diff --git a/packages/playwright-core/src/server/injected/recorder.ts b/packages/playwright-core/src/server/injected/recorder.ts
index cbaa83e60b..5b7b6188da 100644
--- a/packages/playwright-core/src/server/injected/recorder.ts
+++ b/packages/playwright-core/src/server/injected/recorder.ts
@@ -25,6 +25,7 @@ interface RecorderDelegate {
   performAction?(action: actions.Action): Promise<void>;
   recordAction?(action: actions.Action): Promise<void>;
   setSelector?(selector: string): Promise<void>;
+  highlightUpdated?(): void;
 }
 
 export class Recorder {
@@ -41,16 +42,13 @@ export class Recorder {
   private _highlight: Highlight;
   private _testIdAttributeName: string = 'data-testid';
   readonly document: Document;
-  private _delegate: RecorderDelegate;
+  private _delegate: RecorderDelegate = {};
 
-  constructor(injectedScript: InjectedScript, delegate: RecorderDelegate) {
+  constructor(injectedScript: InjectedScript) {
     this.document = injectedScript.document;
     this._injectedScript = injectedScript;
-    this._delegate = delegate;
     this._highlight = new Highlight(injectedScript);
 
-    this.refreshListenersIfNeeded();
-
     if (injectedScript.isUnderTest)
       console.error('Recorder script ready for test'); // eslint-disable-line no-console
   }
@@ -82,13 +80,20 @@ export class Recorder {
     this._highlight.install();
   }
 
-  setUIState(state: UIState) {
+  setUIState(state: UIState, delegate: RecorderDelegate) {
+    this._delegate = delegate;
+
+    if (state.mode !== 'none' || state.actionSelector)
+      this.refreshListenersIfNeeded();
+    else
+      removeEventListeners(this._listeners);
+
     const { mode, actionPoint, actionSelector, language, testIdAttributeName } = state;
     this._testIdAttributeName = testIdAttributeName;
     this._highlight.setLanguage(language);
     if (mode !== this._mode) {
       this._mode = mode;
-      this._clearHighlight();
+      this.clearHighlight();
     }
     if (actionPoint && this._actionPoint && actionPoint.x === this._actionPoint.x && actionPoint.y === this._actionPoint.y) {
       // All good.
@@ -113,7 +118,7 @@ export class Recorder {
     }
   }
 
-  private _clearHighlight() {
+  clearHighlight() {
     this._hoveredModel = null;
     this._activeModel = null;
     this._updateHighlight();
@@ -267,6 +272,8 @@ export class Recorder {
     const elements = this._hoveredModel ? this._hoveredModel.elements : [];
     const selector = this._hoveredModel ? this._hoveredModel.selector : '';
     this._highlight.updateHighlight(elements, selector, this._mode === 'recording');
+    if (this._hoveredModel)
+      this._delegate.highlightUpdated?.();
   }
 
   private _onInput(event: Event) {
@@ -398,7 +405,7 @@ export class Recorder {
   }
 
   private async _performAction(action: actions.Action) {
-    this._clearHighlight();
+    this.clearHighlight();
     this._performingAction = true;
     await this._delegate.performAction?.(action).catch(() => {});
     this._performingAction = false;
@@ -512,7 +519,7 @@ export class PollingRecorder implements RecorderDelegate {
   private _pollRecorderModeTimer: NodeJS.Timeout | undefined;
 
   constructor(injectedScript: InjectedScript) {
-    this._recorder = new Recorder(injectedScript, this);
+    this._recorder = new Recorder(injectedScript);
     this._embedder = injectedScript.window as any;
 
     injectedScript.onGlobalListenersRemoved.add(() => this._recorder.refreshListenersIfNeeded());
@@ -533,7 +540,7 @@ export class PollingRecorder implements RecorderDelegate {
       this._pollRecorderModeTimer = setTimeout(() => this._pollRecorderMode(), pollPeriod);
       return;
     }
-    this._recorder.setUIState(state);
+    this._recorder.setUIState(state, this);
     this._pollRecorderModeTimer = setTimeout(() => this._pollRecorderMode(), pollPeriod);
   }
 
diff --git a/packages/trace-viewer/src/ui/snapshotTab.tsx b/packages/trace-viewer/src/ui/snapshotTab.tsx
index c3d4919336..cbebb86c24 100644
--- a/packages/trace-viewer/src/ui/snapshotTab.tsx
+++ b/packages/trace-viewer/src/ui/snapshotTab.tsx
@@ -227,37 +227,54 @@ export const InspectModeController: React.FunctionComponent<{
   iteration: number,
 }> = ({ iframe, isInspecting, sdkLanguage, testIdAttributeName, highlightedLocator, setHighlightedLocator, iteration }) => {
   React.useEffect(() => {
-    const win = iframe?.contentWindow as any;
-    let recorder: Recorder | undefined;
+    const recorders: { recorder: Recorder, frameSelector: string }[] = [];
     try {
-      if (!win)
-        return;
-      recorder = win._recorder;
-      if (!recorder && !isInspecting && !highlightedLocator)
-        return;
+      createRecorders(recorders, sdkLanguage, testIdAttributeName, '', iframe?.contentWindow);
     } catch {
-      // Potential cross-origin exception when accessing win._recorder.
-      return;
+      // Potential cross-origin exceptions.
     }
-    if (!recorder) {
-      const injectedScript = new InjectedScript(win, false, sdkLanguage, testIdAttributeName, 1, 'chromium', []);
-      recorder = new Recorder(injectedScript, {
+
+    for (const { recorder, frameSelector } of recorders) {
+      const actionSelector = locatorOrSelectorAsSelector(sdkLanguage, highlightedLocator, testIdAttributeName);
+      recorder.setUIState({
+        mode: isInspecting ? 'inspecting' : 'none',
+        actionSelector,
+        language: sdkLanguage,
+        testIdAttributeName,
+      }, {
         async setSelector(selector: string) {
-          setHighlightedLocator(asLocator(sdkLanguage, selector, false /* isFrameLocator */, true /* playSafe */));
+          setHighlightedLocator(asLocator(sdkLanguage, frameSelector + selector, false /* isFrameLocator */, true /* playSafe */));
+        },
+        highlightUpdated() {
+          for (const r of recorders) {
+            if (r.recorder !== recorder)
+              r.recorder.clearHighlight();
+          }
         }
       });
-      win._recorder = recorder;
     }
-    const actionSelector = locatorOrSelectorAsSelector(sdkLanguage, highlightedLocator, testIdAttributeName);
-    recorder.setUIState({
-      mode: isInspecting ? 'inspecting' : 'none',
-      actionSelector,
-      language: sdkLanguage,
-      testIdAttributeName,
-    });
   }, [iframe, isInspecting, highlightedLocator, setHighlightedLocator, sdkLanguage, testIdAttributeName, iteration]);
   return <></>;
 };
 
