diff --git a/php-transformer/composer.json b/php-transformer/composer.json
index 865190ef6..a9b884135 100644
--- a/php-transformer/composer.json
+++ b/php-transformer/composer.json
@@ -377,6 +377,8 @@
       "php tests/unit/navigation-nested-authored-anchor.php",
       "php tests/unit/navigation-anchor-cluster-submenu.php",
       "php tests/unit/navigation-peer-item-wrappers.php",
+      "php tests/unit/navigation-controlled-dropdown-item.php",
+      "php tests/unit/navigation-owned-submenu-panel.php",
       "php tests/unit/navigation-button-dropdown-submenu.php",
       "php tests/unit/navigation-menu-row-beside-controls.php",
       "php tests/unit/navigation-menu-dialog-fold.php",
diff --git a/php-transformer/src/HtmlToBlocks/Patterns/NavigationPattern.php b/php-transformer/src/HtmlToBlocks/Patterns/NavigationPattern.php
index 33b69c23d..f47ed6be1 100644
--- a/php-transformer/src/HtmlToBlocks/Patterns/NavigationPattern.php
+++ b/php-transformer/src/HtmlToBlocks/Patterns/NavigationPattern.php
@@ -3166,7 +3166,7 @@ private function primaryNavigationAnchor(DOMElement $element): ?DOMElement
             // A cluster of child links that follows the item's own anchor is its
             // submenu, not a second anchor carrier. An anchor found inside a
             // sibling wrapper is a peer item's, so the next wrapper is a peer too.
-            if ( array() !== $anchors && $element->isSameNode($anchors[0]->parentNode) && $this->isAnchorOnlyCluster($child) ) {
+            if ( array() !== $anchors && $this->ownsSubmenuCluster($element, $anchors[0], $child) ) {
                 continue;
             }
 
@@ -3235,7 +3235,7 @@ private function collectSubmenuContainers(DOMElement $element, DOMElement $prima
             $tagName = strtolower($child->tagName);
             if ( in_array($tagName, array( 'nav', 'ul', 'ol' ), true)
                 || $this->hasSubmenuSignal($child)
-                || ( $element->isSameNode($primaryAnchor->parentNode) && $this->isAnchorOnlyCluster($child) )
+                || $this->ownsSubmenuCluster($element, $primaryAnchor, $child)
                 || ( $this->isNavigationWrapperElement($child)
                     && ( 0 < $child->getElementsByTagName('ul')->length || 0 < $child->getElementsByTagName('ol')->length ) )
             ) {
@@ -3367,7 +3367,128 @@ private function hasButtonDropdownChild(DOMElement $element): bool
     /** @return array{label:string, cluster:DOMElement, button:DOMElement}|null */
     private function buttonDropdownItem(DOMElement $element): ?array
     {
-        return self::buttonDropdownItemParts($element);
+        return self::buttonDropdownItemParts($element) ?? $this->controlledDropdownItemParts($element);
+    }
+
+    /**
+     * An item made of a labelled button and the sibling panel it names with
+     * `aria-controls`, the panel holding nothing but links, each bare or in its
+     * own wrapper: `<div><button aria-controls="p">About</button><div id="p">
+     * <div><a>Mission</a></div><div><a>Team</a></div></div></div>`. The
+     * button's own declaration ties the panel to it, so no class vocabulary is
+     * needed to read the panel as the button's submenu.
+     *
+     * @return array{label:string, cluster:DOMElement, button:DOMElement}|null
+     */
+    private function controlledDropdownItemParts(DOMElement $element): ?array
+    {
+        $children = array();
+        foreach ( $element->childNodes as $child ) {
+            if ( XML_COMMENT_NODE === $child->nodeType || ( XML_TEXT_NODE === $child->nodeType && '' === trim($child->textContent ?? '') ) ) {
+                continue;
+            }
+            if ( ! $child instanceof DOMElement ) {
+                return null;
+            }
+            $children[] = $child;
+        }
+        if ( 2 !== count($children) || 'button' !== strtolower($children[0]->tagName) ) {
+            return null;
+        }
+        [ $button, $panel ] = $children;
+        $controls = trim($button->getAttribute('aria-controls'));
+        $label = trim(preg_replace('/\s+/', ' ', $this->visibleText($button)) ?? '');
+        if ( '' === $controls || $controls !== trim($panel->getAttribute('id')) || '' === $label ) {
+            return null;
+        }
+        return $this->isWrappedLinkPanel($panel) ? array( 'label' => $label, 'cluster' => $panel, 'button' => $button ) : null;
+    }
+
+    /**
+     * Whether `$cluster` is the submenu of the item whose own link is
+     * `$anchor`. The item must own that link: as its direct child, or as the
+     * only content of a label wrapper
+     * (`<div><span><a>Parent</a></span><div><a>Child</a></div></div>`). A
+     * wrapped label only owns the cluster when the item holds nothing else,
+     * the label is not a heading (a footer column's linked heading titles
+     * its links, it does not open them), and the two do not share a tag or a
+     * class: wrappers alike in either way are peer items of one list. The
+     * cluster holds only links, bare or one per wrapper.
