diff --git a/.changeset/smart-donkeys-jam.md b/.changeset/smart-donkeys-jam.md
new file mode 100644
index 00000000000..f95f1eee00e
--- /dev/null
+++ b/.changeset/smart-donkeys-jam.md
@@ -0,0 +1,5 @@
+---
+"thirdweb": patch
+---
+
+Fix custom paymaster callback not being respected
diff --git a/packages/thirdweb/src/wallets/smart/index.ts b/packages/thirdweb/src/wallets/smart/index.ts
index ff99d153c09..f4d860c23d9 100644
--- a/packages/thirdweb/src/wallets/smart/index.ts
+++ b/packages/thirdweb/src/wallets/smart/index.ts
@@ -225,6 +225,8 @@ async function createSmartAccount(
           };
         };
         paymasterOverride = options.overrides?.paymaster || paymasterCallback;
+      } else {
+        paymasterOverride = options.overrides?.paymaster;
       }
       const executeTx = prepareExecute({
         accountContract,
diff --git a/packages/thirdweb/src/wallets/smart/smart-wallet-integration.test.ts b/packages/thirdweb/src/wallets/smart/smart-wallet-integration.test.ts
index 5a731ce71c1..895d7a93405 100644
--- a/packages/thirdweb/src/wallets/smart/smart-wallet-integration.test.ts
+++ b/packages/thirdweb/src/wallets/smart/smart-wallet-integration.test.ts
@@ -18,7 +18,9 @@ import { setContractURI } from "../../extensions/marketplace/__generated__/IMark
 import { estimateGasCost } from "../../transaction/actions/estimate-gas-cost.js";
 import { sendAndConfirmTransaction } from "../../transaction/actions/send-and-confirm-transaction.js";
 import { sendBatchTransaction } from "../../transaction/actions/send-batch-transaction.js";
+import { sendTransaction } from "../../transaction/actions/send-transaction.js";
 import { waitForReceipt } from "../../transaction/actions/wait-for-tx-receipt.js";
+import { prepareTransaction } from "../../transaction/prepare-transaction.js";
 import { isContractDeployed } from "../../utils/bytecode/is-contract-deployed.js";
 import { sleep } from "../../utils/sleep.js";
 import type { Account, Wallet } from "../interfaces/wallet.js";
@@ -364,5 +366,36 @@ describe.runIf(process.env.TW_SECRET_KEY).sequential(
       });
       expect(balance).toEqual(2n);
     });
+
+    it("can use a different paymaster", async () => {
+      const wallet = smartWallet({
+        chain,
+        factoryAddress: factoryAddress,
+        gasless: true,
+        overrides: {
+          paymaster: async () => {
+            return {
+              paymaster: "0x",
+              paymasterData: "0x",
+            };
+          },
+        },
+      });
+      const newSmartAccount = await wallet.connect({
+        client: TEST_CLIENT,
+        personalAccount,
+      });
+      const transaction = prepareTransaction({
+        client: TEST_CLIENT,
+        chain,
+        value: 0n,
+      });
+      await expect(
+        sendTransaction({
+          transaction,
+          account: newSmartAccount,
+        }),
+      ).rejects.toThrowError(/AA21 didn't pay prefund/);
+    });
   },
 );