diff --git a/crates/trace/src/contour.rs b/crates/trace/src/contour.rs
index e79fa7f06..6bacd3f11 100644
--- a/crates/trace/src/contour.rs
+++ b/crates/trace/src/contour.rs
@@ -48,7 +48,7 @@ fn step(d: u8) -> (i32, i32) {
 }
 
 /// 4-connected component labels (`u32::MAX` outside) and per-component pixel counts.
-fn label(mask: &[bool], w: usize, h: usize) -> (Vec<u32>, Vec<usize>) {
+pub(crate) fn label(mask: &[bool], w: usize, h: usize) -> (Vec<u32>, Vec<usize>) {
     let mut comp = vec![u32::MAX; w * h];
     let mut sizes = Vec::new();
     // (Indices as `u32`: a mask has at most 64 million pixels, and this stack can hold them all.)
diff --git a/crates/trace/src/lib.rs b/crates/trace/src/lib.rs
index 0cf283f6d..6fb1a6dca 100644
--- a/crates/trace/src/lib.rs
+++ b/crates/trace/src/lib.rs
@@ -40,7 +40,8 @@
 //! parts become stroked outlines.
 //!
 //! Colour layers are traced either *abutting* (each colour's own area; shapes share edges) or
-//! *overlapping* (stacked: each layer also covers every layer above it, so no hairline gaps).
+//! *overlapping* (stacked: each layer also covers the layers above it within the areas that hold
+//! its own color, so no hairline gaps).
 #![forbid(unsafe_code)]
 
 mod centerline;
@@ -234,7 +235,8 @@ pub enum Method {
     /// Each colour traced on its own; neighbouring shapes share their edge.
     #[default]
     Abutting,
-    /// Stacked: every layer extends under the layers above it.
+    /// Stacked: every layer extends under the layers above it, within the areas that hold its own
+    /// color.
     Overlapping,
 }
 
@@ -603,10 +605,11 @@ fn trace_paths(img: &Raster, params: &TraceParams, max_anchors: usize) -> Result
     order.sort_by(|a, b| counts[*b].cmp(&counts[*a]).then(a.cmp(b)));
     if params.method == Method::Overlapping {
         // Stacked layers go by lightness instead, from the largest colour's end of the scale: each
-        // layer reaches under all those above it, so where two colours meet, every layer between
-        // them in the stack ends on that same edge and shows through its anti-aliasing. Neighbours
-        // in a picture are mostly neighbours in tone, and in this order they are neighbours in the
-        // stack too (by area, an unrelated colour's edge would shine through as a hairline).
+        // layer reaches under those above it in the areas that hold its own color, so where two
+        // colours meet, every layer between them in the stack that has a pixel in that area ends
+        // on that same edge and shows through its anti-aliasing. Neighbours in a picture are
+        // mostly neighbours in tone, and in this order they are neighbours in the stack too (by
+        // area, an unrelated colour's edge would shine through as a hairline).
         let light = |i: usize| q.palette.get(i).map_or(0, |c| u32::from(c[0]) * 299 + u32::from(c[1]) * 587 + u32::from(c[2]) * 114);
         let first = order.first().copied();
         order.sort_by(|a, b| light(*a).cmp(&light(*b)).then(a.cmp(b)));
@@ -639,6 +642,8 @@ fn trace_paths(img: &Raster, params: &TraceParams, max_anchors: usize) -> Result
     // A layer takes about ten bytes a pixel of its box while it is traced (its mask, the labels
     // of its components, the stack that fills them, its edges): as many layers at a time as fit
     // in half a gigabyte, so that a large image is not traced at the cost of gigabytes.
+    // (Overlapping labels a layer's mask once more before it is traced, with its labels and stack
+    // freed before the trace starts.)
     let largest = job.boxes.iter().flatten().map(|b| (b.2 - b.0) * (b.3 - b.1)).max().unwrap_or(1).max(1);
     let at_a_time = ((512 << 20) / (largest * 10)).max(1);
     for (paths, &(_, ci)) in parallel_map_at_most(at_a_time, &layers, |&(r, ci)| job.layer(r, ci)).into_iter().zip(&layers) {
@@ -965,6 +970,23 @@ impl Layers<'_> {
             let row = self.q.labels.get(y * w + x0..y * w + x1)?;
             mask.extend(row.iter().enumerate().map(|(k, &l)| l != TRANSPARENT && !thin.get(y * w + x0 + k).copied().unwrap_or(false) && part(l)));
         }
+        // Overlapping: a part of the mask with no pixel of this color holds only colors above it,
+        // whose own layers fill it, and is left out. The layer reaches under the colors above it
+        // only within the areas that hold its own color.
+        if overlapping {
+            let (comp, sizes) = contour::label(&mask, bw, bh);
+            let mut own = vec![false; sizes.len()];
+            for (k, &c) in comp.iter().enumerate() {
+                if self.q.labels.get((y0 + k / bw) * w + x0 + k % bw).is_some_and(|&l| l as usize == ci)
+                    && let Some(o) = own.get_mut(c as usize)
+                {
+                    *o = true;
+                }
+            }
+            for (m, &c) in mask.iter_mut().zip(&comp) {
+                *m = *m && own.get(c as usize).copied().unwrap_or(false);
+            }
+        }
         // Without Fills, areas are outlined with a 1 px stroke.
         let area_stroke = (params.strokes && !params.fills).then_some(1.0);
         let min_hole = params.noise.max(1) as i64;
diff --git a/crates/trace/src/tests.rs b/crates/trace/src/tests.rs
index 82e178b6f..05f46a211 100644
--- a/crates/trace/src/tests.rs
+++ b/crates/trace/src/tests.rs
@@ -214,6 +214,70 @@ fn overlapping_layers_stack() {
     assert_eq!(ov.paths[1].color, [0, 0, 0]);
 }
 
