diff --git a/loader/merge_reset_test.go b/loader/merge_reset_test.go
index f721b5f8..69add980 100644
--- a/loader/merge_reset_test.go
+++ b/loader/merge_reset_test.go
@@ -62,6 +62,62 @@ func Test_LoadWithReset(t *testing.T) {
 	})
 }
 
+// Test_LoadWithResetOnKeysNormalizedToSequence is the regression test for
+// docker/compose#11816: when two files contribute the same mapping field
+// (environment, labels, …), merging normalizes it into a "KEY=VALUE" sequence,
+// and a later `!reset` on one of its keys used to be silently ignored.
+func Test_LoadWithResetOnKeysNormalizedToSequence(t *testing.T) {
+	p, err := LoadWithContext(context.TODO(), types.ConfigDetails{
+		ConfigFiles: []types.ConfigFile{
+			{
+				Filename: "base.yml",
+				Content: []byte(`
+ name: test
+ services:
+   foo:
+     image: foo
+     environment:
+       FOO: BAR
+       KEEP: ME
+     labels:
+       com.example.foo: bar
+`),
+			},
+			{
+				Filename: "extra.yml",
+				Content: []byte(`
+ services:
+   foo:
+     environment:
+       - ANOTHER=BAR
+       - PASSTHROUGH
+     labels:
+       com.example.extra: bar
+`),
+			},
+			{
+				Filename: "override.yml",
+				Content: []byte(`
+ services:
+   foo:
+     environment:
+       FOO: !reset
+       ANOTHER: !reset
+       PASSTHROUGH: !reset
+     labels:
+       com.example.foo: !reset
+`),
+			},
+		},
+	}, func(options *Options) {
+		options.SkipNormalization = true
+	})
+	assert.NilError(t, err)
+	me := "ME"
+	assert.DeepEqual(t, p.Services["foo"].Environment, types.MappingWithEquals{"KEEP": &me})
+	assert.DeepEqual(t, p.Services["foo"].Labels, types.Labels{"com.example.extra": "bar"})
+}
+
 func Test_DuplicateReset(t *testing.T) {
 	_, err := LoadWithContext(context.TODO(), types.ConfigDetails{
 		ConfigFiles: []types.ConfigFile{
diff --git a/loader/reset.go b/loader/reset.go
index 78836b5c..fe1dda79 100644
--- a/loader/reset.go
+++ b/loader/reset.go
@@ -18,6 +18,7 @@ package loader
 
 import (
 	"fmt"
+	"slices"
 	"strconv"
 	"strings"
 
@@ -257,6 +258,10 @@ func (p *ResetProcessor) applyNullOverrides(target any, path tree.Path) error {
 					continue KEYS
 				}
 			}
+			if seq, ok := e.([]any); ok {
+				e = p.removeResetKeys(seq, next)
+				v[k] = e
+			}
 			err := p.applyNullOverrides(e, next)
 			if err != nil {
 				return err
@@ -281,6 +286,39 @@ func (p *ResetProcessor) applyNullOverrides(target any, path tree.Path) error {
 	return nil
 }
 
+// removeResetKeys drops from a sequence the entries whose key part is targeted
+// by a recorded `!reset` path. A `!reset` on a mapping key (e.g.
+// `environment.FOO`) records a key path, but once several files contributed
+// the field, merging has normalized it into a "KEY=VALUE" sequence (see
+// override.mergeToSequence: environment, labels, build.args, …), so the
+// mapping branch of applyNullOverrides can no longer reach the key
+// (docker/compose#11816). Match such patterns against the key part of each
+// entry — "KEY=VALUE" or bare "KEY" — and remove it.
+func (p *ResetProcessor) removeResetKeys(seq []any, path tree.Path) []any {
+	var keys []string
+	for _, pattern := range p.paths {
+		last := pattern.Last()
+		if last == tree.PathMatchAll || !path.Matches(pattern.Parent()) {
+			continue
+		}
+		// path segments escape "." (see tree.Path.Next); entries hold raw keys
+		keys = append(keys, tree.Path(last).String())
+	}
+	if len(keys) == 0 {
+		return seq
+	}
+	filtered := make([]any, 0, len(seq))
+	for _, e := range seq {
+		if s, ok := e.(string); ok && slices.ContainsFunc(keys, func(key string) bool {
+			return s == key || strings.HasPrefix(s, key+"=")
+		}) {
+			continue
+		}
+		filtered = append(filtered, e)
+	}
+	return filtered
+}
+
 func (p *ResetProcessor) checkForCycle(node *yaml.Node, path tree.Path) error {
 	paths := p.visitedNodes[node]