diff --git a/packages/playwright-core/src/server/injected/recorder/recorder.ts b/packages/playwright-core/src/server/injected/recorder/recorder.ts
index 1828af3bd0cd8..b905ba8548a05 100644
--- a/packages/playwright-core/src/server/injected/recorder/recorder.ts
+++ b/packages/playwright-core/src/server/injected/recorder/recorder.ts
@@ -1018,7 +1018,7 @@ export class Recorder {
   private _listeners: (() => void)[] = [];
   private _currentTool: RecorderTool;
   private _tools: Record<Mode, RecorderTool>;
-  private _actionSelectorModel: HighlightModel | null = null;
+  private _lastHighlightedSelector: string | undefined = undefined;
   private _lastHighlightedAriaTemplateJSON: string = 'undefined';
   readonly highlight: Highlight;
   readonly overlay: Overlay | undefined;
@@ -1129,12 +1129,12 @@ export class Recorder {
     this._switchCurrentTool();
     this.overlay?.setUIState(state);
 
-    // Race or scroll.
-    if (this._actionSelectorModel?.selector && !this._actionSelectorModel?.elements.length && !this._lastHighlightedAriaTemplateJSON)
-      this._actionSelectorModel = null;
-
-    if (state.actionSelector && state.actionSelector !== this._actionSelectorModel?.selector)
-      this._actionSelectorModel =  querySelector(this.injectedScript, state.actionSelector, this.document);
+    let highlight: HighlightModel | 'clear' | 'noop' = 'noop';
+    if (state.actionSelector !== this._lastHighlightedSelector) {
+      this._lastHighlightedSelector = state.actionSelector;
+      const model = state.actionSelector ? querySelector(this.injectedScript, state.actionSelector, this.document) : null;
+      highlight = model?.elements.length ? model : 'clear';
+    }
 
     const ariaTemplateJSON = JSON.stringify(state.ariaTemplate);
     if (this._lastHighlightedAriaTemplateJSON !== ariaTemplateJSON) {
@@ -1142,16 +1142,15 @@ export class Recorder {
       const template = state.ariaTemplate ? this.injectedScript.utils.parseYamlTemplate(state.ariaTemplate) : undefined;
       const elements = template ? this.injectedScript.getAllByAria(this.document, template) : [];
       if (elements.length)
-        this._actionSelectorModel = { elements };
+        highlight = { elements };
       else
-        this._actionSelectorModel = null;
+        highlight = 'clear';
     }
 
-    if (!state.actionSelector && !state.ariaTemplate)
-      this._actionSelectorModel = null;
-
-    if (this.state.mode === 'none' || this.state.mode === 'standby')
-      this.updateHighlight(this._actionSelectorModel, false);
+    if (highlight === 'clear')
+      this.clearHighlight();
+    else if (highlight !== 'noop')
+      this.updateHighlight(highlight, false);
   }
 
   clearHighlight() {
@@ -1266,6 +1265,8 @@ export class Recorder {
   private _onScroll(event: Event) {
     if (!event.isTrusted)
       return;
+    this._lastHighlightedSelector = undefined;
+    this._lastHighlightedAriaTemplateJSON = 'undefined';
     this.highlight.hideActionPoint();
     this._currentTool.onScroll?.(event);
   }
diff --git a/packages/recorder/src/recorder.tsx b/packages/recorder/src/recorder.tsx
index 50fc5174ecd52..f98682af89ebf 100644
--- a/packages/recorder/src/recorder.tsx
+++ b/packages/recorder/src/recorder.tsx
@@ -67,6 +67,7 @@ export const Recorder: React.FC<RecorderProps> = ({
     const language = source.language;
     setLocator(asLocator(language, elementInfo.selector));
     setAriaSnapshot(elementInfo.ariaSnapshot);
+    setAriaSnapshotErrors([]);
     if (userGesture && selectedTab !== 'locator' && selectedTab !== 'aria')
       setSelectedTab('locator');
 