+/// Overlapping with Shapes: a black disc on the light half is written once. The blue layer, between
+/// light and black in the stack, does not reach under it: the disc holds no blue.
+#[test]
+fn overlapping_writes_no_copy_of_a_shape_under_a_color_it_does_not_touch() {
+    let (light, blue) = ([240, 240, 220, 255], [40, 120, 240, 255]);
+    let img = Raster::from_fn(600, 400, |x, y| {
+        let disc = |cx: f64, cy: f64| Point::new(f64::from(x) + 0.5, f64::from(y) + 0.5).distance(Point::new(cx, cy)) <= 12.0;
+        if disc(100.0, 100.0) || disc(200.0, 300.0) || (400..500).contains(&x) && (150..250).contains(&y) {
+            BLACK
+        } else if x >= 300 {
+            blue
+        } else {
+            light
+        }
+    });
+    let params = TraceParams {
+        mode: Mode::Color,
+        palette: Palette::Limited,
+        colors: 3,
+        paths: 90.0,
+        corners: 50.0,
+        noise: 2,
+        method: Method::Overlapping,
+        shapes: true,
+        ..TraceParams::default()
+    };
+    let res = trace(&img, &params);
+    let ellipses = res.paths.iter().filter(|p| matches!(p.shape, Some(TracedShape::Ellipse { .. }))).count();
+    let rectangles = res.paths.iter().filter(|p| matches!(p.shape, Some(TracedShape::Rectangle { .. }))).count();
+    // The two discs; the light ground, the blue half (the black square touches it) and the square.
+    assert_eq!((ellipses, rectangles), (2, 3), "{:?}", res.paths.iter().map(|p| (p.color, p.shape)).collect::<Vec<_>>());
+    let bounds: Vec<_> = res.paths.iter().filter(|p| p.shape.is_some()).filter_map(|p| p.path.bounds()).collect();
+    for (i, a) in bounds.iter().enumerate() {
+        for b in &bounds[i + 1..] {
+            let same = [(a.x0, b.x0), (a.y0, b.y0), (a.x1, b.x1), (a.y1, b.y1)].iter().all(|(u, v)| (u - v).abs() <= 0.5);
+            assert!(!same, "two shapes at {a:?}");
+        }
+    }
+}
+
+/// Overlapping: a black line on the light ground gets no blue path under it, though blue lies
+/// between light and black in the stack.
+#[test]
+fn overlapping_layers_leave_out_areas_without_their_color() {
+    let (light, blue) = ([240, 240, 220, 255], [40, 120, 240, 255]);
+    let img = Raster::from_fn(400, 400, |x, y| {
+        if (170..230).contains(&x) && (170..230).contains(&y) {
+            blue
+        } else if (50..350).contains(&x) && (320..330).contains(&y) {
+            BLACK
+        } else {
+            light
+        }
+    });
+    let params = TraceParams { mode: Mode::Color, palette: Palette::Limited, colors: 3, method: Method::Overlapping, ..TraceParams::default() };
+    let res = trace(&img, &params);
+    let blues: Vec<_> = res.paths.iter().filter(|p| p.color[0] < 100 && p.color[2] > 150).collect();
+    assert!(!blues.is_empty(), "{:?}", res.palette);
+    for p in blues {
+        let b = p.path.bounds().unwrap();
+        assert!(b.x1 <= 50.0 || b.x0 >= 350.0 || b.y1 <= 320.0 || b.y0 >= 330.0, "a blue path over the line: {b:?}");
+    }
+}
+
 #[test]
 fn transparent_pixels_are_not_traced() {
     let img = Raster::from_fn(40, 40, |x, _| if x < 20 { [0, 0, 0, 0] } else { BLACK });
@@ -474,9 +538,8 @@ fn parallel_layers_keep_their_order() {
     for _ in 0..4 {
         assert_eq!(trace(&img, &p), a);
     }
-    // Overlapping: each layer's shapes cover the layers above, so the pixel counts fall upwards.
-    let firsts: Vec<usize> = a.palette.iter().filter_map(|c| a.paths.iter().find(|t| t.color == *c).map(|t| t.pixels)).collect();
-    assert!(firsts.windows(2).all(|w| w[0] >= w[1]), "{firsts:?}");
+    // Overlapping: the bottom layer comes first and covers the whole image.
+    assert_eq!(a.paths.first().map(|t| t.pixels), Some(90 * 90));
 }
 
