diff --git a/services/core/java/com/android/server/wm/LetterboxUiController.java b/services/core/java/com/android/server/wm/LetterboxUiController.java
index 44b1cc88c0a46..32f72157a2fc6 100644
--- a/services/core/java/com/android/server/wm/LetterboxUiController.java
+++ b/services/core/java/com/android/server/wm/LetterboxUiController.java
@@ -1395,9 +1395,9 @@ final class LetterboxUiController {
                 FIRST_OPAQUE_NOT_FINISHING_ACTIVITY_PREDICATE /* callback */,
                 mActivityRecord /* boundary */, false /* includeBoundary */,
                 true /* traverseTopToBottom */);
-        if (firstOpaqueActivityBeneath == null) {
+        if (firstOpaqueActivityBeneath == null || firstOpaqueActivityBeneath.isEmbedded()) {
             // We skip letterboxing if the translucent activity doesn't have any opaque
-            // activities beneath
+            // activities beneath or the activity below is embedded which never has letterbox.
             return;
         }
         inheritConfiguration(firstOpaqueActivityBeneath);
diff --git a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
index abbd3977d1a86..0bec634132762 100644
--- a/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
+++ b/services/tests/wmtests/src/com/android/server/wm/SizeCompatTests.java
@@ -384,6 +384,24 @@ public class SizeCompatTests extends WindowTestsBase {
         assertEquals(opaqueBounds, translucent2RequestedBounds);
     }
 
+    @Test
+    public void testNotApplyStrategyToTranslucentActivitiesOverEmbeddedActivities() {
+        mWm.mLetterboxConfiguration.setTranslucentLetterboxingOverrideEnabled(true);
+        setUpDisplaySizeWithApp(2000, 1000);
+        mActivity.info.screenOrientation = SCREEN_ORIENTATION_PORTRAIT;
+        mActivity.mDisplayContent.setIgnoreOrientationRequest(true /* ignoreOrientationRequest */);
+        // Mock the activity as embedded without additional TaskFragment layer in the task for
+        // simplicity.
+        doReturn(true).when(mActivity).isEmbedded();
+        // Translucent Activity
+        final ActivityRecord translucentActivity = new ActivityBuilder(mAtm).build();
+        doReturn(false).when(translucentActivity).matchParentBounds();
+        doReturn(false).when(translucentActivity).fillsParent();
+        mTask.addChild(translucentActivity);
+        // Check the strategy has not being applied
+        assertFalse(translucentActivity.mLetterboxUiController.hasInheritedLetterboxBehavior());
+    }
+
     @Test
     public void testTranslucentActivitiesDontGoInSizeCompactMode() {
         mWm.mLetterboxConfiguration.setTranslucentLetterboxingOverrideEnabled(true);