diff --git a/lib/ruby_indexer/lib/ruby_indexer/configuration.rb b/lib/ruby_indexer/lib/ruby_indexer/configuration.rb
index f189121f6..2c9a65871 100644
--- a/lib/ruby_indexer/lib/ruby_indexer/configuration.rb
+++ b/lib/ruby_indexer/lib/ruby_indexer/configuration.rb
@@ -273,6 +273,9 @@ def initial_excluded_gems
       end
 
       others.concat(this_gem.to_spec.dependencies) if this_gem
+      others.concat(others.filter_map { |d| d.to_spec&.dependencies }.flatten)
+      others.uniq!
+      others.map!(&:name)
 
       excluded.each do |dependency|
         next unless dependency.runtime?
@@ -281,12 +284,7 @@ def initial_excluded_gems
         next unless spec
 
         spec.dependencies.each do |transitive_dependency|
-          # If the transitive dependency is included in other groups, skip it
-          next if others.any? { |d| d.name == transitive_dependency.name }
-
-          # If the transitive dependency is included as a transitive dependency of a gem outside of the development
-          # group, skip it
-          next if others.any? { |d| d.to_spec&.dependencies&.include?(transitive_dependency) }
+          next if others.include?(transitive_dependency.name)
 
           excluded << transitive_dependency
         end
diff --git a/lib/ruby_indexer/test/configuration_test.rb b/lib/ruby_indexer/test/configuration_test.rb
index f74960118..f807208d3 100644
--- a/lib/ruby_indexer/test/configuration_test.rb
+++ b/lib/ruby_indexer/test/configuration_test.rb
@@ -166,5 +166,37 @@ def test_includes_top_level_files
         assert(uris.find { |u| File.basename(u.full_path) == "find_me.rb" })
       end
     end
+
+    def test_transitive_dependencies_for_non_dev_gems_are_not_excluded
+      Dir.mktmpdir do |dir|
+        Dir.chdir(dir) do
+          # Both IRB and debug depend on reline. Since IRB is in the default group, reline should not be excluded
+          File.write(File.join(dir, "Gemfile"), <<~RUBY)
+            source "https://rubygems.org"
+            gem "irb"
+            gem "ruby-lsp", path: "#{Bundler.root}"
+
+            group :development do
+              gem "debug"
+            end
+          RUBY
+
+          Bundler.with_unbundled_env do
+            system("bundle install")
+
+            stdout, _stderr = capture_subprocess_io do
+              script = "puts RubyIndexer::Configuration.new.send(:initial_excluded_gems).join(\",\")"
+
+              system("bundle exec ruby -rruby_lsp/internal -e '#{script}'")
+            end
+
+            excluded_gems = stdout.split(",")
+            assert_includes(excluded_gems, "debug")
+            refute_includes(excluded_gems, "reline")
+            refute_includes(excluded_gems, "irb")
+          end
+        end
+      end
+    end
   end
 end