diff --git a/packages/compiler-core/src/transforms/vFor.ts b/packages/compiler-core/src/transforms/vFor.ts
index 0dca0ba9ab4..8aba1f2c1b2 100644
--- a/packages/compiler-core/src/transforms/vFor.ts
+++ b/packages/compiler-core/src/transforms/vFor.ts
@@ -42,6 +42,7 @@ import {
 import {
   FRAGMENT,
   IS_MEMO_SAME,
+  KEEP_ALIVE,
   OPEN_BLOCK,
   RENDER_LIST,
 } from '../runtimeHelpers'
@@ -208,7 +209,9 @@ export const transformFor: NodeTransform = createStructuralDirectiveTransform(
               )
             }
           }
-          childBlock.isBlock = !isStableFragment
+          // track KeepAlive child as block
+          childBlock.isBlock =
+            childBlock.tag === KEEP_ALIVE || !isStableFragment
           if (childBlock.isBlock) {
             helper(OPEN_BLOCK)
             helper(getVNodeBlockHelper(context.inSSR, childBlock.isComponent))
diff --git a/packages/runtime-core/__tests__/rendererOptimizedMode.spec.ts b/packages/runtime-core/__tests__/rendererOptimizedMode.spec.ts
index 1d8bb84205b..f6fd16692c4 100644
--- a/packages/runtime-core/__tests__/rendererOptimizedMode.spec.ts
+++ b/packages/runtime-core/__tests__/rendererOptimizedMode.spec.ts
@@ -1,10 +1,12 @@
 import {
   Fragment,
   type FunctionalComponent,
+  KeepAlive,
   type SetupContext,
   Teleport,
   type TestElement,
   type VNode,
+  computed,
   createApp,
   createBlock,
   createCommentVNode,
@@ -1402,4 +1404,54 @@ describe('renderer: optimized mode', () => {
     expect(inner(root)).toBe('<!--v-if-->')
     expect(beforeUnmountSpy).toHaveBeenCalledTimes(1)
   })
+
+  //#12914
+  test('unmount KeepAlive children when wrapped in v-for with stable fragment', async () => {
+    const CompA = {
+      setup() {
+        return () => h('span', 'CompA')
+      },
+    }
+    const CompB = {
+      setup() {
+        return () => h('span', 'CompB')
+      },
+    }
+
+    const toggle = ref(true)
+    const view = computed(() => {
+      return toggle.value ? CompA : CompB
+    })
+
+    const app = createApp({
+      render() {
+        return (
+          openBlock(),
+          createElementBlock(
+            Fragment,
+            null,
+            renderList(1, () => {
+              return (
+                openBlock(),
+                createBlock(
+                  KeepAlive,
+                  { include: [] },
+                  [(openBlock(), createBlock(view.value))],
+                  1024 /* DYNAMIC_SLOTS */,
+                )
+              )
+            }),
+            64 /* STABLE_FRAGMENT */,
+          )
+        )
+      },
+    })
+
+    app.mount(root)
+    expect(inner(root)).toBe('<span>CompA</span>')
+
+    toggle.value = false
+    await nextTick()
+    expect(inner(root)).toBe('<span>CompB</span>')
+  })
 })