@@ -122,9 +123,6 @@ export const Recorder: React.FC<RecorderProps> = ({
     if (!errors.length)
       window.dispatch({ event: 'highlightRequested', params: { ariaTemplate: fragment } });
   }, [mode]);
-  const isRecording = mode === 'recording' || mode === 'recording-inspecting';
-  const locatorPlaceholder = isRecording ? '// Unavailable while recording' : (locator ? undefined : '// Pick element or type locator');
-  const ariaPlaceholder = isRecording ? '# Unavailable while recording' : (ariaSnapshot ? undefined : '# Pick element or type snapshot');
 
   return <div className='recorder'>
     <Toolbar>
@@ -191,7 +189,7 @@ export const Recorder: React.FC<RecorderProps> = ({
           {
             id: 'locator',
             title: 'Locator',
-            render: () => <CodeMirrorWrapper text={locatorPlaceholder || locator} language={source.language} readOnly={isRecording} focusOnChange={true} onChange={onEditorChange} wrapLines={true} />
+            render: () => <CodeMirrorWrapper text={locator} language={source.language} focusOnChange={true} onChange={onEditorChange} wrapLines={true} />
           },
           {
             id: 'log',
@@ -201,7 +199,7 @@ export const Recorder: React.FC<RecorderProps> = ({
           {
             id: 'aria',
             title: 'Aria snapshot',
-            render: () => <CodeMirrorWrapper text={ariaPlaceholder || ariaSnapshot || ''} language={'yaml'} readOnly={isRecording} onChange={onAriaEditorChange} highlight={ariaSnapshotErrors} wrapLines={true} />
+            render: () => <CodeMirrorWrapper text={ariaSnapshot || ''} language={'yaml'} onChange={onAriaEditorChange} highlight={ariaSnapshotErrors} wrapLines={true} />
           },
         ]}
         selectedTab={selectedTab}
diff --git a/tests/library/debug-controller.spec.ts b/tests/library/debug-controller.spec.ts
index 528b4fcec8c3c..6050d4e64525d 100644
--- a/tests/library/debug-controller.spec.ts
+++ b/tests/library/debug-controller.spec.ts
@@ -31,8 +31,9 @@ type Fixtures = {
 };
 
 const test = baseTest.extend<Fixtures>({
-  wsEndpoint: async ({ }, use) => {
-    process.env.PW_DEBUG_CONTROLLER_HEADLESS = '1';
+  wsEndpoint: async ({ headless }, use) => {
+    if (headless)
+      process.env.PW_DEBUG_CONTROLLER_HEADLESS = '1';
     const server = new PlaywrightServer({ mode: 'extension', path: '/' + createGuid(), maxConnections: Number.MAX_VALUE, enableSocksProxy: false });
     const wsEndpoint = await server.listen();
     await use(wsEndpoint);
diff --git a/tests/library/inspector/cli-codegen-aria.spec.ts b/tests/library/inspector/cli-codegen-aria.spec.ts
index 6fe75209eb13c..820dab7c14137 100644
--- a/tests/library/inspector/cli-codegen-aria.spec.ts
+++ b/tests/library/inspector/cli-codegen-aria.spec.ts
@@ -64,11 +64,10 @@ test.describe(() => {
   test('should inspect aria snapshot', async ({ openRecorder }) => {
     const { recorder } = await openRecorder();
     await recorder.setContentAndWait(`<main><button>Submit</button></main>`);
-    await recorder.recorderPage.getByRole('button', { name: 'Record' }).click();
     await recorder.page.click('x-pw-tool-item.pick-locator');
     await recorder.page.hover('button');
     await recorder.trustedClick();
-    await recorder.recorderPage.getByRole('tab', { name: 'Aria snapshot ' }).click();
+    await recorder.recorderPage.getByRole('tab', { name: 'Aria snapshot' }).click();
     await expect(recorder.recorderPage.locator('.tab-aria .CodeMirror')).toMatchAriaSnapshot(`
       - textbox
       - text: '- button "Submit"'
@@ -85,12 +84,11 @@ test.describe(() => {
     const submitButton = recorder.page.getByRole('button', { name: 'Submit' });
     const cancelButton = recorder.page.getByRole('button', { name: 'Cancel' });
 
