diff --git a/packages/core/src/components/tree/test/tree.ct.ts b/packages/core/src/components/tree/test/tree.ct.ts
index 9e1e09dcd92..1729486b947 100644
--- a/packages/core/src/components/tree/test/tree.ct.ts
+++ b/packages/core/src/components/tree/test/tree.ct.ts
@@ -463,3 +463,50 @@ regressionTest(
     await expect(items.nth(2)).not.toBeVisible();
   }
 );
+
+regressionTest(
+  'should handle click events on custom rendered tree items',
+  async ({ mount, page }) => {
+    const tree = await initializeTree(mount, page);
+
+    await tree.evaluate(
+      (t) =>
+        ((t as HTMLIxTreeElement).renderItem = (
+          _index,
+          item,
+          _dataList,
+          context,
+          update
+        ) => {
+          const el = document.createElement('ix-tree-item');
+          const treeItem = item as TreeItem<any>;
+          el.hasChildren = treeItem.hasChildren;
+          el.context = context[treeItem.id];
+
+          const container = document.createElement('div');
+          container.classList.add('custom-content');
+          container.style.display = 'flex';
+          container.style.alignItems = 'center';
+
+          const name = document.createElement('span');
+          name.innerText = treeItem.data.name;
+
+          container.appendChild(name);
+          el.appendChild(container);
+
+          update((updateTreeItem) => {
+            name.innerText = updateTreeItem.data.name;
+          });
+
+          return el;
+        })
+    );
+
+    const root = tree.locator('ix-tree-item').first();
+    await root.locator('.icon-toggle-container').click();
+
+    const customItem = tree.locator('ix-tree-item').nth(1);
+    await customItem.click();
+    await expect(customItem).toHaveClass(/selected/);
+  }
+);
diff --git a/packages/core/src/components/tree/tree.tsx b/packages/core/src/components/tree/tree.tsx
index 7e7f46450f6..3c56d9f6bf9 100644
--- a/packages/core/src/components/tree/tree.tsx
+++ b/packages/core/src/components/tree/tree.tsx
@@ -339,7 +339,16 @@ export class Tree {
       return;
     }
 
-    const id = target.getAttribute('data-tree-node-id');
+    let treeNodeElement = target;
+    let id = treeNodeElement.dataset.treeNodeId;
+
+    while (!id && treeNodeElement && treeNodeElement !== this.hostElement) {
+      treeNodeElement = treeNodeElement.parentElement as HTMLElement;
+      if (treeNodeElement) {
+        id = treeNodeElement.dataset.treeNodeId;
+      }
+    }
+
     if (!id) {
       return;
     }
@@ -361,7 +370,16 @@ export class Tree {
       return;
     }
 
-    const id = target.getAttribute('data-tree-node-id');
+    let treeNodeElement = target;
+    let id = treeNodeElement.dataset.treeNodeId;
+
+    while (!id && treeNodeElement && treeNodeElement !== this.hostElement) {
+      treeNodeElement = treeNodeElement.parentElement as HTMLElement;
+      if (treeNodeElement) {
+        id = treeNodeElement.dataset.treeNodeId;
+      }
+    }
+
     if (!id) {
       return;
     }
@@ -377,7 +395,9 @@ export class Tree {
     }
 
     if (!event.defaultPrevented) {
-      Object.values(this.context).forEach((c) => (c.isSelected = false));
+      for (const c of Object.values(this.context)) {
+        c.isSelected = false;
+      }
       const context = this.getContext(id);
       context.isSelected = true;
       this.setContext(id, context);