diff --git a/packages/@headlessui-react/CHANGELOG.md b/packages/@headlessui-react/CHANGELOG.md
index 81a084a..b742c3c 100644
--- a/packages/@headlessui-react/CHANGELOG.md
+++ b/packages/@headlessui-react/CHANGELOG.md
@@ -12,6 +12,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Fix focus styles showing up when using the mouse ([#2347](https://github.com/tailwindlabs/headlessui/pull/2347))
 - Fix "Can't perform a React state update on an unmounted component." when using the `Transition` component ([#2374](https://github.com/tailwindlabs/headlessui/pull/2374))
 - Add `FocusTrap` event listeners once document has loaded ([#2389](https://github.com/tailwindlabs/headlessui/pull/2389))
+- Fix `className` hydration for `<Transition appear>` ([#2390](https://github.com/tailwindlabs/headlessui/pull/2390))
 
 ### Added
 
diff --git a/packages/@headlessui-react/src/components/transitions/transition.ssr.test.tsx b/packages/@headlessui-react/src/components/transitions/transition.ssr.test.tsx
index 64a6108..2648043 100644
--- a/packages/@headlessui-react/src/components/transitions/transition.ssr.test.tsx
+++ b/packages/@headlessui-react/src/components/transitions/transition.ssr.test.tsx
@@ -9,8 +9,34 @@ beforeAll(() => {
 
 describe('Rendering', () => {
   describe('SSR', () => {
+    it('A transition without appear=true does not insert classes during SSR', async () => {
+      let result = await renderSSR(
+        <Transition
+          as={Fragment}
+          show={true}
+          enter="enter"
+          enterFrom="enter-from"
+          enterTo="enter-to"
+        >
+          <div className="inner"></div>
+        </Transition>
+      )
+
+      let div = document.querySelector('.inner')
+
+      expect(div).not.toBeNull()
+      expect(div?.className).toBe('inner')
+
+      await result.hydrate()
+
+      div = document.querySelector('.inner')
+
+      expect(div).not.toBeNull()
+      expect(div?.className).toBe('inner')
+    })
+
     it('should not overwrite className of children when as=Fragment', async () => {
-      await renderSSR(
+      let result = await renderSSR(
         <Transition
           as={Fragment}
           show={true}
@@ -27,6 +53,13 @@ describe('Rendering', () => {
 
       expect(div).not.toBeNull()
       expect(div?.className).toBe('inner enter enter-from')
+
+      await result.hydrate()
+
+      div = document.querySelector('.inner')
+
+      expect(div).not.toBeNull()
+      expect(div?.className).toBe('inner enter enter-from')
     })
   })
 })
diff --git a/packages/@headlessui-react/src/components/transitions/transition.tsx b/packages/@headlessui-react/src/components/transitions/transition.tsx
index fe20bf6..9925609 100644
--- a/packages/@headlessui-react/src/components/transitions/transition.tsx
+++ b/packages/@headlessui-react/src/components/transitions/transition.tsx
@@ -436,7 +436,7 @@ function TransitionChildFn<TTag extends ElementType = typeof DEFAULT_TRANSITION_
   let theirProps = rest
   let ourProps = { ref: transitionRef }
 
-  if (appear && show && env.isServer) {
+  if (appear && show) {
     theirProps = {
       ...theirProps,
       // Already apply the `enter` and `enterFrom` on the server if required
diff --git a/packages/@headlessui-vue/src/components/transitions/transition.ssr.test.ts b/packages/@headlessui-vue/src/components/transitions/transition.ssr.test.ts
index a43053e..103f1e6 100644
--- a/packages/@headlessui-vue/src/components/transitions/transition.ssr.test.ts
+++ b/packages/@headlessui-vue/src/components/transitions/transition.ssr.test.ts
@@ -10,8 +10,41 @@ beforeAll(() => {
 
 describe('Rendering', () => {
   describe('SSR', () => {
+    it('A transition without appear=true does not insert classes during SSR', async () => {
+      let result = await renderSSR(
+        defineComponent({
+          components: Transition,
+          template: html`
+            <TransitionRoot
+              as="template"
+              :show="true"
+              enter="enter"
+              enterFrom="enter-from"
+              enterTo="enter-to"
+            >
+              <div class="inner"></div>
+            </TransitionRoot>
+          `,
+        })
+      )
+
+      let div = document.querySelector('.inner')
+
+      expect(div).not.toBeNull()
+      expect(div?.className).toBe('inner')
+
+      // If we don't await then we get the same for SSR and hydration
+      // but we want to investigate what effects this has on our other transition tests too
+      await result.hydrate()
+
+      div = document.querySelector('.inner')
+
+      expect(div).not.toBeNull()
+      expect(div?.className).toBe('inner enter enter-from')
+    })
+
     it('should not overwrite className of children when as=Fragment', async () => {
-      await renderSSR(
+      let result = await renderSSR(
         defineComponent({
           components: Transition,
           template: html`
@@ -33,6 +66,13 @@ describe('Rendering', () => {
 
       expect(div).not.toBeNull()
       expect(div?.className).toBe('inner enter enter-from')
+
+      await result.hydrate()
+
+      div = document.querySelector('.inner')
+
+      expect(div).not.toBeNull()
+      expect(div?.className).toBe('inner enter enter-from')
     })
   })
 })
diff --git a/packages/@headlessui-vue/src/components/transitions/transition.ts b/packages/@headlessui-vue/src/components/transitions/transition.ts
index 64e2e88..89dcd74 100644
--- a/packages/@headlessui-vue/src/components/transitions/transition.ts
+++ b/packages/@headlessui-vue/src/components/transitions/transition.ts
@@ -354,7 +354,7 @@ export let TransitionChild = defineComponent({
       let ourProps = { ref: container }
       let theirProps = {
         ...rest,
-        ...(appear && show && env.isServer
+        ...(appear.value && show.value && env.isServer
           ? {
               // Already apply the `enter` and `enterFrom` on the server if required
               class: normalizeClass([