diff --git a/src/BuildPrediction/Predictors/GetCopyToOutputDirectoryItemsGraphPredictor.cs b/src/BuildPrediction/Predictors/GetCopyToOutputDirectoryItemsGraphPredictor.cs
index fa121ef..9c1a95d 100644
--- a/src/BuildPrediction/Predictors/GetCopyToOutputDirectoryItemsGraphPredictor.cs
+++ b/src/BuildPrediction/Predictors/GetCopyToOutputDirectoryItemsGraphPredictor.cs
@@ -2,6 +2,7 @@
 // Licensed under the MIT license. See LICENSE file in the project root for full license information.
 
 using System;
+using System.Collections.Generic;
 using System.IO;
 using Microsoft.Build.Execution;
 using Microsoft.Build.Graph;
@@ -15,9 +16,21 @@ public sealed class GetCopyToOutputDirectoryItemsGraphPredictor : IProjectGraphP
     {
         internal const string UseCommonOutputDirectoryPropertyName = "UseCommonOutputDirectory";
         internal const string OutDirPropertyName = "OutDir";
+        internal const string MSBuildCopyContentTransitivelyPropertyName = "MSBuildCopyContentTransitively";
 
         /// <inheritdoc/>
         public void PredictInputsAndOutputs(ProjectGraphNode projectGraphNode, ProjectPredictionReporter predictionReporter)
+        {
+            string outDir = projectGraphNode.ProjectInstance.GetPropertyValue(OutDirPropertyName);
+            HashSet<ProjectGraphNode> visitedNodes = new();
+            PredictInputsAndOutputs(projectGraphNode, outDir, predictionReporter, visitedNodes);
+        }
+
+        private static void PredictInputsAndOutputs(
+            ProjectGraphNode projectGraphNode,
+            string outDir,
+            ProjectPredictionReporter predictionReporter,
+            HashSet<ProjectGraphNode> visitedNodes)
         {
             ProjectInstance projectInstance = projectGraphNode.ProjectInstance;
 
@@ -25,13 +38,22 @@ public void PredictInputsAndOutputs(ProjectGraphNode projectGraphNode, ProjectPr
             var useCommonOutputDirectory = projectInstance.GetPropertyValue(UseCommonOutputDirectoryPropertyName);
             if (!useCommonOutputDirectory.Equals("true", StringComparison.OrdinalIgnoreCase))
             {
-                string outDir = projectInstance.GetPropertyValue(OutDirPropertyName);
+                bool copyContentTransitively = projectInstance.GetPropertyValue(MSBuildCopyContentTransitivelyPropertyName).Equals("true", StringComparison.OrdinalIgnoreCase);
 
-                // Note that GetCopyToOutputDirectoryItems effectively only is able to go one project reference deep despite being recursive as
-                // it uses @(_MSBuildProjectReferenceExistent) to recurse, which is not set in the recursive calls.
-                // See: https://github.com/microsoft/msbuild/blob/master/src/Tasks/Microsoft.Common.CurrentVersion.targets
                 foreach (ProjectGraphNode dependency in projectGraphNode.ProjectReferences)
                 {
+                    if (!visitedNodes.Add(dependency))
+                    {
+                        // Avoid duplicate predictions
+                        continue;
+                    }
+
+                    // If transitive, recurse
+                    if (copyContentTransitively)
+                    {
+                        PredictInputsAndOutputs(dependency, outDir, predictionReporter, visitedNodes);
+                    }
+
                     // Process each item type considered in GetCopyToOutputDirectoryItems. Yes, Compile is considered.
                     ReportCopyToOutputDirectoryItemsAsInputs(dependency.ProjectInstance, ContentItemsPredictor.ContentItemName, outDir, predictionReporter);
                     ReportCopyToOutputDirectoryItemsAsInputs(dependency.ProjectInstance, EmbeddedResourceItemsPredictor.EmbeddedResourceItemName, outDir, predictionReporter);
diff --git a/src/BuildPredictionTests/Predictors/GetCopyToOutputDirectoryItemsGraphPredictorTests.cs b/src/BuildPredictionTests/Predictors/GetCopyToOutputDirectoryItemsGraphPredictorTests.cs
index 0c9019e..607690f 100644
--- a/src/BuildPredictionTests/Predictors/GetCopyToOutputDirectoryItemsGraphPredictorTests.cs
+++ b/src/BuildPredictionTests/Predictors/GetCopyToOutputDirectoryItemsGraphPredictorTests.cs
@@ -2,6 +2,7 @@
 // Licensed under the MIT license. See LICENSE file in the project root for full license information.
 
