diff --git a/lib/Db/MemberRequest.php b/lib/Db/MemberRequest.php
index df29cd0db..518882111 100644
--- a/lib/Db/MemberRequest.php
+++ b/lib/Db/MemberRequest.php
@@ -413,6 +413,25 @@ public function getMemberInstances(string $circleId): array {
 		);
 	}
 
+	/**
+	 * @param list<string> $singleIds
+	 *
+	 * @return list<Member>
+	 * @throws RequestBuilderException
+	 */
+	public function getMembersBySingleIds(array $singleIds): array {
+		$members = [];
+		foreach (array_chunk(array_values(array_unique($singleIds)), 1000) as $chunk) {
+			$qb = $this->getMemberSelectSql();
+			$qb->leftJoinCircle(CoreQueryBuilder::MEMBER);
+			$qb->limitInArray('single_id', $chunk);
+
+			array_push($members, ...$this->getItemsFromRequest($qb));
+		}
+
+		return $members;
+	}
+
 	/**
 	 * @param string $singleId
 	 *
diff --git a/lib/Service/MembershipService.php b/lib/Service/MembershipService.php
index 79f5dcf7f..d63acbae5 100644
--- a/lib/Service/MembershipService.php
+++ b/lib/Service/MembershipService.php
@@ -128,49 +128,49 @@ public function deleteFederatedUser(FederatedUser $federatedUser) {
 
 	/**
 	 * @param string $singleId
-	 * @param string $circleId
-	 * @param array $memberships
-	 * @param array $knownIds
-	 * @param array $path
 	 *
-	 * @return array
+	 * @return Membership[]
 	 * @throws RequestBuilderException
 	 */
-	private function generateMemberships(
-		string $singleId,
-		string $circleId = '',
-		array &$memberships = [],
-		array $knownIds = [],
-		array $path = [],
-	): array {
-		$circleId = ($circleId === '') ? $singleId : $circleId;
-		$path[] = $circleId;
-		$knownIds[] = $circleId;
-
-		$members = $this->memberRequest->getMembersBySingleId($circleId);
-		foreach ($members as $member) {
-			if (!$member->hasCircle() || $member->getLevel() < Member::LEVEL_MEMBER) {
-				continue;
-			}
+	private function generateMemberships(string $singleId): array {
+		$memberships = [];
+		$pathMap = [$singleId => [$singleId]];
+		$knownIds = [$singleId => true];
+		$currentLevelIds = [$singleId];
+
+		while (!empty($currentLevelIds)) {
+			$nextLevelIds = [];
+			$newPaths = [];
+			foreach ($this->memberRequest->getMembersBySingleIds($currentLevelIds) as $member) {
+				if (!$member->hasCircle() || $member->getLevel() < Member::LEVEL_MEMBER) {
+					continue;
+				}
 
-			if ($member->getCircle()->isConfig(Circle::CFG_NO_OWNER)
-				&& $member->getLevel() === Member::LEVEL_OWNER) {
-				continue;
+				if ($member->getCircle()->isConfig(Circle::CFG_NO_OWNER)
+					&& $member->getLevel() === Member::LEVEL_OWNER) {
+					continue;
+				}
+
+				$path = $pathMap[$member->getSingleId()];
+				$circleId = $member->getCircleId();
+				$membershipPath = array_merge($path, [$circleId]);
+
+				$membership = new Membership($singleId, count($path) > 1 ? $path[1] : '', $member);
+				$membership->setInheritancePath(array_reverse($path))
+					->setInheritanceDepth(count($path));
+				$this->fillMemberships($membership, $memberships);
+
+				if (!isset($knownIds[$circleId])) {
+					$newPaths[$circleId] ??= $membershipPath;
+					$nextLevelIds[$circleId] = $circleId;
+				}
 			}
 
