diff --git a/src/components/Nodes/wrapNode.tsx b/src/components/Nodes/wrapNode.tsx
index e87f388e..da2f507e 100644
--- a/src/components/Nodes/wrapNode.tsx
+++ b/src/components/Nodes/wrapNode.tsx
@@ -49,7 +49,7 @@ export default (NodeComponent: ComponentType<NodeComponentProps>) => {
     resizeObserver,
     dragHandle,
     zIndex,
-    isParentNode,
+    isParent,
   }: WrapNodeProps) => {
     const {
       addSelectedElements,
@@ -85,7 +85,7 @@ export default (NodeComponent: ComponentType<NodeComponentProps>) => {
         onMouseEnter,
         onMouseMove,
         onMouseLeave,
-        isParentNode,
+        isParent,
         zIndex,
       ]
     );
@@ -228,7 +228,7 @@ export default (NodeComponent: ComponentType<NodeComponentProps>) => {
       {
         selected: isSelected,
         selectable: isSelectable,
-        parent: isParentNode,
+        parent: isParent,
       },
     ]);
 
diff --git a/src/container/NodeRenderer/index.tsx b/src/container/NodeRenderer/index.tsx
index a34fdc46..7876c1ec 100644
--- a/src/container/NodeRenderer/index.tsx
+++ b/src/container/NodeRenderer/index.tsx
@@ -106,8 +106,8 @@ const NodeRenderer = (props: NodeRendererProps) => {
             isConnectable={isConnectable}
             resizeObserver={resizeObserver}
             dragHandle={node.dragHandle}
-            zIndex={internals?.treeLevel || 0}
-            isParentNode={!!internals?.isParentNode}
+            zIndex={internals?.z || 0}
+            isParent={!!internals?.isParent}
           />
         );
       })}
diff --git a/src/hooks/useVisibleEdges.ts b/src/hooks/useVisibleEdges.ts
index 33befa1e..837150f1 100644
--- a/src/hooks/useVisibleEdges.ts
+++ b/src/hooks/useVisibleEdges.ts
@@ -4,21 +4,18 @@ import { useStore } from '../store';
 import { isEdgeVisible } from '../container/EdgeRenderer/utils';
 import { ReactFlowState, NodeInternals, Edge } from '../types';
 
-function groupEdgesByTreeLevel(edges: Edge[], nodeInternals: NodeInternals) {
+function groupEdgesByZLevel(edges: Edge[], nodeInternals: NodeInternals) {
   let maxLevel = -1;
 
   const levelLookup = edges.reduce<Record<string, Edge[]>>((tree, edge) => {
-    const treeLevel = Math.max(
-      nodeInternals.get(edge.source)?.treeLevel || 0,
-      nodeInternals.get(edge.target)?.treeLevel || 0
-    );
-    if (tree[treeLevel]) {
-      tree[treeLevel].push(edge);
+    const z = Math.max(nodeInternals.get(edge.source)?.z || 0, nodeInternals.get(edge.target)?.z || 0);
+    if (tree[z]) {
+      tree[z].push(edge);
     } else {
-      tree[treeLevel] = [edge];
+      tree[z] = [edge];
     }
 
-    maxLevel = treeLevel > maxLevel ? treeLevel : maxLevel;
+    maxLevel = z > maxLevel ? z : maxLevel;
 
     return tree;
   }, {});
@@ -69,7 +66,7 @@ function useVisibleEdges(onlyRenderVisible: boolean, nodeInternals: NodeInternal
     )
   );
 
-  return groupEdgesByTreeLevel(edges, nodeInternals);
+  return groupEdgesByZLevel(edges, nodeInternals);
 }
 
 export default useVisibleEdges;
diff --git a/src/store/utils.ts b/src/store/utils.ts
index 923620af..9333a004 100644
--- a/src/store/utils.ts
+++ b/src/store/utils.ts
@@ -1,48 +1,50 @@
 import { ElementId, Node, NodeInternals, NodeInternalsItem, XYPosition } from '../types';
 
-type XYPosAndTreeLevel = XYPosition & { treeLevel: number };
+type XYZPosition = XYPosition & { z: number };
+type ParentNodes = Record<ElementId, boolean>;
 
-function addPositions(a: XYPosAndTreeLevel, b: XYPosAndTreeLevel): XYPosAndTreeLevel {
-  return {
-    x: (a.x ?? 0) + (b.x ?? 0),
-    y: (a.y ?? 0) + (b.y ?? 0),
-    treeLevel: a.treeLevel + (b.treeLevel || 1),
-  };
-}
-
-function getAbsolutePosAndTreeLevel(
+function calculateXYZPosition(
   node: NodeInternalsItem,
   nodeInternals: NodeInternals,
-  result: XYPosAndTreeLevel
-): XYPosAndTreeLevel {
-  const parentNode = node.parentNode ? nodeInternals.get(node.parentNode) : false;
-
-  if (!parentNode) {
+  parentNodes: ParentNodes,
+  result: XYZPosition
+): XYZPosition {
+  if (!node.parentNode) {
     return result;
   }
+  const parentNode = nodeInternals.get(node.parentNode)!;
 
