diff --git a/servers/visual/visual_server_canvas.cpp b/servers/visual/visual_server_canvas.cpp
index 84b7504ad40..74a05ce4e43 100644
--- a/servers/visual/visual_server_canvas.cpp
+++ b/servers/visual/visual_server_canvas.cpp
@@ -51,6 +51,23 @@ void VisualServerCanvas::_render_canvas_item_tree(Item *p_canvas_item, const Tra
 	}
 }
 
+void _collect_ysort_children(VisualServerCanvas::Item *p_canvas_item, Transform2D p_transform, VisualServerCanvas::Item **r_items, Transform2D *r_extra_transforms, int &r_index) {
+	int child_item_count = p_canvas_item->child_items.size();
+	VisualServerCanvas::Item **child_items = p_canvas_item->child_items.ptrw();
+	for (int i = 0; i < child_item_count; i++) {
+		if (r_items) {
+			r_items[r_index] = child_items[i];
+			child_items[i]->ysort_xform = p_transform;
+			child_items[i]->ysort_pos = p_transform.xform(child_items[i]->xform.elements[2]);
+		}
+
+		r_index++;
+
+		if (child_items[i]->sort_y)
+			_collect_ysort_children(child_items[i], p_transform * child_items[i]->xform, r_items, r_extra_transforms, r_index);
+	}
+}
+
 void VisualServerCanvas::_render_canvas_item(Item *p_canvas_item, const Transform2D &p_transform, const Rect2 &p_clip_rect, const Color &p_modulate, int p_z, RasterizerCanvas::Item **z_list, RasterizerCanvas::Item **z_last_list, Item *p_canvas_clip, Item *p_material_owner) {
 
 	Item *ci = p_canvas_item;
@@ -58,10 +75,10 @@ void VisualServerCanvas::_render_canvas_item(Item *p_canvas_item, const Transfor
 	if (!ci->visible)
 		return;
 
-	if (p_canvas_item->children_order_dirty) {
+	if (ci->children_order_dirty) {
 
-		p_canvas_item->child_items.sort_custom<ItemIndexSort>();
-		p_canvas_item->children_order_dirty = false;
+		ci->child_items.sort_custom<ItemIndexSort>();
+		ci->children_order_dirty = false;
 	}
 
 	Rect2 rect = ci->get_rect();
@@ -82,8 +99,8 @@ void VisualServerCanvas::_render_canvas_item(Item *p_canvas_item, const Transfor
 		return;
 
 	int child_item_count = ci->child_items.size();
-	Item **child_items = (Item **)alloca(child_item_count * sizeof(Item *));
-	copymem(child_items, ci->child_items.ptr(), child_item_count * sizeof(Item *));
+	Item **child_items = ci->child_items.ptrw();
+	Transform2D *child_extra_transforms = NULL;
 
 	if (ci->clip) {
 		if (p_canvas_clip != NULL) {
@@ -99,6 +116,17 @@ void VisualServerCanvas::_render_canvas_item(Item *p_canvas_item, const Transfor
 
 	if (ci->sort_y) {
 
+		if (ci->ysort_children_count == -1) {
+			ci->ysort_children_count = 0;
+			_collect_ysort_children(ci, Transform2D(), NULL, NULL, ci->ysort_children_count);
+		}
+
+		child_item_count = ci->ysort_children_count;
+		child_items = (Item **)alloca(child_item_count * sizeof(Item *));
+
+		int i = 0;
+		_collect_ysort_children(ci, Transform2D(), child_items, child_extra_transforms, i);
+
 		SortArray<Item *, ItemPtrSort> sorter;
 		sorter.sort(child_items, child_item_count);
 	}
@@ -110,9 +138,13 @@ void VisualServerCanvas::_render_canvas_item(Item *p_canvas_item, const Transfor
 
 	for (int i = 0; i < child_item_count; i++) {
 
-		if (!child_items[i]->behind)
+		if (!child_items[i]->behind || (ci->sort_y && child_items[i]->sort_y))
 			continue;
-		_render_canvas_item(child_items[i], xform, p_clip_rect, modulate, p_z, z_list, z_last_list, (Item *)ci->final_clip_owner, p_material_owner);
+		if (ci->sort_y) {
+			_render_canvas_item(child_items[i], xform * child_items[i]->ysort_xform, p_clip_rect, modulate, p_z, z_list, z_last_list, (Item *)ci->final_clip_owner, p_material_owner);
+		} else {
+			_render_canvas_item(child_items[i], xform, p_clip_rect, modulate, p_z, z_list, z_last_list, (Item *)ci->final_clip_owner, p_material_owner);
+		}
 	}
 