-			$membership = new Membership($singleId, count($path) > 1 ? $path[1] : '', $member);
-			$membership->setInheritancePath(array_reverse($path))
-				->setInheritanceDepth(sizeof($path));
-			$this->fillMemberships($membership, $memberships);
-			if (!in_array($member->getCircleId(), $knownIds)) {
-				$this->generateMemberships(
-					$singleId,
-					$member->getCircleId(),
-					$memberships,
-					$knownIds,
-					$path
-				);
+			foreach ($newPaths as $circleId => $path) {
+				$pathMap[$circleId] = $path;
+				$knownIds[$circleId] = true;
 			}
+			$currentLevelIds = array_values($nextLevelIds);
 		}
 
 		return $memberships;
diff --git a/tests/psalm-baseline.xml b/tests/psalm-baseline.xml
index c7c9412d8..d00389944 100644
--- a/tests/psalm-baseline.xml
+++ b/tests/psalm-baseline.xml
@@ -276,11 +276,6 @@
       <code><![CDATA[Signer]]></code>
     </UndefinedDocblockClass>
   </file>
-  <file src="lib/Service/MembershipService.php">
-    <ConflictingReferenceConstraint>
-      <code><![CDATA[if (!in_array($member->getCircleId(), $knownIds)) {]]></code>
-    </ConflictingReferenceConstraint>
-  </file>
   <file src="lib/Service/MiscService.php">
     <DeprecatedMethod>
       <code><![CDATA[MiscService::getContactData($member->getUserId())]]></code>
diff --git a/tests/unit/lib/Service/MembershipServiceTest.php b/tests/unit/lib/Service/MembershipServiceTest.php
new file mode 100644
index 000000000..a38cbbad1
--- /dev/null
+++ b/tests/unit/lib/Service/MembershipServiceTest.php
@@ -0,0 +1,161 @@
+<?php
+
+declare(strict_types=1);
+
+/**
+ * SPDX-FileCopyrightText: 2026 Nextcloud GmbH and Nextcloud contributors
+ * SPDX-License-Identifier: AGPL-3.0-or-later
+ */
+
+namespace OCA\Circles\Tests\Unit\Service;
+
+use OCA\Circles\Db\CircleRequest;
+use OCA\Circles\Db\MemberRequest;
+use OCA\Circles\Db\MembershipRequest;
+use OCA\Circles\Model\Circle;
+use OCA\Circles\Model\Member;
+use OCA\Circles\Model\Membership;
+use OCA\Circles\Service\EventService;
+use OCA\Circles\Service\MembershipService;
+use OCA\Circles\Service\OutputService;
+use OCA\Circles\Service\ShareWrapperService;
+use PHPUnit\Framework\MockObject\MockObject;
+use PHPUnit\Framework\TestCase;
+
+class MembershipServiceTest extends TestCase {
+	private MemberRequest&MockObject $memberRequest;
+	private MembershipService $service;
+	/** @var string[][] */
+	private array $queriedSingleIds = [];
+
+	protected function setUp(): void {
+		$this->memberRequest = $this->createMock(MemberRequest::class);
+		$this->service = new MembershipService(
+			$this->createMock(MembershipRequest::class),
+			$this->createMock(CircleRequest::class),
+			$this->memberRequest,
+			$this->createMock(EventService::class),
+			$this->createMock(ShareWrapperService::class),
+			$this->createMock(OutputService::class),
+		);
+	}
+
+	public function testUserWithoutMembershipsGetsNothing(): void {
+		$this->mockGraph([]);
+
+		self::assertSame([], $this->generate('user'));
+	}
+
+	public function testDirectMemberships(): void {
+		$this->mockGraph([
+			'user' => [['A', Member::LEVEL_MEMBER], ['B', Member::LEVEL_ADMIN], ['C', Member::LEVEL_OWNER]],
+		]);
+
+		$memberships = $this->generate('user');
+
+		self::assertEqualsCanonicalizing(['A', 'B', 'C'], array_keys($memberships));
+		self::assertSame(Member::LEVEL_ADMIN, $memberships['B']->getLevel());
+		self::assertSame(1, $memberships['B']->getInheritanceDepth());
+		self::assertSame('user', $memberships['B']->getInheritanceFirst());
+		self::assertSame('B', $memberships['B']->getInheritanceLast());
+		self::assertSame(['user'], $memberships['B']->getInheritancePath());
+	}
+
+	public function testNestedChainKeepsPathsDepthsAndLevelsOfEachHop(): void {
+		$this->mockGraph([
+			'user' => [['A', Member::LEVEL_ADMIN]],
