diff --git a/internal/libyaml/loader.go b/internal/libyaml/loader.go
index ab150ce7..f59eed84 100644
--- a/internal/libyaml/loader.go
+++ b/internal/libyaml/loader.go
@@ -139,6 +139,10 @@ func (l *Loader) Load(v any) (err error) {
 	// Stage 2: Resolve - determine implicit types for untagged scalars
 	l.resolver.Resolve(node)
 
+	// Propagate a snapshot of loader options onto every node so that Node.Decode called
+	// inside custom UnmarshalYAML implementations inherits settings like KnownFields
+	propagateLoadOptions(node, l.options)
+
 	// Stage 3: Construct - convert node tree to Go values
 	out := reflect.ValueOf(v)
 	if out.Kind() == reflect.Pointer && !out.IsNil() {
@@ -153,6 +157,24 @@ func (l *Loader) Load(v any) (err error) {
 	return nil
 }
 
+// propagateLoadOptions stamps n and every node reachable through Content with opts.
+// Alias pointers are not followed: in valid YAML, anchors are defined before
+// their aliases, so the anchor node is always reachable through n.Content traversal.
+func propagateLoadOptions(n *Node, opts *Options) {
+	if n == nil || opts == nil {
+		return
+	}
+	snapshot := *opts // pass a snapshot to avoid data race
+	propagateLoadOptionsRecursion(n, &snapshot)
+}
+
+func propagateLoadOptionsRecursion(n *Node, opts *Options) {
+	n.options = opts
+	for _, child := range n.Content {
+		propagateLoadOptionsRecursion(child, opts)
+	}
+}
+
 // loadAll loads all documents from the input into a slice.
 // The out parameter must be a non-nil pointer to a slice.
 // Each document is appended to the slice as an element.
@@ -262,6 +284,7 @@ func loadSingle(in []byte, out any, opts *Options) error {
 // This is used by the legacy Decoder.KnownFields() method.
 func (l *Loader) SetKnownFields(enable bool) {
 	l.constructor.KnownFields = enable
+	l.options.KnownFields = enable
 }
 
 // ComposeAndResolve composes and resolves the next document from the input
@@ -282,6 +305,10 @@ func (l *Loader) ComposeAndResolve() *Node {
 	// Stage 2: Resolve - determine implicit types for untagged scalars
 	l.resolver.Resolve(node)
 
+	// Propagate a snapshot of loader options onto every node so that Node.Decode called
+	// inside custom UnmarshalYAML implementations inherits settings like KnownFields
+	propagateLoadOptions(node, l.options)
+
 	return node
 }
 
diff --git a/internal/libyaml/loader_test.go b/internal/libyaml/loader_test.go
index 1ebe1351..80c00d20 100644
--- a/internal/libyaml/loader_test.go
+++ b/internal/libyaml/loader_test.go
@@ -275,3 +275,26 @@ func TestLoad_MultipleDocuments(t *testing.T) {
 	assert.NotNil(t, err)
 	assert.ErrorMatches(t, ".*expected single document, found multiple.*", err)
 }
+
+// TestComposeAndResolvePropagatesOptions tests that ComposeAndResolve propagates
+// a snapshot of the loader options onto the returned node tree so that
+// Node.Decode inside custom UnmarshalYAML implementations respects settings
+// like KnownFields.
+func TestComposeAndResolvePropagatesOptions(t *testing.T) {
+	type target struct {
+		Name string `yaml:"name"`
+	}
+
+	input := []byte("name: Alice\nunknown_field: oops\n")
+	loader, err := NewLoader(bytes.NewReader(input), WithKnownFields())
+	assert.NoError(t, err)
+
+	node := loader.ComposeAndResolve()
+	assert.NotNil(t, node)
+	assert.NotNil(t, node.options)
+
+	var v target
+	err = node.Decode(&v)
+	assert.NotNil(t, err)
+	assert.ErrorMatches(t, ".*unknown_field.*", err)
+}
diff --git a/internal/libyaml/node.go b/internal/libyaml/node.go
index 4fee73b3..36763110 100644
--- a/internal/libyaml/node.go
+++ b/internal/libyaml/node.go
@@ -189,9 +189,16 @@ type Node struct {
 
 	// Stream holds stream metadata (non-nil only when Kind == StreamNode).
 	Stream *Stream
+
+	// options is set by propagateLoadOptions when a Loader produces this node. It carries
+	// the loader options so that Decode can inherit them in custom UnmarshalYAML functions.
+	// Is typically nil for user-constructed nodes.
+	options *Options
 }
 