 	if (ci->copy_back_buffer) {
@@ -148,9 +180,13 @@ void VisualServerCanvas::_render_canvas_item(Item *p_canvas_item, const Transfor
 
 	for (int i = 0; i < child_item_count; i++) {
 
-		if (child_items[i]->behind)
+		if (child_items[i]->behind || (ci->sort_y && child_items[i]->sort_y))
 			continue;
-		_render_canvas_item(child_items[i], xform, p_clip_rect, modulate, p_z, z_list, z_last_list, (Item *)ci->final_clip_owner, p_material_owner);
+		if (ci->sort_y) {
+			_render_canvas_item(child_items[i], xform * child_items[i]->ysort_xform, p_clip_rect, modulate, p_z, z_list, z_last_list, (Item *)ci->final_clip_owner, p_material_owner);
+		} else {
+			_render_canvas_item(child_items[i], xform, p_clip_rect, modulate, p_z, z_list, z_last_list, (Item *)ci->final_clip_owner, p_material_owner);
+		}
 	}
 }
 
@@ -300,6 +336,7 @@ void VisualServerCanvas::canvas_item_set_parent(RID p_item, RID p_parent) {
 
 			Item *item_owner = canvas_item_owner.get(canvas_item->parent);
 			item_owner->child_items.erase(canvas_item);
+			item_owner->ysort_children_count = -1;
 		}
 
 		canvas_item->parent = RID();
@@ -319,6 +356,12 @@ void VisualServerCanvas::canvas_item_set_parent(RID p_item, RID p_parent) {
 			item_owner->child_items.push_back(canvas_item);
 			item_owner->children_order_dirty = true;
 
+			Item *ysort_owner = item_owner;
+			while (ysort_owner && ysort_owner->sort_y) {
+				item_owner->ysort_children_count = -1;
+				ysort_owner = canvas_item_owner.getornull(ysort_owner->parent);
+			}
+
 		} else {
 
 			ERR_EXPLAIN("Invalid parent");
@@ -826,6 +869,7 @@ void VisualServerCanvas::canvas_item_set_sort_children_by_y(RID p_item, bool p_e
 	ERR_FAIL_COND(!canvas_item);
 
 	canvas_item->sort_y = p_enable;
+	canvas_item->ysort_children_count = -1;
 }
 void VisualServerCanvas::canvas_item_set_z_index(RID p_item, int p_z) {
 
diff --git a/servers/visual/visual_server_canvas.h b/servers/visual/visual_server_canvas.h
index d12bd520bf4..4b7422b15a3 100644
--- a/servers/visual/visual_server_canvas.h
+++ b/servers/visual/visual_server_canvas.h
@@ -48,6 +48,9 @@ public:
 		bool use_parent_material;
 		int index;
 		bool children_order_dirty;
+		int ysort_children_count;
+		Transform2D ysort_xform;
+		Vector2 ysort_pos;
 
 		Vector<Item *> child_items;
 
@@ -61,6 +64,9 @@ public:
 			use_parent_material = false;
 			z_relative = true;
 			index = 0;
+			ysort_children_count = -1;
+			ysort_xform = Transform2D();
+			ysort_pos = Vector2();
 		}
 	};
 
@@ -76,10 +82,10 @@ public:
 
 		_FORCE_INLINE_ bool operator()(const Item *p_left, const Item *p_right) const {
 
-			if (Math::abs(p_left->xform.elements[2].y - p_right->xform.elements[2].y) < CMP_EPSILON)
-				return p_left->xform.elements[2].x < p_right->xform.elements[2].x;
+			if (Math::abs(p_left->ysort_pos.y - p_right->ysort_pos.y) < CMP_EPSILON)
+				return p_left->ysort_pos.x < p_right->ysort_pos.x;
 			else
-				return p_left->xform.elements[2].y < p_right->xform.elements[2].y;
+				return p_left->ysort_pos.y < p_right->ysort_pos.y;
 		}
 	};