 using System;
+using System.Collections.Generic;
 using System.IO;
 using Microsoft.Build.Construction;
 using Microsoft.Build.Prediction.Predictors;
@@ -77,8 +78,10 @@ public void UseCommonOutputDirectory()
                 .AssertNoPredictions();
         }
 
-        [Fact]
-        public void WithCopy()
+        [Theory]
+        [InlineData(false)]
+        [InlineData(true)]
+        public void WithCopy(bool copyContentTransitively)
         {
             string projectFile = Path.Combine(_rootDir, @"src\project.csproj");
             ProjectRootElement projectRootElement = ProjectRootElement.Create(projectFile);
@@ -89,7 +92,12 @@ public void WithCopy()
             ProjectRootElement dep2 = CreateDependencyProject("dep2", shouldCopy);
             ProjectRootElement dep3 = CreateDependencyProject("dep3", shouldCopy);
 
-            // The main project depends on 1 and 2; 2 depends on 3; 3 depends on 1. Note that this should *not* be transitive
+            projectRootElement.AddProperty(GetCopyToOutputDirectoryItemsGraphPredictor.MSBuildCopyContentTransitivelyPropertyName, copyContentTransitively.ToString());
+            dep1.AddProperty(GetCopyToOutputDirectoryItemsGraphPredictor.MSBuildCopyContentTransitivelyPropertyName, copyContentTransitively.ToString());
+            dep2.AddProperty(GetCopyToOutputDirectoryItemsGraphPredictor.MSBuildCopyContentTransitivelyPropertyName, copyContentTransitively.ToString());
+            dep3.AddProperty(GetCopyToOutputDirectoryItemsGraphPredictor.MSBuildCopyContentTransitivelyPropertyName, copyContentTransitively.ToString());
+
+            // The main project depends on 1 and 2; 2 depends on 3; 3 depends on 1.
             projectRootElement.AddItem("ProjectReference", @"..\dep1\dep1.proj");
             projectRootElement.AddItem("ProjectReference", @"..\dep2\dep2.proj");
             dep2.AddItem("ProjectReference", @"..\dep3\dep3.proj");
@@ -100,8 +108,8 @@ public void WithCopy()
             dep2.Save();
             dep3.Save();
 
-            var expectedInputFiles = new[]
-            {
+            List<PredictedItem> expectedInputFiles =
+            [
                 new PredictedItem(@"dep1\dep1.xml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"dep1\dep1.resx", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"dep1\dep1.cs", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
@@ -112,10 +120,10 @@ public void WithCopy()
                 new PredictedItem(@"dep2\dep2.cs", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"dep2\dep2.txt", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"dep2\dep2.xaml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
-            };
+            ];
 
-            var expectedOutputFiles = new[]
-            {
+            List<PredictedItem> expectedOutputFiles =
+            [
                 new PredictedItem(@"src\bin\dep1.xml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"src\bin\dep1.resx", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"src\bin\dep1.cs", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
@@ -126,7 +134,28 @@ public void WithCopy()
                 new PredictedItem(@"src\bin\dep2.cs", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"src\bin\dep2.txt", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
                 new PredictedItem(@"src\bin\dep2.xaml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
-            };
+            ];
+
+            if (copyContentTransitively)
+            {
+                expectedInputFiles.AddRange(
+                    [
+                        new PredictedItem(@"dep3\dep3.xml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"dep3\dep3.resx", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"dep3\dep3.cs", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"dep3\dep3.txt", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"dep3\dep3.xaml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                    ]);
+
+                expectedOutputFiles.AddRange(
+                    [
+                        new PredictedItem(@"src\bin\dep3.xml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"src\bin\dep3.resx", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"src\bin\dep3.cs", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"src\bin\dep3.txt", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                        new PredictedItem(@"src\bin\dep3.xaml", nameof(GetCopyToOutputDirectoryItemsGraphPredictor)),
+                    ]);
+            }
 
             new GetCopyToOutputDirectoryItemsGraphPredictor()
                 .GetProjectPredictions(projectFile)