diff --git a/.changeset/dirty-tools-switch.md b/.changeset/dirty-tools-switch.md
new file mode 100644
index 00000000..d07b3e1d
--- /dev/null
+++ b/.changeset/dirty-tools-switch.md
@@ -0,0 +1,5 @@
+---
+'@reactflow/core': patch
+---
+
+handles: handles on top of each other, reduce re-renderings
diff --git a/examples/vite-app/src/examples/EasyConnect/CustomNode.tsx b/examples/vite-app/src/examples/EasyConnect/CustomNode.tsx
index 989df5fa..bd107c93 100644
--- a/examples/vite-app/src/examples/EasyConnect/CustomNode.tsx
+++ b/examples/vite-app/src/examples/EasyConnect/CustomNode.tsx
@@ -2,8 +2,9 @@ import { Handle, NodeProps, Position, ReactFlowState, useStore } from 'reactflow
 
 const connectionNodeIdSelector = (state: ReactFlowState) => state.connectionNodeId;
 
-export default function CustomNode({ id, isConnectable }: NodeProps) {
+export default function CustomNode({ id }: NodeProps) {
   const connectionNodeId = useStore(connectionNodeIdSelector);
+  const isConnecting = !!connectionNodeId;
   const isTarget = connectionNodeId && connectionNodeId !== id;
 
   const targetHandleStyle = { zIndex: isTarget ? 3 : 1 };
@@ -18,19 +19,16 @@ export default function CustomNode({ id, isConnectable }: NodeProps) {
           backgroundColor: isTarget ? '#ffcce3' : '#ccd9f6',
         }}
       >
+        {!isConnecting && (
+          <Handle className="customHandle" style={{ zIndex: 2 }} position={Position.Right} type="source" />
+        )}
+
         <Handle
-          className="targetHandle"
-          style={{ zIndex: 2 }}
-          position={Position.Right}
-          type="source"
-          isConnectable={isConnectable}
-        />
-        <Handle
-          className="targetHandle"
+          className="customHandle"
           style={targetHandleStyle}
           position={Position.Left}
           type="target"
-          isConnectable={isConnectable}
+          isConnectableStart={false}
         />
         {label}
       </div>
diff --git a/examples/vite-app/src/examples/EasyConnect/style.css b/examples/vite-app/src/examples/EasyConnect/style.css
index c2ebc0a2..8e06c4ea 100644
--- a/examples/vite-app/src/examples/EasyConnect/style.css
+++ b/examples/vite-app/src/examples/EasyConnect/style.css
@@ -28,19 +28,7 @@
   border: 2px solid #222138;
 }
 
-div.sourceHandle {
-  width: 100%;
-  height: 100%;
-  position: absolute;
-  top: 0;
-  left: 0;
-  border-radius: 0;
-  transform: none;
-  border: none;
-  opacity: 0;
-}
-
-div.targetHandle {
+div.customHandle {
   width: 100%;
   height: 100%;
   background: blue;
diff --git a/packages/core/src/components/Handle/handler.ts b/packages/core/src/components/Handle/handler.ts
index 9825295b..0b598dec 100644
--- a/packages/core/src/components/Handle/handler.ts
+++ b/packages/core/src/components/Handle/handler.ts
@@ -51,7 +51,7 @@ export function handlePointerDown({
     cancelConnection,
   } = getState();
   let autoPanId = 0;
-  let prevClosestHandle: ConnectionHandle | null;
+  let closestHandle: ConnectionHandle | null;
 
   const { x, y } = getEventPosition(event);
   const clickedHandle = doc?.elementFromPoint(x, y);
@@ -106,9 +106,9 @@ export function handlePointerDown({
 
   function onPointerMove(event: MouseEvent | TouchEvent) {
     const { transform } = getState();
-    connectionPosition = getEventPosition(event, containerBounds);
 