+     */
+    private function ownsSubmenuCluster(DOMElement $element, DOMElement $anchor, DOMElement $cluster): bool
+    {
+        $carrier = $anchor->parentNode;
+        if ( ! $carrier instanceof DOMElement ) {
+            return false;
+        }
+        if ( ! $element->isSameNode($carrier) ) {
+            $parent = $carrier->parentNode;
+            $sole = $this->soleMeaningfulChild($carrier);
+            if ( ! $parent instanceof DOMElement || ! $element->isSameNode($parent)
+                || ! $sole instanceof DOMElement || ! $anchor->isSameNode($sole)
+                || 2 !== $element->childElementCount
+                || 1 === preg_match('/^h[1-6]$/i', $carrier->tagName)
+                || strtolower($carrier->tagName) === strtolower($cluster->tagName)
+                || array() !== array_intersect(
+                    SourceDom::boundedClassTokens($carrier->getAttribute('class')),
+                    SourceDom::boundedClassTokens($cluster->getAttribute('class'))
+                )
+            ) {
+                return false;
+            }
+        }
+
+        return $this->isAnchorOnlyCluster($cluster) || $this->isWrappedLinkPanel($cluster);
+    }
+
+    /**
+     * The text a control paints: screen-reader-only (`sr-only`,
+     * `visually-hidden`, `screen-reader-text`) and `hidden` descendants are
+     * left out, so a visible label does not repeat assistive text.
+     */
+    private function visibleText(DOMElement $element): string
+    {
+        $text = '';
+        foreach ( $element->childNodes as $child ) {
+            if ( XML_TEXT_NODE === $child->nodeType ) {
+                $text .= $child->textContent;
+            } elseif ( $child instanceof DOMElement && ! $child->hasAttribute('hidden')
+                && 1 !== preg_match('/(?:^|[\s_-])(?:visually-hidden|sr-only|screen-reader-only|screen-reader-text)(?:$|[\s_-])/', strtolower($child->getAttribute('class')))
+            ) {
+                $text .= ' ' . $this->visibleText($child) . ' ';
+            }
+        }
+
+        return $text;
+    }
+
+    /**
+     * A panel whose entries are all destination links, each bare or the only
+     * child of its own wrapper (`<div><div><a>One</a></div><div><a>Two</a></div></div>`).
+     */
+    private function isWrappedLinkPanel(DOMElement $panel): bool
+    {
+        if ( ! in_array(strtolower($panel->tagName), array( 'div', 'span', 'ul', 'ol' ), true) ) {
+            return false;
+        }
+        $links = 0;
+        foreach ( $panel->childNodes as $item ) {
+            if ( XML_COMMENT_NODE === $item->nodeType || ( XML_TEXT_NODE === $item->nodeType && '' === trim($item->textContent ?? '') ) ) {
+                continue;
+            }
+            $link = $item instanceof DOMElement && in_array(strtolower($item->tagName), array( 'div', 'span', 'li' ), true)
+                ? $this->soleMeaningfulChild($item)
+                : $item;
+            if ( ! $link instanceof DOMElement || 'a' !== strtolower($link->tagName)
+                || '' === trim($link->textContent ?? '') || '' === trim($link->getAttribute('href'))
+                || $link->hasAttribute('aria-controls') || $link->hasAttribute('aria-expanded')
+            ) {
+                return false;
+            }
+            ++$links;
+        }
+
+        return 0 < $links;
     }
 
     /**
diff --git a/php-transformer/tests/unit/navigation-controlled-dropdown-item.php b/php-transformer/tests/unit/navigation-controlled-dropdown-item.php
new file mode 100644
index 000000000..4d061c067
--- /dev/null
+++ b/php-transformer/tests/unit/navigation-controlled-dropdown-item.php
@@ -0,0 +1,74 @@
+<?php
+declare(strict_types=1);
+
+/**
+ * A button that names its sibling link panel with `aria-controls` is a
+ * dropdown item.
+ *
+ * Squarespace's desktop menu writes a folder as `div.item > button
+ * [aria-controls=p] + div#p > div > a ...`. Without this reading the folder's
+ * own label was lost: before #2743 the first child link became the submenu
+ * label, and after it the child links were flattened into the top row.
