diff --git a/packages/trace-viewer/src/snapshotRenderer.ts b/packages/trace-viewer/src/snapshotRenderer.ts
index 11e63de04f..0d2f2af502 100644
--- a/packages/trace-viewer/src/snapshotRenderer.ts
+++ b/packages/trace-viewer/src/snapshotRenderer.ts
@@ -346,6 +346,8 @@ function snapshotScript(...targetIds: (string | undefined)[]) {
       if (search.get('pointX') && search.get('pointY')) {
         const pointX = +search.get('pointX')!;
         const pointY = +search.get('pointY')!;
+        const hasInputTarget = search.has('hasInputTarget');
+        const isTopFrame = window.location.pathname.match(/\/page@[a-z0-9]+$/);
         const hasTargetElements = targetElements.length > 0;
         const roots = document.documentElement ? [document.documentElement] : [];
         for (const target of (hasTargetElements ? targetElements : roots)) {
@@ -370,7 +372,8 @@ function snapshotScript(...targetIds: (string | undefined)[]) {
             pointElement.style.left = centerX + 'px';
             pointElement.style.top = centerY + 'px';
             // "Warning symbol" indicates that action point is not 100% correct.
-            if (Math.abs(centerX - pointX) >= 10 || Math.abs(centerY - pointY) >= 10) {
+            // Note that action point is relative to the top frame, so we can only compare in the top frame.
+            if (isTopFrame && (Math.abs(centerX - pointX) >= 10 || Math.abs(centerY - pointY) >= 10)) {
               const warningElement = document.createElement('x-pw-pointer-warning');
               warningElement.textContent = '⚠';
               warningElement.style.fontSize = '19px';
@@ -380,13 +383,14 @@ function snapshotScript(...targetIds: (string | undefined)[]) {
               pointElement.appendChild(warningElement);
               pointElement.setAttribute('title', kPointerWarningTitle);
             }
-          } else {
+            document.documentElement.appendChild(pointElement);
+          } else if (isTopFrame && !hasInputTarget) {
             // For actions without a target element, e.g. page.mouse.move(),
-            // show the point at the recorder location.
+            // show the point at the recorded location, which is relative to the top frame.
             pointElement.style.left = pointX + 'px';
             pointElement.style.top = pointY + 'px';
+            document.documentElement.appendChild(pointElement);
           }
-          document.documentElement.appendChild(pointElement);
         }
       }
     };
diff --git a/packages/trace-viewer/src/ui/snapshotTab.tsx b/packages/trace-viewer/src/ui/snapshotTab.tsx
index 00fcbf64e9..9dafa10b96 100644
--- a/packages/trace-viewer/src/ui/snapshotTab.tsx
+++ b/packages/trace-viewer/src/ui/snapshotTab.tsx
@@ -55,7 +55,7 @@ export const SnapshotTab: React.FunctionComponent<{
   const [snapshotTab, setSnapshotTab] = React.useState<'action'|'before'|'after'>('action');
   const [showScreenshotInsteadOfSnapshot] = useSetting('screenshot-instead-of-snapshot', false);
 
-  type Snapshot = { action: ActionTraceEvent, snapshotName: string, point?: { x: number, y: number } };
+  type Snapshot = { action: ActionTraceEvent, snapshotName: string, point?: { x: number, y: number }, hasInputTarget?: boolean };
   const { snapshots } = React.useMemo(() => {
     if (!action)
       return { snapshots: {} };
@@ -68,7 +68,7 @@ export const SnapshotTab: React.FunctionComponent<{
       beforeSnapshot = a?.afterSnapshot ? { action: a, snapshotName: a?.afterSnapshot } : undefined;
     }
     const afterSnapshot: Snapshot | undefined = action.afterSnapshot ? { action, snapshotName: action.afterSnapshot } : beforeSnapshot;
-    const actionSnapshot: Snapshot | undefined = action.inputSnapshot ? { action, snapshotName: action.inputSnapshot } : afterSnapshot;
+    const actionSnapshot: Snapshot | undefined = action.inputSnapshot ? { action, snapshotName: action.inputSnapshot, hasInputTarget: true } : afterSnapshot;
     if (actionSnapshot)
       actionSnapshot.point = action.point;
     return { snapshots: { action: actionSnapshot, before: beforeSnapshot, after: afterSnapshot } };
@@ -85,6 +85,8 @@ export const SnapshotTab: React.FunctionComponent<{
     if (snapshot.point) {
       params.set('pointX', String(snapshot.point.x));
       params.set('pointY', String(snapshot.point.y));
+      if (snapshot.hasInputTarget)
+        params.set('hasInputTarget', '1');
     }
     const snapshotUrl = new URL(`snapshot/${snapshot.action.pageId}?${params.toString()}`, window.location.href).toString();
     const snapshotInfoUrl = new URL(`snapshotInfo/${snapshot.action.pageId}?${params.toString()}`, window.location.href).toString();
@@ -95,6 +97,8 @@ export const SnapshotTab: React.FunctionComponent<{
     if (snapshot.point) {
       popoutParams.set('pointX', String(snapshot.point.x));
       popoutParams.set('pointY', String(snapshot.point.y));
+      if (snapshot.hasInputTarget)
+        params.set('hasInputTarget', '1');
     }
     const popoutUrl = new URL(`snapshot.html?${popoutParams.toString()}`, window.location.href).toString();
     return { snapshots, snapshotInfoUrl, snapshotUrl, popoutUrl, point: snapshot.point };
diff --git a/tests/library/trace-viewer.spec.ts b/tests/library/trace-viewer.spec.ts
index 8f8d69116f..2b00949b19 100644
--- a/tests/library/trace-viewer.spec.ts
+++ b/tests/library/trace-viewer.spec.ts
@@ -1496,3 +1496,28 @@ test('should handle case where neither snapshots nor screenshots exist', async (
   await expect(screenshot).not.toBeVisible();
 });
 
+test('should show only one pointer with multilevel iframes', async ({ page, runAndTrace, server, browserName }) => {
+  test.fixme(browserName !== 'chromium', 'Elements in iframe are not marked');
+
+  server.setRoute('/level-0.html', (req, res) => {
+    res.writeHead(200);
+    res.end(`<iframe src="/level-1.html" style="position: absolute; left: 100px"></iframe>`);
+  });
+  server.setRoute('/level-1.html', (req, res) => {
+    res.writeHead(200);
+    res.end(`<iframe src="/level-2.html"></iframe>`);
+  });
+  server.setRoute('/level-2.html', (req, res) => {
+    res.writeHead(200);
+    res.end(`<button>Click me</button>`);
+  });
+
+  const traceViewer = await runAndTrace(async () => {
+    await page.goto(server.PREFIX + '/level-0.html');
+    await page.frameLocator('iframe').frameLocator('iframe').locator('button').click({ position: { x: 5, y: 5 } });
+  });
+  const snapshotFrame = await traceViewer.snapshotFrame('locator.click');
+  await expect.soft(snapshotFrame.locator('x-pw-pointer')).not.toBeAttached();
+  await expect.soft(snapshotFrame.frameLocator('iframe').locator('x-pw-pointer')).not.toBeAttached();
+  await expect.soft(snapshotFrame.frameLocator('iframe').frameLocator('iframe').locator('x-pw-pointer')).toBeVisible();
+});