+			'A' => [['B', Member::LEVEL_MEMBER]],
+			'B' => [['C', Member::LEVEL_MODERATOR]],
+			'C' => [['D', Member::LEVEL_MEMBER]],
+		]);
+
+		$memberships = $this->generate('user');
+
+		self::assertEqualsCanonicalizing(['A', 'B', 'C', 'D'], array_keys($memberships));
+
+		$expected = [
+			'A' => [Member::LEVEL_ADMIN, 1, 'user', 'A', ['user']],
+			'B' => [Member::LEVEL_MEMBER, 2, 'A', 'A', ['A', 'user']],
+			'C' => [Member::LEVEL_MODERATOR, 3, 'B', 'A', ['B', 'A', 'user']],
+			'D' => [Member::LEVEL_MEMBER, 4, 'C', 'A', ['C', 'B', 'A', 'user']],
+		];
+		foreach ($expected as $circleId => [$level, $depth, $first, $last, $path]) {
+			self::assertSame($level, $memberships[$circleId]->getLevel(), "level of $circleId");
+			self::assertSame($depth, $memberships[$circleId]->getInheritanceDepth(), "depth of $circleId");
+			self::assertSame($first, $memberships[$circleId]->getInheritanceFirst(), "first of $circleId");
+			self::assertSame($last, $memberships[$circleId]->getInheritanceLast(), "last of $circleId");
+			self::assertSame($path, $memberships[$circleId]->getInheritancePath(), "path of $circleId");
+		}
+	}
+
+	public function testCircularAndSelfMembershipsTerminate(): void {
+		$this->mockGraph([
+			'user' => [['A', Member::LEVEL_MEMBER]],
+			'A' => [['A', Member::LEVEL_MEMBER], ['B', Member::LEVEL_MEMBER]],
+			'B' => [['A', Member::LEVEL_MEMBER]],
+		]);
+
+		$memberships = $this->generate('user');
+
+		self::assertEqualsCanonicalizing(['A', 'B'], array_keys($memberships));
+		self::assertSame(1, $memberships['A']->getInheritanceDepth());
+		self::assertSame(2, $memberships['B']->getInheritanceDepth());
+	}
+
+	public function testDiamondIsExpandedOnceAndKeepsFirstPathForDescendants(): void {
+		$this->mockGraph([
+			'user' => [['A', Member::LEVEL_MEMBER], ['B', Member::LEVEL_MEMBER]],
+			'A' => [['D', Member::LEVEL_MEMBER]],
+			'B' => [['D', Member::LEVEL_MEMBER]],
+			'D' => [['E', Member::LEVEL_MEMBER]],
+		]);
+
+		$memberships = $this->generate('user');
+
+		self::assertEqualsCanonicalizing(['A', 'B', 'D', 'E'], array_keys($memberships));
+		self::assertSame([['user'], ['A', 'B'], ['D'], ['E']], $this->queriedSingleIds);
+
+		self::assertSame(2, $memberships['D']->getInheritanceDepth());
+		self::assertSame('A', $memberships['D']->getInheritanceFirst());
+		self::assertSame(['A', 'user'], $memberships['D']->getInheritancePath());
+
+		self::assertSame(3, $memberships['E']->getInheritanceDepth());
+		self::assertSame('D', $memberships['E']->getInheritanceFirst());
+		self::assertSame('A', $memberships['E']->getInheritanceLast());
+		self::assertSame(['D', 'A', 'user'], $memberships['E']->getInheritancePath());
+	}
+
+	/**
+	 * @param array<string, array<array{string, int}>> $graph single id => [circle id, level] it belongs to
+	 */
+	private function mockGraph(array $graph): void {
+		$membersOf = function (string $singleId) use ($graph): array {
+			return array_map(function (array $edge) use ($singleId): Member {
+				$circle = new Circle();
+				$circle->setSingleId($edge[0]);
+
+				$member = new Member();
+				$member->setSingleId($singleId);
+				$member->setCircleId($edge[0]);
+				$member->setLevel($edge[1]);
+				$member->setCircle($circle);
+
+				return $member;
+			}, $graph[$singleId] ?? []);
+		};
+
+		$this->memberRequest->method('getMembersBySingleIds')
+			->willReturnCallback(function (array $singleIds) use ($membersOf): array {
+				$this->queriedSingleIds[] = $singleIds;
+
+				return array_merge(...array_map($membersOf, $singleIds));
+			});
+	}
+
+	/**
+	 * @return array<string, Membership>
+	 */
+	private function generate(string $singleId): array {
+		return (new \ReflectionMethod($this->service, 'generateMemberships'))->invoke($this->service, $singleId);
+	}
+}