+ */
+
+require dirname(__DIR__, 2) . '/vendor/autoload.php';
+
+use Automattic\BlocksEngine\PhpTransformer\HtmlToBlocks\HtmlTransformer;
+
+$failures = 0;
+$passes = 0;
+$assert = static function (bool $ok, string $message, string $detail = '') use (&$failures, &$passes): void {
+    if ( $ok ) {
+        ++$passes;
+        return;
+    }
+    ++$failures;
+    fwrite(STDERR, 'FAIL: ' . $message . ( '' !== $detail ? ' - ' . $detail : '' ) . PHP_EOL);
+};
+
+$items = static function (string $controls, string $panelId): array {
+    $child = static fn (string $label, string $href): string => '<div class="folder-item"><a href="' . $href . '">' . $label . '</a></div>';
+    $html = '<header><nav class="nav-list">'
+        . '<div class="nav-item"><a href="/">Home</a></div>'
+        . '<div class="nav-item nav-item--folder"><button class="folder-title" aria-expanded="false"' . $controls . '><span>About Us</span></button>'
+        . '<div class="folder-content"' . $panelId . '>' . $child('Our Mission', '/mission') . $child('Our Team', '/team') . '</div></div>'
+        . '<div class="nav-item"><a href="/services">Services</a></div>'
+        . '</nav></header>';
+    $serialized = (string) (( new HtmlTransformer() )->transform($html, array())->toArray()['serialized_blocks'] ?? '');
+    preg_match_all('/<!-- (\/?)wp:navigation-(link|submenu)(?: (\{.*?\}))?/', $serialized, $matches, PREG_SET_ORDER);
+    $out = array();
+    foreach ( $matches as $match ) {
+        if ( '/' === $match[1] ) {
+            $out[] = 'end';
+            continue;
+        }
+        $attrs = json_decode($match[3] ?? '{}', true);
+        $out[] = $match[2] . ':' . strip_tags((string) ($attrs['label'] ?? ''));
+    }
+
+    return $out;
+};
+
+$controlled = $items(' aria-controls="about-us"', ' id="about-us"');
+$assert(
+    array( 'link:Home', 'submenu:About Us', 'link:Our Mission', 'link:Our Team', 'end', 'link:Services' ) === $controlled,
+    'the controlled panel becomes the button\'s submenu under the button label',
+    json_encode($controlled)
+);
+
+$unbound = $items(' aria-controls="elsewhere"', ' id="about-us"');
+$assert(! in_array('submenu:About Us', $unbound, true), 'a button that names another element does not claim the panel', json_encode($unbound));
+
+$hiddenLabel = (string) (( new HtmlTransformer() )->transform(
+    '<nav class="nav-list"><div class="nav-item"><a href="/">Home</a></div><div class="nav-item"><button aria-controls="p" aria-expanded="false">'
+    . '<span class="sr-only">Open submenu for </span>About</button><div id="p"><div><a href="/m">Mission</a></div></div></div></nav>',
+    array()
+)->toArray()['serialized_blocks'] ?? '');
+$assert(str_contains($hiddenLabel, '"label":"About"'), 'the submenu label leaves out screen-reader-only text', $hiddenLabel);
+
+if ( 0 < $failures ) {
+    fwrite(STDERR, "Navigation controlled dropdown item: {$failures} failed, {$passes} passed\n");
+    exit(1);
+}
+
+echo "Navigation controlled dropdown item passed: {$passes} assertions\n";
diff --git a/php-transformer/tests/unit/navigation-owned-submenu-panel.php b/php-transformer/tests/unit/navigation-owned-submenu-panel.php
new file mode 100644
index 000000000..407d87658
--- /dev/null
+++ b/php-transformer/tests/unit/navigation-owned-submenu-panel.php
@@ -0,0 +1,105 @@
+<?php
+declare(strict_types=1);
+
+/**
+ * An item's own link owns the link panel beside it.
+ *
+ * #2743 stopped reading peer item wrappers as a submenu and stopped carrying
+ * list-level wrapper classes onto items. Two submenu shapes then fell through:
+ * - a Squarespace desktop folder titled by a link,
+ *   `div.item > a.title + div.panel > div.entry > a`: the panel's entries
+ *   are wrapped one link per wrapper, which the anchor-only cluster reading
+ *   did not accept, so they came out as top-level links in the bar and the
+ *   title lost the item's classes;
+ * - a parent link inside a label wrapper,
+ *   `div.entry > span > a + div > a`: the guard wanted the link as the item's
+ *   direct child, so the whole menu was dropped.
+ * Peers stay peers: a wrapped label only owns the cluster when the item
+ * holds nothing else, the label is not a heading, and the two share neither
+ * a tag nor a class.
