diff --git a/lib/internal/main/watch_mode.js b/lib/internal/main/watch_mode.js
index 06c2c8602da444..c8e466f14c309e 100644
--- a/lib/internal/main/watch_mode.js
+++ b/lib/internal/main/watch_mode.js
@@ -94,12 +94,15 @@ let exited;
 function start() {
   exited = false;
   const stdio = kShouldFilterModules ? ['inherit', 'inherit', 'inherit', 'ipc'] : 'inherit';
+  const env = {
+    ...process.env,
+    WATCH_REPORT_DEPENDENCIES: '1',
+  };
+
+  delete env.NODE_OPTIONS;
   child = spawn(process.execPath, argsWithoutWatchOptions, {
     stdio,
-    env: {
-      ...process.env,
-      WATCH_REPORT_DEPENDENCIES: '1',
-    },
+    env,
   });
   watcher.watchChildProcessModules(child);
   if (kEnvFiles.length > 0) {
diff --git a/test/sequential/test-watch-mode-watch-flags.mjs b/test/sequential/test-watch-mode-watch-flags.mjs
index 385f381ad6a0ed..1d18d6297f7011 100644
--- a/test/sequential/test-watch-mode-watch-flags.mjs
+++ b/test/sequential/test-watch-mode-watch-flags.mjs
@@ -5,7 +5,7 @@ import path from 'node:path';
 import { execPath } from 'node:process';
 import { describe, it } from 'node:test';
 import { spawn } from 'node:child_process';
-import { writeFileSync, mkdirSync } from 'node:fs';
+import { writeFileSync, mkdirSync, chmodSync } from 'node:fs';
 import { inspect } from 'node:util';
 import { createInterface } from 'node:readline';
 
@@ -48,6 +48,44 @@ async function runNode({
   return { stdout, stderr, pid: child.pid };
 }
 
+async function runExecutable({
+  file,
+  expectedCompletionLog = 'Completed running',
+  options = {},
+  timeout = common.platformTimeout(10_000),
+}) {
+  const child = spawn(file, [], { encoding: 'utf8', stdio: 'pipe', ...options });
+  let stderr = '';
+  const stdout = [];
+  let timedOut = true;
+
+  child.stderr.on('data', (data) => {
+    stderr += data;
+  });
+
+  const timer = setTimeout(() => {
+    child.kill();
+  }, timeout);
+
+  try {
+    for await (const data of createInterface({ input: child.stdout })) {
+      if (!data.startsWith('Waiting for graceful termination') &&
+          !data.startsWith('Gracefully restarted')) {
+        stdout.push(data);
+      }
+      if (data.startsWith(expectedCompletionLog)) {
+        timedOut = false;
+        break;
+      }
+    }
+  } finally {
+    clearTimeout(timer);
+    child.kill();
+  }
+
+  return { stdout, stderr, timedOut };
+}
+
 tmpdir.refresh();
 
 describe('watch mode - watch flags', { concurrency: !process.env.TEST_PARALLEL, timeout: 60_000 }, () => {
@@ -94,4 +132,37 @@ describe('watch mode - watch flags', { concurrency: !process.env.TEST_PARALLEL,
       `Completed running ${inspect(file)}. Waiting for file changes before restarting...`,
     ]);
   });
+
+  it('should not recursively re-enter watch mode for shebang scripts when NODE_OPTIONS=--watch',
+     { skip: common.isWindows || process.config.variables.node_without_node_options },
+     async () => {
+       const projectDir = tmpdir.resolve('project-watch-node-options-shebang');
+       mkdirSync(projectDir);
+
+       const file = createTmpFile(
+         '#!/usr/bin/env node\nconsole.log("shebang run");\n',
+         '.js',
+         projectDir,
+       );
+       chmodSync(file, 0o755);
+
+       const { stdout, stderr, timedOut } = await runExecutable({
+         file,
+         options: {
+           cwd: projectDir,
+           env: {
+             ...process.env,
+             NODE_OPTIONS: '--watch',
+             PATH: `${path.dirname(execPath)}${path.delimiter}${process.env.PATH ?? ''}`,
+           },
+         },
+       });
+
+       assert.strictEqual(timedOut, false);
+       assert.strictEqual(stderr, '');
+       assert.deepStrictEqual(stdout, [
+         'shebang run',
+         `Completed running ${inspect(file)}. Waiting for file changes before restarting...`,
+       ]);
+     });
 });