diff --git a/packages/playwright-core/src/client/channelOwner.ts b/packages/playwright-core/src/client/channelOwner.ts
index 89f3edced3..a5d753507b 100644
--- a/packages/playwright-core/src/client/channelOwner.ts
+++ b/packages/playwright-core/src/client/channelOwner.ts
@@ -168,7 +168,7 @@ export abstract class ChannelOwner<T extends channels.Channel = channels.Channel
     return channel;
   }
 
-  async _wrapApiCall<R>(func: (apiZone: ApiZone) => Promise<R>, isInternal = false): Promise<R> {
+  async _wrapApiCall<R>(func: (apiZone: ApiZone) => Promise<R>, isInternal?: boolean): Promise<R> {
     const logger = this._logger;
     const apiZone = zones.zoneData<ApiZone>('apiZone');
     if (apiZone)
@@ -178,7 +178,8 @@ export abstract class ChannelOwner<T extends channels.Channel = channels.Channel
     let apiName: string | undefined = stackTrace.apiName;
     const frames: channels.StackFrame[] = stackTrace.frames;
 
-    isInternal = isInternal || this._isInternalType;
+    if (isInternal === undefined)
+      isInternal = this._isInternalType;
     if (isInternal)
       apiName = undefined;
 
diff --git a/packages/playwright-core/src/client/tracing.ts b/packages/playwright-core/src/client/tracing.ts
index a85d951388..2481741e3e 100644
--- a/packages/playwright-core/src/client/tracing.ts
+++ b/packages/playwright-core/src/client/tracing.ts
@@ -52,11 +52,15 @@ export class Tracing extends ChannelOwner<channels.TracingChannel> implements ap
   }
 
   async group(name: string, options: { location?: { file: string, line?: number, column?: number } } = {}) {
-    await this._channel.tracingGroup({ name, location: options.location });
+    await this._wrapApiCall(async () => {
+      await this._channel.tracingGroup({ name, location: options.location });
+    }, false);
   }
 
   async groupEnd() {
-    await this._channel.tracingGroupEnd();
+    await this._wrapApiCall(async () => {
+      await this._channel.tracingGroupEnd();
+    }, false);
   }
 
   private async _startCollectingStacks(traceName: string) {
diff --git a/packages/playwright-core/src/server/trace/recorder/tracing.ts b/packages/playwright-core/src/server/trace/recorder/tracing.ts
index 0184c1a2a5..927aa9c646 100644
--- a/packages/playwright-core/src/server/trace/recorder/tracing.ts
+++ b/packages/playwright-core/src/server/trace/recorder/tracing.ts
@@ -214,8 +214,9 @@ export class Tracing extends SdkObject implements InstrumentationListener, Snaps
       startTime: metadata.startTime,
       apiName: name,
       class: 'Tracing',
-      method: 'group',
+      method: 'tracingGroup',
       params: { },
+      stepId: metadata.stepId,
       stack: stackFrames,
     };
     if (this._state.groupStack.length)
diff --git a/packages/playwright/src/index.ts b/packages/playwright/src/index.ts
index add1661502..a7be5ec533 100644
--- a/packages/playwright/src/index.ts
+++ b/packages/playwright/src/index.ts
@@ -20,7 +20,7 @@ import type { APIRequestContext, BrowserContext, Browser, BrowserContextOptions,
 import * as playwrightLibrary from 'playwright-core';
 import { createGuid, debugMode, addInternalStackPrefix, isString, asLocator, jsonStringifyForceASCII } from 'playwright-core/lib/utils';
 import type { Fixtures, PlaywrightTestArgs, PlaywrightTestOptions, PlaywrightWorkerArgs, PlaywrightWorkerOptions, ScreenshotMode, TestInfo, TestType, VideoMode } from '../types/test';
-import type { TestInfoImpl } from './worker/testInfo';
+import type { TestInfoImpl, TestStepInternal } from './worker/testInfo';
 import { rootTestType } from './common/testType';
 import type { ContextReuseMode } from './common/config';
 import type { ClientInstrumentation, ClientInstrumentationListener } from '../../playwright-core/src/client/clientInstrumentation';
@@ -255,20 +255,28 @@ const playwrightFixtures: Fixtures<TestFixtures, WorkerFixtures> = ({
 
     const artifactsRecorder = new ArtifactsRecorder(playwright, tracing().artifactsDir(), screenshot);
     await artifactsRecorder.willStartTest(testInfo as TestInfoImpl);
+
+    let tracingGroupSteps: TestStepInternal[] = [];
     const csiListener: ClientInstrumentationListener = {
       onApiCallBegin: (apiName: string, params: Record<string, any>, frames: StackFrame[], userData: any, out: { stepId?: string }) => {
         const testInfo = currentTestInfo();
         if (!testInfo || apiName.includes('setTestIdAttribute'))
           return { userObject: null };
+        if (apiName === 'tracing.groupEnd') {
+          tracingGroupSteps.pop();
+          return { userObject: null };
+        }
         const step = testInfo._addStep({
           location: frames[0] as any,
           category: 'pw:api',
           title: renderApiCall(apiName, params),
           apiName,
           params,
-        });
+        }, tracingGroupSteps[tracingGroupSteps.length - 1]);
         userData.userObject = step;
         out.stepId = step.stepId;
+        if (apiName === 'tracing.group')
+          tracingGroupSteps.push(step);
       },
       onApiCallEnd: (userData: any, error?: Error) => {
         const step = userData.userObject;
diff --git a/packages/playwright/src/worker/testInfo.ts b/packages/playwright/src/worker/testInfo.ts
index 378b32524f..5041e4f389 100644
--- a/packages/playwright/src/worker/testInfo.ts
+++ b/packages/playwright/src/worker/testInfo.ts
@@ -237,15 +237,15 @@ export class TestInfoImpl implements TestInfo {
     }
   }
 
-  _addStep(data: Omit<TestStepInternal, 'complete' | 'stepId' | 'steps'>): TestStepInternal {
+  _addStep(data: Omit<TestStepInternal, 'complete' | 'stepId' | 'steps'>, parentStep?: TestStepInternal): TestStepInternal {
     const stepId = `${data.category}@${++this._lastStepId}`;
 
-    let parentStep: TestStepInternal | undefined;
     if (data.isStage) {
       // Predefined stages form a fixed hierarchy - use the current one as parent.
       parentStep = this._findLastStageStep(this._steps);
     } else {
-      parentStep = zones.zoneData<TestStepInternal>('stepZone');
+      if (!parentStep)
+        parentStep = zones.zoneData<TestStepInternal>('stepZone');
       if (!parentStep) {
         // If no parent step on stack, assume the current stage as parent.
         parentStep = this._findLastStageStep(this._steps);