-    prevClosestHandle = getClosestHandle(
+    connectionPosition = getEventPosition(event, containerBounds);
+    closestHandle = getClosestHandle(
       pointToRendererPoint(connectionPosition, transform, false, [1, 1]),
       connectionRadius,
       handleLookup
@@ -121,7 +121,7 @@ export function handlePointerDown({
 
     const result = isValidHandle(
       event,
-      prevClosestHandle,
+      closestHandle,
       connectionMode,
       nodeId,
       handleId,
@@ -136,20 +136,20 @@ export function handlePointerDown({
 
     setState({
       connectionPosition:
-        prevClosestHandle && isValid
+        closestHandle && isValid
           ? rendererPointToPoint(
               {
-                x: prevClosestHandle.x,
-                y: prevClosestHandle.y,
+                x: closestHandle.x,
+                y: closestHandle.y,
               },
               transform
             )
           : connectionPosition,
-      connectionStatus: getConnectionStatus(!!prevClosestHandle, isValid),
+      connectionStatus: getConnectionStatus(!!closestHandle, isValid),
       connectionEndHandle: result.endHandle,
     });
 
-    if (!prevClosestHandle && !isValid && !handleDomNode) {
+    if (!closestHandle && !isValid && !handleDomNode) {
       return resetRecentHandle(prevActiveHandle);
     }
 
@@ -164,7 +164,7 @@ export function handlePointerDown({
   }
 
   function onPointerUp(event: MouseEvent | TouchEvent) {
-    if ((prevClosestHandle || handleDomNode) && connection && isValid) {
+    if ((closestHandle || handleDomNode) && connection && isValid) {
       onConnect?.(connection);
     }
 
diff --git a/packages/core/src/components/Handle/index.tsx b/packages/core/src/components/Handle/index.tsx
index dcd95d7c..ca724285 100644
--- a/packages/core/src/components/Handle/index.tsx
+++ b/packages/core/src/components/Handle/index.tsx
@@ -62,7 +62,7 @@ const Handle = forwardRef<HTMLDivElement, HandleComponentProps>(
     const store = useStoreApi();
     const nodeId = useNodeId();
     const { connectOnClick, noPanClassName } = useStore(selector, shallow);
-    const { connecting, clickConnecting } = useStore(connectingSelector(nodeId, handleId, type));
+    const { connecting, clickConnecting } = useStore(connectingSelector(nodeId, handleId, type), shallow);
 
     if (!nodeId) {
       store.getState().onError?.('010', errorMessages['error010']());
diff --git a/packages/core/src/components/Handle/utils.ts b/packages/core/src/components/Handle/utils.ts
index b8e8cf6a..353b249a 100644
--- a/packages/core/src/components/Handle/utils.ts
+++ b/packages/core/src/components/Handle/utils.ts
@@ -41,18 +41,30 @@ export function getClosestHandle(
   connectionRadius: number,
   handles: ConnectionHandle[]
 ): ConnectionHandle | null {
-  let closestHandle: ConnectionHandle | null = null;
+  let closestHandles: ConnectionHandle[] = [];
   let minDistance = Infinity;
 
   handles.forEach((handle) => {
     const distance = Math.sqrt(Math.pow(handle.x - pos.x, 2) + Math.pow(handle.y - pos.y, 2));
-    if (distance <= connectionRadius && distance < minDistance) {
+    if (distance <= connectionRadius) {
+      if (distance < minDistance) {
+        closestHandles = [handle];
+      } else if (distance === minDistance) {
+        // when multiple handles are on the same distance we collect all of them
+        closestHandles.push(handle);
+      }
       minDistance = distance;
-      closestHandle = handle;
     }
   });
 
-  return closestHandle;
+  if (!closestHandles.length) {
+    return null;
+  }
+
+  return closestHandles.length === 1
+    ? closestHandles[0]
+    : // if multiple handles are layouted on top of each other we take the one with type = target because it's more likely that the user wants to connect to this one
+      closestHandles.find((handle) => handle.type === 'target') || closestHandles[0];
 }
 
 type Result = {
@@ -81,6 +93,8 @@ export function isValidHandle(
   );
   const { x, y } = getEventPosition(event);
   const handleBelow = doc.elementFromPoint(x, y);
+  // we always want to prioritize the handle below the mouse cursor over the closest distance handle,
+  // because it could be that the center of another handle is closer to the mouse pointer than the handle below the cursor
   const handleToCheck = handleBelow?.classList.contains('react-flow__handle') ? handleBelow : handleDomNode;
 
   const result: Result = {