diff --git a/packages/@headlessui-vue/CHANGELOG.md b/packages/@headlessui-vue/CHANGELOG.md
index a5bc701..41e97e1 100644
--- a/packages/@headlessui-vue/CHANGELOG.md
+++ b/packages/@headlessui-vue/CHANGELOG.md
@@ -15,6 +15,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Add support for `role="alertdialog"` to `<Dialog>` component ([#2709](https://github.com/tailwindlabs/headlessui/pull/2709))
 - Ensure blurring the `ComboboxInput` component closes the `Combobox` ([#2712](https://github.com/tailwindlabs/headlessui/pull/2712))
 - Allow `<button>` to be in nested components in `<PopoverButton>` ([#2715](https://github.com/tailwindlabs/headlessui/pull/2715))
+- Don't overwrite user-defined template refs when rendering ([#2720](https://github.com/tailwindlabs/headlessui/pull/2720))
 
 ## [1.7.16] - 2023-08-17
 
diff --git a/packages/@headlessui-vue/src/components/dialog/dialog.test.ts b/packages/@headlessui-vue/src/components/dialog/dialog.test.ts
index 727f9bb..7293d67 100644
--- a/packages/@headlessui-vue/src/components/dialog/dialog.test.ts
+++ b/packages/@headlessui-vue/src/components/dialog/dialog.test.ts
@@ -738,6 +738,49 @@ describe('Rendering', () => {
         expect(document.documentElement.style.overflow).toBe('')
       })
     )
+
+    it(
+      'should not have a scroll lock when the transition marked as not shown',
+      suppressConsoleLogs(async () => {
+        let dialogRef = ref(null)
+
+        renderTemplate({
+          components: {
+            Dialog,
+            TransitionRoot,
+          },
+          template: `
+            <button @click="show = !show">toggle</button>
+            <div id="output">{{ hasRef ? "Yes" : "No" }}</div>
+            <TransitionRoot as="template" :show="show">
+              <Dialog as="div" ref="dialogRef">
+                <input type="text" />
+              </Dialog>
+            </TransitionRoot>
+          `,
+          setup() {
+            let show = ref(false)
+
+            return {
+              show,
+              dialogRef,
+            }
+          },
+        })
+
+        expect(dialogRef.value).toBeNull()
+
+        await click(getByText('toggle'))
+        await nextFrame()
+
+        expect(dialogRef.value).not.toBeNull()
+
+        await click(getByText('toggle'))
+        await nextFrame()
+
+        expect(dialogRef.value).toBeNull()
+      })
+    )
   })
 
   describe('DialogOverlay', () => {
diff --git a/packages/@headlessui-vue/src/utils/render.ts b/packages/@headlessui-vue/src/utils/render.ts
index 9aa634a..10f3e12 100644
--- a/packages/@headlessui-vue/src/utils/render.ts
+++ b/packages/@headlessui-vue/src/utils/render.ts
@@ -140,7 +140,7 @@ function _render({
       }
 
       let mergedProps = mergeProps(firstChild.props ?? {}, incomingProps)
-      let cloned = cloneVNode(firstChild, mergedProps)
+      let cloned = cloneVNode(firstChild, mergedProps, true)
       // Explicitly override props starting with `on`. This is for event handlers, but there are
       // scenario's where we set them to `undefined` explicitly (when `aria-disabled="true"` is
       // happening instead of `disabled`). But cloneVNode doesn't like overriding `onXXX` props so