-  return getAbsolutePosAndTreeLevel(
-    parentNode,
-    nodeInternals,
-    addPositions(result, {
-      x: parentNode.position?.x || 0,
-      y: parentNode.position?.y || 0,
-      treeLevel: parentNode.treeLevel || 0,
-    })
-  );
+  // +1 for each recursion level
+  let zAddition = 1;
+
+  // +2 if it's a parent node, so that groups/parents are always on top
+  if (parentNodes[node.parentNode!]) {
+    zAddition = 2;
+  }
+
+  if (parentNode.z) {
+    zAddition += parentNode.z;
+  }
+
+  return calculateXYZPosition(parentNode, nodeInternals, parentNodes, {
+    x: (result.x ?? 0) + (parentNode.position?.x ?? 0),
+    y: (result.y ?? 0) + (parentNode.position?.y ?? 0),
+    z: (result.z ?? 0) + zAddition,
+  });
 }
 export function createNodeInternals(nodes: Node[], nodeInternals: NodeInternals): NodeInternals {
   const nextNodeInternals = new Map<ElementId, NodeInternalsItem>();
-  const parentNodes: Record<ElementId, boolean> = {};
+  const parentNodes: ParentNodes = {};
 
   nodes.forEach((node) => {
     const internals: NodeInternalsItem = {
       ...nodeInternals.get(node.id),
+      id: node.id,
       width: node.width || null,
       height: node.height || null,
       position: node.position,
       positionAbsolute: node.position,
-      treeLevel: node.isDragging || node.isSelected ? 1000 : node.zIndex || 0,
+      z: node.isDragging || node.isSelected ? 1000 : node.zIndex || 0,
     };
     if (node.parentNode) {
       internals.parentNode = node.parentNode;
@@ -55,25 +57,30 @@ export function createNodeInternals(nodes: Node[], nodeInternals: NodeInternals)
     const updatedInternals: NodeInternalsItem = nextNodeInternals.get(node.id)!;
 
     if (node.parentNode || parentNodes[node.id]) {
-      if (node.parentNode) {
-        const parentNodeInternal = nextNodeInternals.get(node.parentNode);
-        if (parentNodeInternal) {
-          parentNodeInternal.isParentNode = true;
+      let startingZ = updatedInternals.z;
+
+      if (!startingZ) {
+        if (parentNodes[node.id] && node.parentNode) {
+          startingZ = 2;
+        } else if (node.parentNode) {
+          startingZ = 1;
         }
       }
 
-      const positionAbsoluteAndTreeLevel = getAbsolutePosAndTreeLevel(node, nextNodeInternals, {
+      const { x, y, z } = calculateXYZPosition(node, nextNodeInternals, parentNodes, {
         ...node.position,
-        treeLevel: updatedInternals.treeLevel || 1,
+        z: startingZ as number,
       });
 
-      const { treeLevel, x, y } = positionAbsoluteAndTreeLevel;
-
       updatedInternals.positionAbsolute = {
         x,
         y,
       };
-      updatedInternals.treeLevel = treeLevel;
+      updatedInternals.z = z;
+
+      if (parentNodes[node.id]) {
+        updatedInternals.isParent = true;
+      }
     }
   });
 
diff --git a/src/types/index.ts b/src/types/index.ts
index 2e794286..5b99da4d 100644
--- a/src/types/index.ts
+++ b/src/types/index.ts
@@ -303,7 +303,7 @@ export interface WrapNodeProps<T = any> {
   resizeObserver: ResizeObserver | null;
   dragHandle?: string;
   zIndex: number;
-  isParentNode: boolean;
+  isParent: boolean;
 }
 
 export type FitViewParams = {
@@ -460,14 +460,15 @@ export type OnNodesChange = (nodes: NodeChange[]) => void;
 export type OnEdgesChange = (nodes: EdgeChange[]) => void;
 
 export type NodeInternalsItem = {
+  id?: string;
   width?: number | null;
   height?: number | null;
   parentNode?: ElementId;
   position?: XYPosition;
   positionAbsolute?: XYPosition;
   handleBounds?: NodeHandleBounds;
-  treeLevel?: number;
-  isParentNode?: boolean;
+  z?: number;
+  isParent?: boolean;
 };
 
 export type NodeInternals = Map<ElementId, NodeInternalsItem>;