+function createRecorders(recorders: { recorder: Recorder, frameSelector: string }[], sdkLanguage: Language, testIdAttributeName: string, parentFrameSelector: string, frameWindow: Window | null | undefined) {
+  if (!frameWindow)
+    return;
+  const win = frameWindow as any;
+  if (!win._recorder) {
+    const injectedScript = new InjectedScript(frameWindow as any, false, sdkLanguage, testIdAttributeName, 1, 'chromium', []);
+    const recorder = new Recorder(injectedScript);
+    win._injectedScript = injectedScript;
+    win._recorder = { recorder, frameSelector: parentFrameSelector };
+  }
+  recorders.push(win._recorder);
+
+  for (let i = 0; i < frameWindow.frames.length; ++i) {
+    const childFrame = frameWindow.frames[i];
+    const frameSelector = childFrame.frameElement ? win._injectedScript.generateSelector(childFrame.frameElement, { omitInternalEngines: true, testIdAttributeName }) + ' >> internal:control=enter-frame >> ' : '';
+    createRecorders(recorders, sdkLanguage, testIdAttributeName, parentFrameSelector + frameSelector, childFrame);
+  }
+}
+
 const kDefaultViewport = { width: 1280, height: 720 };
 const kBlankSnapshotUrl = 'data:text/html,<body style="background: #ddd"></body>';
diff --git a/tests/library/trace-viewer.spec.ts b/tests/library/trace-viewer.spec.ts
index d3632aa1d1..3f06591f24 100644
--- a/tests/library/trace-viewer.spec.ts
+++ b/tests/library/trace-viewer.spec.ts
@@ -996,3 +996,41 @@ test('should ignore 304 responses', async ({ page, server, runAndTrace }) => {
   const frame = await traceViewer.snapshotFrame('locator.click');
   await expect(frame.locator('body')).toHaveCSS('background-color', 'rgb(123, 123, 123)');
 });
+
+test('should pick locator in iframe', async ({ page, runAndTrace, server }) => {
+  /*
+    iframe[id=frame1]
+      div Hello1
+      iframe
+        div Hello2
+        iframe[name=one]
+          div HelloNameOne
+        iframe[name=two]
+          dev HelloNameTwo
+  */
+  const traceViewer = await runAndTrace(async () => {
+    await page.goto(server.EMPTY_PAGE);
+    await page.setContent(`<iframe id=frame1 srcdoc="<div>Hello1</div><iframe srcdoc='<div>Hello2</div><iframe name=one></iframe><iframe name=two></iframe><iframe></iframe>'>">`);
+    const frameOne = page.frame({ name: 'one' });
+    await frameOne.setContent(`<div>HelloNameOne</div>`);
+    const frameTwo = page.frame({ name: 'two' });
+    await frameTwo.setContent(`<div>HelloNameTwo</div>`);
+    await page.evaluate('2+2');
+  });
+  await traceViewer.page.getByTitle('Pick locator').click();
+  const cmWrapper = traceViewer.page.locator('.cm-wrapper');
+
+  const snapshot = await traceViewer.snapshotFrame('page.evaluate');
+
+  await snapshot.frameLocator('#frame1').getByText('Hello1').click();
+  await expect.soft(cmWrapper).toContainText(`frameLocator('#frame1').getByText('Hello1')`);
+
+  await snapshot.frameLocator('#frame1').frameLocator('iframe').getByText('Hello2').click();
+  await expect.soft(cmWrapper).toContainText(`frameLocator('#frame1').frameLocator('iframe').getByText('Hello2')`, { timeout: 0 });
+
+  await snapshot.frameLocator('#frame1').frameLocator('iframe').frameLocator('[name=one]').getByText('HelloNameOne').click();
+  await expect.soft(cmWrapper).toContainText(`frameLocator('#frame1').frameLocator('iframe').frameLocator('iframe[name="one"]').getByText('HelloNameOne')`, { timeout: 0 });
+
+  await snapshot.frameLocator('#frame1').frameLocator('iframe').frameLocator('[name=two]').getByText('HelloNameTwo').click();
+  await expect.soft(cmWrapper).toContainText(`frameLocator('#frame1').frameLocator('iframe').frameLocator('iframe[name="two"]').getByText('HelloNameTwo')`, { timeout: 0 });
+});