+ */
+
+require dirname(__DIR__, 2) . '/vendor/autoload.php';
+
+use Automattic\BlocksEngine\PhpTransformer\HtmlToBlocks\HtmlTransformer;
+
+$failures = 0;
+$passes = 0;
+$assert = static function (bool $ok, string $message, string $detail = '') use (&$failures, &$passes): void {
+    if ( $ok ) {
+        ++$passes;
+        return;
+    }
+    ++$failures;
+    fwrite(STDERR, 'FAIL: ' . $message . ( '' !== $detail ? ' - ' . $detail : '' ) . PHP_EOL);
+};
+
+$items = static function (string $html): array {
+    $serialized = (string) (( new HtmlTransformer() )->transform($html, array())->toArray()['serialized_blocks'] ?? '');
+    preg_match_all('/<!-- (\/?)wp:navigation-(link|submenu)(?: (\{.*?\}))?/', $serialized, $matches, PREG_SET_ORDER);
+    $out = array();
+    foreach ( $matches as $match ) {
+        if ( '/' === $match[1] ) {
+            $out[] = 'end';
+            continue;
+        }
+        $attrs = json_decode($match[3] ?? '{}', true);
+        $out[] = $match[2] . ':' . strip_tags((string) ($attrs['label'] ?? '')) . '|' . (string) ($attrs['className'] ?? '');
+    }
+
+    return $out;
+};
+$labels = static fn (array $items): array => array_map(static fn (string $item): string => strtok($item, '|'), $items);
+
+$entry = static fn (string $label, string $href): string => '<div class="nav-folder-item"><a href="' . $href . '"><span>' . $label . '</span></a></div>';
+$folder = $items(
+    '<header><nav class="nav-list">'
+    . '<div class="nav-item"><a href="/">Home</a></div>'
+    . '<div class="nav-item nav-item--folder"><a class="nav-folder-title" href="/services">Services</a>'
+    . '<div class="nav-folder-content">' . $entry('Alpha', '/a') . $entry('Beta', '/b') . '</div></div>'
+    . '<div class="nav-item"><a href="/contact">Contact</a></div>'
+    . '</nav></header>'
+);
+$assert(
+    array( 'link:Home', 'submenu:Services', 'link:Alpha', 'link:Beta', 'end', 'link:Contact' ) === $labels($folder),
+    'a folder titled by a link keeps its wrapped entries as its submenu',
+    json_encode($labels($folder))
+);
+$services = (string) ($folder[1] ?? '');
+$assert(str_contains($services, 'nav-item') && str_contains($services, 'nav-item--folder'), 'the folder title keeps the item classes', $services);
+
+$span = $items(
+    '<nav class="site-menu"><div class="entry"><span><a href="/shop">Shop</a></span><div class="children"><a href="/shop/new">New</a></div></div>'
+    . '<div class="entry"><a href="/about">About</a></div></nav>'
+);
+$assert(
+    array( 'submenu:Shop', 'link:New', 'end', 'link:About' ) === $labels($span),
+    'a parent link in a label wrapper owns the cluster beside it',
+    json_encode($labels($span))
+);
+
+$peers = $items(
+    '<header><div class="menu-panel"><div class="menu-nav"><nav class="menu-nav-list"><div class="nav-wrapper">'
+    . '<div class="nav-item"><a href="/">Home</a></div><div class="nav-item"><a href="/a">A</a></div><div class="nav-item"><a href="/b">B</a></div>'
+    . '</div></nav></div></div></header>'
+);
+$assert(! in_array('submenu:Home', $labels($peers), true), 'a wrapper of the same tag beside the label stays a peer', json_encode($labels($peers)));
+
+// Shapes that read as peers or as titled columns stay as trunk: no submenu.
+$noSubmenu = array(
+    'a label of another tag beside peer items in a list' => '<nav class="nav"><div class="list"><span class="item current"><a href="/">Home</a></span><div class="item"><a href="/about">About</a></div><div class="item"><a href="/contact">Contact</a></div></div></nav>',
+    'a paragraph item beside a div item sharing its class' => '<nav class="nav"><div class="row"><p class="item"><a href="/">Home</a></p><div class="item"><a href="/about">About</a><a href="/team">Team</a></div></div></nav>',
+    'footer columns titled by linked headings' => '<footer><nav aria-label="Footer" class="cols"><div class="col"><h4><a href="/shop">Shop</a></h4><div class="links"><a href="/shoes">Shoes</a><a href="/bags">Bags</a></div></div>'
+        . '<div class="col"><h4><a href="/help">Help</a></h4><div class="links"><a href="/faq">FAQ</a><a href="/returns">Returns</a></div></div></nav></footer>',
+);
+foreach ( $noSubmenu as $case => $html ) {
+    $read = $labels($items($html));
+    $assert(array() === array_filter($read, static fn (string $item): bool => str_starts_with($item, 'submenu:')), $case . ' gets no submenu', json_encode($read));
+}
+
+if ( 0 < $failures ) {
+    fwrite(STDERR, "Navigation owned submenu panel: {$failures} failed, {$passes} passed\n");
+    exit(1);
+}
+
+echo "Navigation owned submenu panel passed: {$passes} assertions\n";