diff --git a/.changeset/gate-group-on-person-processing.md b/.changeset/gate-group-on-person-processing.md
new file mode 100644
index 0000000000..252c72ff21
--- /dev/null
+++ b/.changeset/gate-group-on-person-processing.md
@@ -0,0 +1,5 @@
+---
+'posthog-js': patch
+---
+
+Gate `$groupidentify` on person processing. Under `identified_only`, a `group()` call promotes the user to identified so the event is kept instead of dropped. Under `never`, the local group association is retained for subsequent events and feature flags, but `$groupidentify` is not sent because the server always drops it.
diff --git a/packages/browser/src/__tests__/personProcessing.test.ts b/packages/browser/src/__tests__/personProcessing.test.ts
index d891cb5d86..d07d82048a 100644
--- a/packages/browser/src/__tests__/personProcessing.test.ts
+++ b/packages/browser/src/__tests__/personProcessing.test.ts
@@ -606,8 +606,7 @@ describe('person processing', () => {
             expect(eventAfterGroup[0].properties.$process_person_profile).toEqual(true)
         })
 
-        it('should send the $groupidentify event even if person_processing is set to never', async () => {
-            // Groups are separate from person processing - $groupidentify should always be sent
+        it('should retain the group association without sending $groupidentify if person_processing is never', async () => {
             // arrange
             const { posthog, beforeSendMock } = await setup('never')
 
@@ -617,21 +616,19 @@ describe('person processing', () => {
             posthog.capture('custom event after group')
 
             // assert
-            // setGroupPropertiesForFlags still has a person processing check
             expect(mockLogger.error).toBeCalledTimes(1)
             expect(mockLogger.error).toHaveBeenCalledWith(
                 'posthog.setGroupPropertiesForFlags was called, but process_person is set to "never". This call will be ignored.'
             )
 
-            // $groupidentify is sent (groups are independent of person processing)
-            expect(beforeSendMock).toBeCalledTimes(3)
+            // no $groupidentify is sent, only the two custom events
+            expect(beforeSendMock).toBeCalledTimes(2)
             const eventBeforeGroup = beforeSendMock.mock.calls[0]
             expect(eventBeforeGroup[0].properties.$process_person_profile).toEqual(false)
-            const groupIdentify = beforeSendMock.mock.calls[1]
-            expect(groupIdentify[0].event).toEqual('$groupidentify')
-            // $groupidentify doesn't set $process_person_profile since it doesn't process persons
-            const eventAfterGroup = beforeSendMock.mock.calls[2]
+            const eventAfterGroup = beforeSendMock.mock.calls[1]
+            expect(eventAfterGroup[0].event).toEqual('custom event after group')
             expect(eventAfterGroup[0].properties.$process_person_profile).toEqual(false)
+            expect(eventAfterGroup[0].properties.$groups).toEqual({ groupType: 'groupKey' })
         })
     })
 
diff --git a/packages/browser/src/posthog-core.ts b/packages/browser/src/posthog-core.ts
index 92dae38264..10d398ffc7 100644
--- a/packages/browser/src/posthog-core.ts
+++ b/packages/browser/src/posthog-core.ts
@@ -3210,9 +3210,9 @@ export class PostHog implements PostHogInterface {
         this.register({ $groups: { ...existingGroups, [groupType]: groupKey } })
 
         // Send $groupidentify when the group is new/changed OR when properties
-        // are provided. Skip only when the group already exists with the same
-        // key and no new properties are being set.
-        if (isNewGroup || groupPropertiesToSet) {
+        // are provided, but only when the event can be processed. The local group
+        // association remains useful for events and feature flags without person processing.
+        if ((isNewGroup || groupPropertiesToSet) && this._hasPersonProcessing()) {
             const groupIdentifyProperties: Properties = {
                 $group_type: groupType,
                 $group_key: groupKey,