 /// A PNG whose header says `w` × `h` pixels, with no image data.
@@ -1099,11 +1162,12 @@ fn stacked_layers_go_by_lightness_and_leave_ignored_white_alone() {
     let params = TraceParams { mode: Mode::Grayscale, colors: 4, noise: 0, method: Method::Overlapping, ..TraceParams::default() };
     let tones = |res: &TraceResult| res.paths.iter().map(|p| p.color[0]).collect::<Vec<u8>>();
     // The largest colour is light, so the stack starts at the light end.
-    // (Each layer reaches under those above it: under the black stripe too, a part of its own.)
-    assert_eq!(tones(&trace(&img, &params)), [255, 200, 200, 120, 120, 0]);
+    // (Each layer reaches under those above it only where it is part of the area: the black stripe
+    // holds no gray, so no gray layer reaches under it.)
+    assert_eq!(tones(&trace(&img, &params)), [255, 200, 120, 0]);
     // Without white, no layer reaches under where it was.
     let res = trace(&img, &TraceParams { ignore_white: true, ..params });
-    assert_eq!(tones(&res), [200, 200, 120, 120, 0]);
+    assert_eq!(tones(&res), [200, 120, 0]);
     for p in &res.paths {
         let b = p.path.bounds().unwrap();
         assert!(b.x1 <= 20.5 || b.x0 >= 39.5, "a {} layer covers the white stripe: {b:?}", p.color[0]);
diff --git a/docs/target-app-parity.md b/docs/target-app-parity.md
index a3fa786e9..ecea6beab 100644
--- a/docs/target-app-parity.md
+++ b/docs/target-app-parity.md
@@ -796,6 +796,7 @@ Moved from the ROADMAP's "Shipped so far" on 2026-10-10. Update it when a featur
 - **Image Trace small contours:** closed fits too small to form an editable subpath retain their positioned outline, including holes. Source-generated island, hole/winding and stepped-region regressions cover Corners and Noise; defaults, parity scores and estimates are unchanged.
 - **Create Strokes baseline (2026-10-17, measured):** the ignored centre-lines class covers 23 exact code-drawn scenes in aa and hard variants, including junctions, crossings, fills meeting strokes and varying widths. [Baseline and metric definitions](image-trace-quality.md#centre-lines). Topology is recovered from emitted geometry; width-profile metrics remain unavailable. No behaviour change or score increase.
 - **Image Trace, collapsed loops keep few segments:** a loop whose fit collapses to one cubic keeps the fewest segments that hold its area and course, so a higher Paths gives no fewer segments; a code-drawn Paths sweep in `crates/trace` (see [quality notes](image-trace-quality.md#collapsed-loops-keep-few-segments)).
+- **Image Trace, stacked layers only under their own areas:** with Method Overlapping, a layer reaches under the colors above it only within the connected areas that hold its own color, so a shape that sits apart from a color is no longer written again, at the same bounds, in that color, and the edge of that color's layer no longer shows through that shape's anti-aliased rim. *Measured* by `crates/trace/tests/quality` on each preset's own inputs: High Fidelity Photo 121 paths to 69.6 with ΔE 1.74 to 1.72, Low Fidelity Photo 37.1 paths to 26.1. Code-drawn disc, square and line tests in `crates/trace`.
 - **Image Trace, notches read only their own piece:** the notch rule of `subpixel::outline` reads only the shared piece, so both regions of an edge cut a corner pixel alike and leave no gap; a code-drawn noisy multi-colour coverage test in `crates/trace` (see [quality notes](image-trace-quality.md#notches-read-only-their-own-piece)).
 - **Image Trace, same shift from either side of an edge:** a crack's sub-pixel shift is averaged from its two sides, so abutting regions on one- and two-pixel slivers get the same points and leave nothing uncovered; code-drawn regressions in `crates/trace` (see [quality notes](image-trace-quality.md#same-sub-pixel-shift-from-either-side-of-an-edge)).
 - **Image Trace, cut-out edges:** in Color and Grayscale, a semi-transparent pixel (alpha 128 to 254) on the edge of a cut-out image, beside a pixel that is less than half opaque, traces as a color of the fully opaque pixels within two pixels of it when its own color is that color or a darker shade of it, and of several such colors, as the one the most of those pixels have (art across a transparent gap does not count), so a darkened edge tone no longer traces as a 1 px sliver of an unrelated palette color, while a thin semi-transparent outline of another color keeps its own; code-drawn cut-out, opaque-edge and thin-outline tests in `crates/trace`.