diff --git a/src/android/app/src/main/java/org/yuzu/yuzu_emu/activities/EmulationActivity.kt b/src/android/app/src/main/java/org/yuzu/yuzu_emu/activities/EmulationActivity.kt
index 44290fd4b6..d01bf81ce5 100644
--- a/src/android/app/src/main/java/org/yuzu/yuzu_emu/activities/EmulationActivity.kt
+++ b/src/android/app/src/main/java/org/yuzu/yuzu_emu/activities/EmulationActivity.kt
@@ -246,6 +246,7 @@ class EmulationActivity : AppCompatActivity(), SensorEventListener, InputManager
         nfcReader.startScanning()
         startMotionSensorListener()
         InputHandler.updateControllerData()
+        notifyPhysicalControllerState()
 
         buildPictureInPictureParams()
     }
@@ -469,29 +470,30 @@ class EmulationActivity : AppCompatActivity(), SensorEventListener, InputManager
     override fun onInputDeviceAdded(deviceId: Int) {
         if (isGameController(deviceId)) {
             InputHandler.updateControllerData()
-            val navHostFragment =
-                supportFragmentManager.findFragmentById(R.id.fragment_container) as? NavHostFragment
-            val emulationFragment =
-                navHostFragment?.childFragmentManager?.fragments?.firstOrNull() as? org.yuzu.yuzu_emu.fragments.EmulationFragment
-            emulationFragment?.onControllerConnected()
+            notifyPhysicalControllerState()
         }
     }
 
     override fun onInputDeviceRemoved(deviceId: Int) {
         InputHandler.updateControllerData()
-        val navHostFragment =
-            supportFragmentManager.findFragmentById(R.id.fragment_container) as? NavHostFragment
-        val emulationFragment =
-            navHostFragment?.childFragmentManager?.fragments?.firstOrNull() as? org.yuzu.yuzu_emu.fragments.EmulationFragment
-        emulationFragment?.onControllerDisconnected()
+        notifyPhysicalControllerState()
     }
 
     override fun onInputDeviceChanged(deviceId: Int) {
         if (isGameController(deviceId)) {
             InputHandler.updateControllerData()
+            notifyPhysicalControllerState()
         }
     }
 
+    private fun notifyPhysicalControllerState() {
+        val navHostFragment =
+            supportFragmentManager.findFragmentById(R.id.fragment_container) as? NavHostFragment
+        val emulationFragment =
+            navHostFragment?.childFragmentManager?.fragments?.firstOrNull() as? org.yuzu.yuzu_emu.fragments.EmulationFragment
+        emulationFragment?.onPhysicalControllerStateChanged(InputHandler.androidControllers.isNotEmpty())
+    }
+
     override fun onSensorChanged(event: SensorEvent) {
         if (!NativeLibrary.isRunning() || NativeLibrary.isPaused()) {
             return
diff --git a/src/android/app/src/main/java/org/yuzu/yuzu_emu/fragments/EmulationFragment.kt b/src/android/app/src/main/java/org/yuzu/yuzu_emu/fragments/EmulationFragment.kt
index 3d3749d4b3..a4c9eb9039 100644
--- a/src/android/app/src/main/java/org/yuzu/yuzu_emu/fragments/EmulationFragment.kt
+++ b/src/android/app/src/main/java/org/yuzu/yuzu_emu/fragments/EmulationFragment.kt
@@ -90,6 +90,7 @@ import org.yuzu.yuzu_emu.utils.FileUtil
 import org.yuzu.yuzu_emu.utils.GameHelper
 import org.yuzu.yuzu_emu.utils.GameIconUtils
 import org.yuzu.yuzu_emu.utils.GpuDriverHelper
+import org.yuzu.yuzu_emu.utils.InputHandler
 import org.yuzu.yuzu_emu.utils.Log
 import org.yuzu.yuzu_emu.utils.NativeConfig
 import org.yuzu.yuzu_emu.utils.NativeFreedrenoConfig
@@ -114,6 +115,8 @@ class EmulationFragment : Fragment(), SurfaceHolder.Callback {
     val handler = Handler(Looper.getMainLooper())
 
