diff --git a/packages/playwright/src/isomorphic/teleReceiver.ts b/packages/playwright/src/isomorphic/teleReceiver.ts
index c5d82d810d..a14523da1a 100644
--- a/packages/playwright/src/isomorphic/teleReceiver.ts
+++ b/packages/playwright/src/isomorphic/teleReceiver.ts
@@ -209,8 +209,8 @@ export class TeleReporterReceiver {
       this._rootSuite.suites.push(projectSuite);
       projectSuite.parent = this._rootSuite;
     }
-    const p = this._parseProject(project);
-    projectSuite.project = () => p;
+    // Always update project in watch mode.
+    projectSuite._project = this._parseProject(project);
     this._mergeSuitesInto(project.suites, projectSuite);
 
     // Remove deleted tests when listing. Empty suites will be auto-filtered
@@ -428,6 +428,7 @@ export class TeleSuite implements SuitePrivate {
   _timeout: number | undefined;
   _retries: number | undefined;
   _fileId: string | undefined;
+  _project: TeleFullProject | undefined;
   _parallelMode: 'none' | 'default' | 'serial' | 'parallel' = 'none';
   readonly _type: 'root' | 'project' | 'file' | 'describe';
 
@@ -459,7 +460,7 @@ export class TeleSuite implements SuitePrivate {
   }
 
   project(): TeleFullProject | undefined {
-    return undefined;
+    return this._project ?? this.parent?.project();
   }
 }
 
diff --git a/tests/playwright-test/reporter-blob.spec.ts b/tests/playwright-test/reporter-blob.spec.ts
index 63b6fd815b..1bbc3e2a26 100644
--- a/tests/playwright-test/reporter-blob.spec.ts
+++ b/tests/playwright-test/reporter-blob.spec.ts
@@ -1677,3 +1677,35 @@ test('merge reports without --config preserves path separators', async ({ runInl
   expect(output).toContain(`test: ${test.info().outputPath('dir1', 'tests2', 'b.test.js').replaceAll(path.sep, otherSeparator)}`);
   expect(output).toContain(`test title: ${'tests2' + otherSeparator + 'b.test.js'}`);
 });
+
+test('TestSuite.project() should return owning project', async ({ runInlineTest, mergeReports }) => {
+  test.info().annotations.push({ type: 'issue', description: 'https://github.com/microsoft/playwright/issues/29173' });
+  const files1 = {
+    'echo-reporter.js': `
+      export default class EchoReporter {
+        onTestBegin(test) {
+          console.log('test project:', test.parent?.project()?.name);
+        }
+      };
+    `,
+    'merge.config.ts': `module.exports = {
+      testDir: 'mergeRoot',
+      reporter: './echo-reporter.js'
+     };`,
+    'playwright.config.ts': `module.exports = {
+      testDir: 'tests',
+      reporter: [['blob', { outputDir: 'blob-report' }]],
+      projects: [{name: 'my-project'}]
+    };`,
+    'tests/a.test.js': `
+      import { test, expect } from '@playwright/test';
+      test('math 1', async ({}) => { });
+    `,
+  };
+  await runInlineTest(files1);
+
+  const { exitCode, output } = await mergeReports(test.info().outputPath('blob-report'), undefined, { additionalArgs: ['--config', 'merge.config.ts'] });
+  expect(exitCode).toBe(0);
+  console.log(output);
+  expect(output).toContain(`test project: my-project`);
+});