diff --git a/packages/flutter/lib/src/widgets/overlay.dart b/packages/flutter/lib/src/widgets/overlay.dart
index 166781c8f8..58e52eb568 100644
--- a/packages/flutter/lib/src/widgets/overlay.dart
+++ b/packages/flutter/lib/src/widgets/overlay.dart
@@ -709,6 +709,8 @@ class _RenderTheatre extends RenderBox with ContainerRenderObjectMixin<RenderBox
     addAll(children);
   }
 
+  bool _hasVisualOverflow = false;
+
   @override
   void setupParentData(RenderBox child) {
     if (child.parentData is! StackParentData) {
@@ -834,6 +836,8 @@ class _RenderTheatre extends RenderBox with ContainerRenderObjectMixin<RenderBox
 
   @override
   void performLayout() {
+    _hasVisualOverflow = false;
+
     if (_onstageChildCount == 0) {
       return;
     }
@@ -852,7 +856,7 @@ class _RenderTheatre extends RenderBox with ContainerRenderObjectMixin<RenderBox
         child.layout(nonPositionedConstraints, parentUsesSize: true);
         childParentData.offset = _resolvedAlignment!.alongOffset(size - child.size as Offset);
       } else {
-        RenderStack.layoutPositionedChild(child, childParentData, size, _resolvedAlignment!);
+        _hasVisualOverflow = RenderStack.layoutPositionedChild(child, childParentData, size, _resolvedAlignment!) || _hasVisualOverflow;
       }
 
       assert(child.parentData == childParentData);
@@ -894,7 +898,7 @@ class _RenderTheatre extends RenderBox with ContainerRenderObjectMixin<RenderBox
 
   @override
   void paint(PaintingContext context, Offset offset) {
-    if (clipBehavior != Clip.none) {
+    if (_hasVisualOverflow && clipBehavior != Clip.none) {
       _clipRectLayer.layer = context.pushClipRect(
         needsCompositing,
         offset,
@@ -935,7 +939,7 @@ class _RenderTheatre extends RenderBox with ContainerRenderObjectMixin<RenderBox
       case Clip.hardEdge:
       case Clip.antiAlias:
       case Clip.antiAliasWithSaveLayer:
-        return Offset.zero & size;
+        return _hasVisualOverflow ? Offset.zero & size : null;
     }
   }
 
diff --git a/packages/flutter/test/cupertino/action_sheet_test.dart b/packages/flutter/test/cupertino/action_sheet_test.dart
index 57e229d8b7..1b849c9903 100644
--- a/packages/flutter/test/cupertino/action_sheet_test.dart
+++ b/packages/flutter/test/cupertino/action_sheet_test.dart
@@ -952,7 +952,7 @@ void main() {
     );
 
     await tester.tap(find.text('Go'));
-    await tester.pumpAndSettle();
+    await tester.pump();
 
     expect(
       semantics,
diff --git a/packages/flutter/test/widgets/overlay_test.dart b/packages/flutter/test/widgets/overlay_test.dart
index f47a2c6511..98c3ba24b1 100644
--- a/packages/flutter/test/widgets/overlay_test.dart
+++ b/packages/flutter/test/widgets/overlay_test.dart
@@ -6,7 +6,6 @@ import 'package:flutter/foundation.dart';
 import 'package:flutter/widgets.dart';
 import 'package:flutter_test/flutter_test.dart';
 
-import '../rendering/mock_canvas.dart';
 import 'semantics_tester.dart';
 
 void main() {
@@ -1120,28 +1119,6 @@ void main() {
     }
   });
 
-  testWidgets('Overlay always applies clip', (WidgetTester tester) async {
-    await tester.pumpWidget(
-      Directionality(
-        textDirection: TextDirection.ltr,
-        child: Overlay(
-          initialEntries: <OverlayEntry>[
-            OverlayEntry(
-              builder: (BuildContext context) => Positioned(left: 10, right: 10, child: Container()),
-            ),
-          ],
-        ),
-      ),
-    );
-    final RenderObject renderObject = tester.renderObject(find.byType(Overlay));
-    // ignore: avoid_dynamic_calls
-    expect((renderObject as dynamic).paint, paints
-      ..save()
-      ..clipRect(rect: const Rect.fromLTWH(0.0, 0.0, 800.0, 600.0))
-      ..restore(),
-    );
-  });
-
   group('OverlayEntry listenable', () {
     final GlobalKey overlayKey = GlobalKey();
     final Widget emptyOverlay = Directionality(