     private var controllerInputReceived = false
+    private var hasPhysicalControllerConnected = false
+    private var overlayHiddenByPhysicalController = false
 
     private var _binding: FragmentEmulationBinding? = null
 
@@ -666,6 +669,7 @@ class EmulationFragment : Fragment(), SurfaceHolder.Callback {
         driverInUse = driverViewModel.selectedDriverVersion.value
 
         updateQuickOverlayMenuEntry(BooleanSetting.SHOW_INPUT_OVERLAY.getBoolean())
+        onPhysicalControllerStateChanged(InputHandler.androidControllers.isNotEmpty())
 
         binding.surfaceEmulation.holder.addCallback(this)
         binding.doneControlConfig.setOnClickListener { stopConfiguringControls() }
@@ -760,11 +764,8 @@ class EmulationFragment : Fragment(), SurfaceHolder.Callback {
 
                 R.id.menu_quick_overlay -> {
                     val newState = !BooleanSetting.SHOW_INPUT_OVERLAY.getBoolean()
-                    BooleanSetting.SHOW_INPUT_OVERLAY.setBoolean(newState)
-                    updateQuickOverlayMenuEntry(newState)
-                    binding.surfaceInputOverlay.refreshControls()
-                    // Sync view visibility with the setting
                     toggleOverlay(newState)
+                    updateQuickOverlayMenuEntry(BooleanSetting.SHOW_INPUT_OVERLAY.getBoolean())
                     NativeConfig.saveGlobalConfig()
                     true
                 }
@@ -1053,7 +1054,8 @@ class EmulationFragment : Fragment(), SurfaceHolder.Callback {
             val shouldShowOverlay = if (args.overlayGamelessEditMode) {
                 true
             } else {
-                showInputOverlay && emulationViewModel.emulationStarted.value
+                showInputOverlay && emulationViewModel.emulationStarted.value &&
+                    !hasPhysicalControllerConnected
             }
             b.surfaceInputOverlay.setVisible(shouldShowOverlay)
             if (!isInFoldableLayout) {
@@ -2497,6 +2499,7 @@ class EmulationFragment : Fragment(), SurfaceHolder.Callback {
 
     fun toggleOverlay(enable: Boolean) {
         if (!isAdded || _binding == null) return
+        if (enable && hasPhysicalControllerConnected && !args.overlayGamelessEditMode) return
         if (enable == !BooleanSetting.SHOW_INPUT_OVERLAY.getBoolean()) {
             // Reset controller input flag so controller can hide overlay again
             if (!enable) {
@@ -2520,13 +2523,30 @@ class EmulationFragment : Fragment(), SurfaceHolder.Callback {
     }
 
     fun onControllerConnected() {
-        controllerInputReceived = false
+        onPhysicalControllerStateChanged(InputHandler.androidControllers.isNotEmpty())
     }
 
     fun onControllerDisconnected() {
-        if (!BooleanSetting.HIDE_OVERLAY_ON_CONTROLLER_INPUT.getBoolean()) return
-        if (!BooleanSetting.SHOW_INPUT_OVERLAY.getBoolean()) return
+        onPhysicalControllerStateChanged(InputHandler.androidControllers.isNotEmpty())
+    }
+
+    fun onPhysicalControllerStateChanged(hasConnectedControllers: Boolean) {
+        hasPhysicalControllerConnected = hasConnectedControllers
         controllerInputReceived = false
-        toggleOverlay(true)
+        if (!isAdded || _binding == null) return
+        if (binding.surfaceInputOverlay.isGamelessMode()) return
+
+        if (hasConnectedControllers) {
+            if (BooleanSetting.SHOW_INPUT_OVERLAY.getBoolean()) {
+                overlayHiddenByPhysicalController = true
+                toggleOverlay(false)
+            }
+            return
+        }
+
+        if (overlayHiddenByPhysicalController) {
+            overlayHiddenByPhysicalController = false
+            toggleOverlay(true)
+        }
     }
 }