diff --git a/packages/block-editor/README.md b/packages/block-editor/README.md
index bb4dc1725bc3fa..1ac284320078a6 100644
--- a/packages/block-editor/README.md
+++ b/packages/block-editor/README.md
@@ -762,8 +762,10 @@ _Parameters_
 
 ### useSetting
 
-Hook that retrieves the editor setting.
-It works with nested objects using by finding the value at path.
+Hook that retrieves the given setting for the block instance in use.
+
+It looks up the settings first in the block instance hierarchy.
+If none is found, it'll look it up in the block editor store.
 
 _Usage_
 
diff --git a/packages/block-editor/src/components/use-setting/index.js b/packages/block-editor/src/components/use-setting/index.js
index db6f1e79507af7..bc8a496c9536df 100644
--- a/packages/block-editor/src/components/use-setting/index.js
+++ b/packages/block-editor/src/components/use-setting/index.js
@@ -7,7 +7,10 @@ import { get } from 'lodash';
  * WordPress dependencies
  */
 import { useSelect } from '@wordpress/data';
-import { __EXPERIMENTAL_PATHS_WITH_MERGE as PATHS_WITH_MERGE } from '@wordpress/blocks';
+import {
+	__EXPERIMENTAL_PATHS_WITH_MERGE as PATHS_WITH_MERGE,
+	hasBlockSupport,
+} from '@wordpress/blocks';
 
 /**
  * Internal dependencies
@@ -91,8 +94,10 @@ const removeCustomPrefixes = ( path ) => {
 };
 
 /**
- * Hook that retrieves the editor setting.
- * It works with nested objects using by finding the value at path.
+ * Hook that retrieves the given setting for the block instance in use.
+ *
+ * It looks up the settings first in the block instance hierarchy.
+ * If none is found, it'll look it up in the block editor store.
  *
  * @param {string} path The path to the setting.
  * @return {any} Returns the value defined for the setting.
@@ -113,41 +118,55 @@ export default function useSetting( path ) {
 				);
 				return undefined;
 			}
-			const settings = select( blockEditorStore ).getSettings();
 
-			// 0 - Use settings for this block instance, if there's any.
-			//     Also, look up in the block hierarchy.
-			// todo: only check if the block type has support for settings to minimize the queries we make
-			// todo: how do we provide i18n for the presets defined by block instances? In PHP, they already do i18n.
-			// todo: the presets defined in a block instance are "custom" ones;
-			// remove the need for users to provide the custom key.
-			const blockAtts = select( blockEditorStore ).getBlockAttributes(
-				clientId
-			);
-
-			// 1 - Use __experimental features, if available.
-			// We cascade to the all value if the block one is not available.
+			let result;
 			const normalizedPath = removeCustomPrefixes( path );
-			const defaultsPath = `__experimentalFeatures.${ normalizedPath }`;
-			const blockPath = `__experimentalFeatures.blocks.${ blockName }.${ normalizedPath }`;
-			const blockInstancePath = `settings.${ normalizedPath }`;
-			const experimentalFeaturesResult =
-				get( blockAtts, blockInstancePath ) ??
-				get( settings, blockPath ) ??
-				get( settings, defaultsPath );
-
-			if ( experimentalFeaturesResult !== undefined ) {
+
+			// 1. Take settings from the block instance or its ancestors.
+			const candidates = [
+				...select( blockEditorStore ).getBlockParents( clientId ),
+				clientId, // The current block is added last, so it overwrites any ancestor.
+			];
+			candidates.forEach( ( candidateClientId ) => {
+				const candidateBlockName = select(
+					blockEditorStore
+				).getBlockName( candidateClientId );
+				if (
+					hasBlockSupport( candidateBlockName, 'settings', false )
+				) {
+					const candidateAtts = select(
+						blockEditorStore
+					).getBlockAttributes( candidateClientId );
+					const candidateResult =
+						get(
+							candidateAtts,
+							`settings.blocks.${ blockName }.${ normalizedPath }`
+						) ??
+						get( candidateAtts, `settings.${ normalizedPath }` );
+					if ( candidateResult !== undefined ) {
+						result = candidateResult;
+					}
+				}
+			} );
+
+			// 2. Fall back to the settings from the block editor store (__experimentalFeatures).
+			const settings = select( blockEditorStore ).getSettings();
+			if ( result === undefined ) {
+				const defaultsPath = `__experimentalFeatures.${ normalizedPath }`;
+				const blockPath = `__experimentalFeatures.blocks.${ blockName }.${ normalizedPath }`;
+				result =
+					get( settings, blockPath ) ?? get( settings, defaultsPath );
+			}
+
+			// Return if the setting was found in either the block instance or the store.
+			if ( result !== undefined ) {
 				if ( PATHS_WITH_MERGE[ normalizedPath ] ) {
-					return (
-						experimentalFeaturesResult.custom ??
-						experimentalFeaturesResult.theme ??
-						experimentalFeaturesResult.default
-					);
+					return result.custom ?? result.theme ?? result.default;
 				}
-				return experimentalFeaturesResult;
+				return result;
 			}
 
-			// 2 - Use deprecated settings, otherwise.
+			// 3. Otherwise, use deprecated settings.
 			const deprecatedSettingsValue = deprecatedFlags[ normalizedPath ]
 				? deprecatedFlags[ normalizedPath ]( settings )
 				: undefined;
@@ -155,13 +174,13 @@ export default function useSetting( path ) {
 				return deprecatedSettingsValue;
 			}
 
-			// 3 - Fall back for typography.dropCap:
+			// 4. Fallback for typography.dropCap:
 			// This is only necessary to support typography.dropCap.
 			// when __experimentalFeatures are not present (core without plugin).
 			// To remove when __experimentalFeatures are ported to core.
 			return normalizedPath === 'typography.dropCap' ? true : undefined;
 		},
-		[ blockName, path ]
+		[ blockName, clientId, path ]
 	);
 
 	return setting;