diff --git a/CHANGES.rst b/CHANGES.rst
index 95395eb28..95d6556df 100644
--- a/CHANGES.rst
+++ b/CHANGES.rst
@@ -9,6 +9,8 @@ Unreleased
     :pr:`3055`
 -   Replace ``Sentinel.UNSET`` default values by ``None`` as they're passed through
     the ``Context.invoke()`` method. :issue:`3066` :issue:`3065` :pr:`3068`
+-   Fix conversion of ``Sentinel.UNSET`` happening too early, which caused incorrect
+    behavior for multiple parameters using the same name. :issue:`3071` :pr:`3079`
 
 Version 8.3.0
 --------------
diff --git a/src/click/core.py b/src/click/core.py
index cd8052f7d..5f4728717 100644
--- a/src/click/core.py
+++ b/src/click/core.py
@@ -1226,6 +1226,19 @@ def parse_args(self, ctx: Context, args: list[str]) -> list[str]:
         for param in iter_params_for_processing(param_order, self.get_params(ctx)):
             _, args = param.handle_parse_result(ctx, opts, args)
 
+        # We now have all parameters' values into `ctx.params`, but the data may contain
+        # the `UNSET` sentinel.
+        # Convert `UNSET` to `None` to ensure that the user doesn't see `UNSET`.
+        #
+        # Waiting until after the initial parse to convert allows us to treat `UNSET`
+        # more like a missing value when multiple params use the same name.
+        # Refs:
+        # https://github.com/pallets/click/issues/3071
+        # https://github.com/pallets/click/pull/3079
+        for name, value in ctx.params.items():
+            if value is UNSET:
+                ctx.params[name] = None
+
         if args and not ctx.allow_extra_args and not ctx.resilient_parsing:
             ctx.fail(
                 ngettext(
@@ -2538,17 +2551,14 @@ def handle_parse_result(
             # We skip adding the value if it was previously set by another parameter
             # targeting the same variable name. This prevents parameters competing for
             # the same name to override each other.
-            and self.name not in ctx.params
+            and (self.name not in ctx.params or ctx.params[self.name] is UNSET)
         ):
             # Click is logically enforcing that the name is None if the parameter is
             # not to be exposed. We still assert it here to please the type checker.
             assert self.name is not None, (
                 f"{self!r} parameter's name should not be None when exposing value."
             )
-            # Normalize UNSET values to None, as we're about to pass them to the
-            # command function and move them to the pure-Python realm of user-written
-            # code.
-            ctx.params[self.name] = value if value is not UNSET else None
+            ctx.params[self.name] = value
 
         return value, args
 
diff --git a/tests/test_defaults.py b/tests/test_defaults.py
index 3f293e881..31eee844b 100644
--- a/tests/test_defaults.py
+++ b/tests/test_defaults.py
@@ -84,3 +84,29 @@ def foo(name):
 
     result = runner.invoke(cli, ["foo", "--help"], default_map={"foo": {"name": True}})
     assert "default: name" in result.output
+
+
+def test_shared_param_prefers_first_default(runner):
+    """test that the first default is chosen when multiple flags share a param name"""
+
+    @click.command
+    @click.option("--red", "color", flag_value="red")
+    @click.option("--green", "color", flag_value="green", default=True)
+    def prefers_green(color):
+        click.echo(color)
+
+    @click.command
+    @click.option("--red", "color", flag_value="red", default=True)
+    @click.option("--green", "color", flag_value="green")
+    def prefers_red(color):
+        click.echo(color)
+
+    result = runner.invoke(prefers_green, [])
+    assert "green" in result.output
+    result = runner.invoke(prefers_green, ["--red"])
+    assert "red" in result.output
+
+    result = runner.invoke(prefers_red, [])
+    assert "red" in result.output
+    result = runner.invoke(prefers_red, ["--green"])
+    assert "green" in result.output