'
 
     let formats = [
-      { format: ':merge(.group):hover &', isArbitraryVariant: false },
-      { format: ':merge(.peer):hover ~ &', isArbitraryVariant: false },
-      { format: ':merge(.group):focus &', isArbitraryVariant: false },
-      { format: ':merge(.peer):focus ~ &', isArbitraryVariant: false },
+      { format: ':merge(.group):hover &', respectPrefix: true },
+      { format: ':merge(.peer):hover ~ &', respectPrefix: true },
+      { format: ':merge(.group):focus &', respectPrefix: true },
+      { format: ':merge(.peer):focus ~ &', respectPrefix: true },
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -171,8 +171,8 @@ crosscheck(() => {
     let selector = '.text-center'
     let candidate = 'group-hover:prose-headings:text-center'
     let formats = [
-      { format: ':where(&) :is(h1, h2, h3, h4)', isArbitraryVariant: false }, // Prose Headings
-      { format: ':merge(.group):hover &', isArbitraryVariant: false }, // Group Hover
+      { format: ':where(&) :is(h1, h2, h3, h4)', respectPrefix: true }, // Prose Headings
+      { format: ':merge(.group):hover &', respectPrefix: true }, // Group Hover
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -184,8 +184,8 @@ crosscheck(() => {
     let selector = '.text-center'
     let candidate = 'prose-headings:group-hover:text-center'
     let formats = [
-      { format: ':merge(.group):hover &', isArbitraryVariant: false }, // Group Hover
-      { format: ':where(&) :is(h1, h2, h3, h4)', isArbitraryVariant: false }, // Prose Headings
+      { format: ':merge(.group):hover &', respectPrefix: true }, // Group Hover
+      { format: ':where(&) :is(h1, h2, h3, h4)', respectPrefix: true }, // Prose Headings
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -197,12 +197,12 @@ crosscheck(() => {
     let selector = '.space-x-4 > :not([hidden]) ~ :not([hidden])'
     let candidate = 'peer-disabled:peer-first-child:group-hover:group-focus:focus:hover:space-x-4'
     let formats = [
-      { format: '&:hover', isArbitraryVariant: false }, // Hover
-      { format: '&:focus', isArbitraryVariant: false }, // Focus
-      { format: ':merge(.group):focus &', isArbitraryVariant: false }, // Group focus
-      { format: ':merge(.group):hover &', isArbitraryVariant: false }, // Group hover
-      { format: ':merge(.peer):first-child ~ &', isArbitraryVariant: false }, // Peer first-child
-      { format: ':merge(.peer):disabled ~ &', isArbitraryVariant: false }, // Peer disabled
+      { format: '&:hover', respectPrefix: true }, // Hover
+      { format: '&:focus', respectPrefix: true }, // Focus
+      { format: ':merge(.group):focus &', respectPrefix: true }, // Group focus
+      { format: ':merge(.group):hover &', respectPrefix: true }, // Group hover
+      { format: ':merge(.peer):first-child ~ &', respectPrefix: true }, // Peer first-child
+      { format: ':merge(.peer):disabled ~ &', respectPrefix: true }, // Peer disabled
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -223,7 +223,7 @@ crosscheck(() => {
     let context = { tailwindConfig: { prefix: 'tw-' } }
     let selector = '.tw-text-center'
     let candidate = 'foo:tw-text-center'
-    let formats = [{ format: '.foo &', isArbitraryVariant: false }]
+    let formats = [{ format: '.foo &', respectPrefix: true }]
 
     expect(finalizeSelector(selector, formats, { candidate, context })).toEqual(
       '.tw-foo .foo\\:tw-text-center'
@@ -234,7 +234,7 @@ crosscheck(() => {
     let context = { tailwindConfig: { prefix: 'tw-' } }
     let selector = '.tw-text-center'
     let candidate = '[.foo_&]:tw-text-center'
-    let formats = [{ format: '.foo &', isArbitraryVariant: true }]
+    let formats = [{ format: '.foo &', respectPrefix: false }]
 
     expect(finalizeSelector(selector, formats, { candidate, context })).toEqual(
       '.foo .\\[\\.foo_\\&\\]\\:tw-text-center'
@@ -247,8 +247,8 @@ crosscheck(() => {
     let selector = '.text-center'
     let candidate = 'text-center'
     let formats = [
-      { format: ':merge(.group):focus > &', isArbitraryVariant: true },
-      { format: ':merge(.group):hover &', isArbitraryVariant: true },
+      { format: ':merge(.group):focus > &', respectPrefix: false },
+      { format: ':merge(.group):hover &', respectPrefix: false },
     ]
 
     expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -261,7 +261,7 @@ crosscheck(() => {
       let selector = '.placeholder-red-500::placeholder'
       let candidate = 'hover:placeholder-red-500'
 