-    await recorder.recorderPage.getByRole('button', { name: 'Record' }).click();
 
     await recorder.page.click('x-pw-tool-item.pick-locator');
     await submitButton.hover();
     await recorder.trustedClick();
-    await recorder.recorderPage.getByRole('tab', { name: 'Aria snapshot ' }).click();
+    await recorder.recorderPage.getByRole('tab', { name: 'Aria snapshot' }).click();
     await expect(recorder.recorderPage.locator('.tab-aria .CodeMirror')).toMatchAriaSnapshot(`
       - text: '- button "Submit"'
     `);
@@ -128,13 +126,12 @@ test.describe(() => {
     </main>`);
 
     const submitButton = recorder.page.getByRole('button', { name: 'Submit' });
-    await recorder.recorderPage.getByRole('button', { name: 'Record' }).click();
 
     await recorder.page.click('x-pw-tool-item.pick-locator');
     await submitButton.hover();
     await recorder.trustedClick();
 
-    await recorder.recorderPage.getByRole('tab', { name: 'Aria snapshot ' }).click();
+    await recorder.recorderPage.getByRole('tab', { name: 'Aria snapshot' }).click();
     await expect(recorder.recorderPage.locator('.tab-aria .CodeMirror')).toMatchAriaSnapshot(`
       - text: '- button "Submit"'
     `);
diff --git a/tests/library/inspector/cli-codegen-pick-locator.spec.ts b/tests/library/inspector/cli-codegen-pick-locator.spec.ts
new file mode 100644
index 0000000000000..53d106b4c9a1e
--- /dev/null
+++ b/tests/library/inspector/cli-codegen-pick-locator.spec.ts
@@ -0,0 +1,69 @@
+/**
+ * Copyright (c) Microsoft Corporation.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+import { test, expect } from './inspectorTest';
+import { roundBox } from '../../page/pageTest';
+
+test.describe(() => {
+  test.skip(({ mode }) => mode !== 'default');
+  test.skip(({ trace, codegenMode }) => trace === 'on' && codegenMode === 'trace-events');
+
+  test('should inspect locator', async ({ openRecorder }) => {
+    const { recorder } = await openRecorder();
+    await recorder.setContentAndWait(`<main><button>Submit</button></main>`);
+    await recorder.page.click('x-pw-tool-item.pick-locator');
+    await recorder.page.hover('button');
+    await recorder.trustedClick();
+    await recorder.recorderPage.getByRole('tab', { name: 'Locator' }).click();
+    await expect(recorder.recorderPage.locator('.tab-locator .CodeMirror')).toMatchAriaSnapshot(`
+      - text: "getByRole('button', { name: 'Submit' })"
+    `);
+  });
+
+  test('should update locator highlight', async ({ openRecorder }) => {
+    const { recorder } = await openRecorder();
+    await recorder.setContentAndWait(`<main>
+      <button>Submit</button>
+      <button>Cancel</button>
+    </main>`);
+
+    const submitButton = recorder.page.getByRole('button', { name: 'Submit' });
+    const cancelButton = recorder.page.getByRole('button', { name: 'Cancel' });
+
+    await recorder.recorderPage.getByRole('button', { name: 'Record' }).click();
+
+    await recorder.page.click('x-pw-tool-item.pick-locator');
+    await submitButton.hover();
+    await recorder.trustedClick();
+    await recorder.recorderPage.getByRole('tab', { name: 'Locator' }).click();
+    await expect(recorder.recorderPage.locator('.tab-locator .CodeMirror')).toMatchAriaSnapshot(`
+      - text: "getByRole('button', { name: 'Submit' })"
+    `);
+
+    await recorder.recorderPage.locator('.tab-locator .CodeMirror').click();
+    for (let i = 0; i < `Submit' })`.length; i++)
+      await recorder.recorderPage.keyboard.press('Backspace');
+
+    {
+      // Different button.
+      await recorder.recorderPage.locator('.tab-locator .CodeMirror').pressSequentially(`Cancel' })`);
+      await expect(recorder.page.locator('x-pw-highlight')).toBeVisible();
+      const box1 = roundBox(await cancelButton.boundingBox());
+      const box2 = roundBox(await recorder.page.locator('x-pw-highlight').boundingBox());
+      expect(box1).toEqual(box2);
+    }
+  });
+});