-      let formats = [{ format: '&:hover', isArbitraryVariant: false }]
+      let formats = [{ format: '&:hover', respectPrefix: true }]
 
       expect(finalizeSelector(selector, formats, { candidate })).toEqual(
         '.hover\\:placeholder-red-500:hover::placeholder'
@@ -273,8 +273,8 @@ crosscheck(() => {
       let candidate = 'group-hover:hover:space-x-4'
 
       let formats = [
-        { format: '&:hover', isArbitraryVariant: false },
-        { format: ':merge(.group):hover &', isArbitraryVariant: false },
+        { format: '&:hover', respectPrefix: true },
+        { format: ':merge(.group):hover &', respectPrefix: true },
       ]
 
       expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -287,8 +287,8 @@ crosscheck(() => {
       let candidate = 'dark:group-hover:text-center'
 
       let formats = [
-        { format: ':merge(.group):hover &', isArbitraryVariant: false },
-        { format: '.dark &', isArbitraryVariant: false },
+        { format: ':merge(.group):hover &', respectPrefix: true },
+        { format: '.dark &', respectPrefix: true },
       ]
 
       expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -302,7 +302,7 @@ crosscheck(() => {
 
       let formats = [
         { format: '.dark &' },
-        { format: ':merge(.group):hover &', isArbitraryVariant: false },
+        { format: ':merge(.group):hover &', respectPrefix: true },
       ]
 
       expect(finalizeSelector(selector, formats, { candidate })).toEqual(
@@ -357,7 +357,7 @@ crosscheck(() => {
       ${'.parent::placeholder input'}                          | ${'.parent input::placeholder'}
       ${'.parent::backdrop dialog'}                            | ${'.parent dialog::backdrop'}
     `('should translate "$before" into "$after"', ({ before, after }) => {
-      let result = finalizeSelector('.a', [{ format: before, isArbitraryVariant: false }], {
+      let result = finalizeSelector('.a', [{ format: before, respectPrefix: true }], {
         candidate: 'a',
       })
 
diff --git a/tests/getVariants.test.js b/tests/getVariants.test.js
index 8d79f82433a8..8c4022186a98 100644
--- a/tests/getVariants.test.js
+++ b/tests/getVariants.test.js
@@ -67,6 +67,25 @@ crosscheck(() => {
     expect(variant.selectors({ modifier: 'foo', value: '.foo_&' })).toEqual(['.foo .group\\/foo &'])
   })
 
+  it('should provide selectors for complex matchVariant variants like `group` (when using a prefix)', () => {
+    let config = { prefix: 'tw-' }
+    let context = createContext(resolveConfig(config))
+
+    let variants = context.getVariants()
+
+    let variant = variants.find((v) => v.name === 'group')
+    expect(variant.selectors()).toEqual(['.tw-group &'])
+    expect(variant.selectors({})).toEqual(['.tw-group &'])
+    expect(variant.selectors({ value: 'hover' })).toEqual(['.tw-group:hover &'])
+    expect(variant.selectors({ value: '.foo_&' })).toEqual(['.foo .tw-group &'])
+    expect(variant.selectors({ modifier: 'foo', value: 'hover' })).toEqual([
+      '.tw-group\\/foo:hover &',
+    ])
+    expect(variant.selectors({ modifier: 'foo', value: '.foo_&' })).toEqual([
+      '.foo .tw-group\\/foo &',
+    ])
+  })
+
   it('should provide selectors for variants with atrules', () => {
     let config = {}
     let context = createContext(resolveConfig(config))
diff --git a/tests/prefix.test.js b/tests/prefix.test.js
index ea3d041ffeac..cf5085509d7a 100644
--- a/tests/prefix.test.js
+++ b/tests/prefix.test.js
@@ -623,3 +623,33 @@ crosscheck(({ stable, oxide }) => {
     `)
   })
 })
+
+test('does not prefix arbitrary group/peer classes', async () => {
+  let config = {
+    prefix: 'tw-',
+    content: [
+      {
+        raw: html`
+          <div class="tw-group tw-peer foo">
+            <div class="group-[&.foo]:tw-flex"></div>
+          </div>
+          <div class="peer-[&.foo]:tw-flex"></div>
+        `,
+      },
+    ],
+    corePlugins: { preflight: false },
+  }
+
+  let input = css`
+    @tailwind utilities;
+  `
+
+  const result = await run(input, config)
+
+  expect(result.css).toMatchFormattedCss(css`
+    .tw-group.foo .group-\[\&\.foo\]\:tw-flex,
+    .tw-peer.foo ~ .peer-\[\&\.foo\]\:tw-flex {
+      display: flex;
+    }
+  `)
+})