-// IsZero returns whether the node has all of its fields unset.
+// IsZero returns whether the node has all of its user-visible fields unset.
+// The unexported options field is intentionally excluded: it is set by loader
+// infrastructure and does not represent user-visible content.
 func (n *Node) IsZero() bool {
 	return n.Kind == 0 && n.Style == 0 && n.Tag == "" && n.Value == "" && n.Anchor == "" && n.Alias == nil && n.Content == nil &&
 		n.HeadComment == "" && n.LineComment == "" && n.FootComment == "" && n.Line == 0 && n.Column == 0 &&
@@ -280,8 +287,12 @@ func (n *Node) SetString(s string) {
 // See the documentation for Unmarshal for details about the
 // conversion of YAML into a Go value.
 func (n *Node) Decode(v any) (err error) {
-	d := NewConstructor(DefaultOptions)
 	defer handleErr(&err)
+	opts := DefaultOptions
+	if n.options != nil {
+		opts = n.options
+	}
+	d := NewConstructor(opts)
 	out := reflect.ValueOf(v)
 	if out.Kind() == reflect.Pointer && !out.IsNil() {
 		out = out.Elem()
@@ -296,8 +307,10 @@ func (n *Node) Decode(v any) (err error) {
 // Load decodes the node and stores its data into the value pointed to by v,
 // applying the given options.
 //
-// This method is useful when you need to preserve options like WithKnownFields()
-// inside custom UnmarshalYAML implementations.
+// Unlike Decode, Load does not inherit options from the loader that produced
+// this node; the caller must supply all required options explicitly.
+// This method is useful when you need explicit control over options like
+// WithKnownFields() inside custom UnmarshalYAML implementations.
 //
 // Maps and pointers (to a struct, string, int, etc) are accepted as v
 // values. If an internal pointer within a struct is not initialized,
diff --git a/node_test.go b/node_test.go
index 36c9af11..4a93f7e9 100644
--- a/node_test.go
+++ b/node_test.go
@@ -11,6 +11,7 @@ import (
 	"bytes"
 	"fmt"
 	"reflect"
+	"sync"
 	"testing"
 
 	"go.yaml.in/yaml/v4"
@@ -784,3 +785,157 @@ func TestNodeDumpInvalidOptions(t *testing.T) {
 	assert.NotNil(t, err)
 	assert.ErrorMatches(t, ".*indent must be.*", err)
 }
+
+type nodeDecodeTarget struct {
+	Name string `yaml:"name"`
+}
+
+func (t *nodeDecodeTarget) UnmarshalYAML(node *yaml.Node) error {
+	type plain nodeDecodeTarget
+	return node.Decode((*plain)(t))
+}
+
+type nodeDecodeChildInner struct {
+	Name string `yaml:"name"`
+}
+
+type nodeDecodeChildOuter struct {
+	Inner nodeDecodeChildInner
+}
+
+func (o *nodeDecodeChildOuter) UnmarshalYAML(node *yaml.Node) error {
+	for i := 0; i+1 < len(node.Content); i += 2 {
+		if node.Content[i].Value == "inner" {
+			return node.Content[i+1].Decode(&o.Inner)
+		}
+	}
+	return nil
+}
+
+func TestNodeDecodeInheritsKnownFields(t *testing.T) {
+	t.Run("known fields rejected", func(t *testing.T) {
+		input := "name: Alice\nunknown_field: oops\n"
+		var v nodeDecodeTarget
+		err := yaml.Load([]byte(input), &v, yaml.WithKnownFields())
+		assert.NotNil(t, err)
+		assert.ErrorMatches(t, ".*unknown_field.*", err)
+	})
+
+	t.Run("unknown fields ignored without option", func(t *testing.T) {
+		input := "name: Alice\nunknown_field: oops\n"
+		var v nodeDecodeTarget
+		err := yaml.Unmarshal([]byte(input), &v)
+		assert.NoError(t, err)
+		assert.Equal(t, "Alice", v.Name)
+	})
+
+	t.Run("user-constructed node uses default options", func(t *testing.T) {
+		node := &yaml.Node{
+			Kind: yaml.MappingNode,
+			Tag:  "!!map",
+			Content: []*yaml.Node{
+				{Kind: yaml.ScalarNode, Tag: "!!str", Value: "name"},
+				{Kind: yaml.ScalarNode, Tag: "!!str", Value: "Bob"},
+				{Kind: yaml.ScalarNode, Tag: "!!str", Value: "extra"},
+				{Kind: yaml.ScalarNode, Tag: "!!str", Value: "ignored"},
+			},
+		}
+		var v nodeDecodeChildInner
+		err := node.Decode(&v)
+		assert.NoError(t, err)
+		assert.Equal(t, "Bob", v.Name)
+	})
+
+	t.Run("child node inherits known fields", func(t *testing.T) {
+		input := "inner:\n  name: Carol\n  unknown_field: oops\n"
+		var v nodeDecodeChildOuter
+		err := yaml.Load([]byte(input), &v, yaml.WithKnownFields())
+		assert.NotNil(t, err)
+		assert.ErrorMatches(t, ".*unknown_field.*", err)
+	})
+
+	t.Run("known fields via decoder api", func(t *testing.T) {
+		input := "name: Alice\nunknown_field: oops\n"
+		var v nodeDecodeTarget
+		dec := yaml.NewDecoder(bytes.NewReader([]byte(input)))
+		dec.KnownFields(true)
+		err := dec.Decode(&v)
+		assert.NotNil(t, err)
+		assert.ErrorMatches(t, ".*unknown_field.*", err)
+	})
+
+	t.Run("known fields enforced on all documents", func(t *testing.T) {
+		input := "name: Alice\n---\nname: Bob\nunknown_field: oops\n"
+		dec := yaml.NewDecoder(bytes.NewReader([]byte(input)))
+		dec.KnownFields(true)
+
+		var v1 nodeDecodeTarget
+		err := dec.Decode(&v1)
+		assert.NoError(t, err)
+		assert.Equal(t, "Alice", v1.Name)
+
+		var v2 nodeDecodeTarget
+		err = dec.Decode(&v2)
+		assert.NotNil(t, err)
+		assert.ErrorMatches(t, ".*unknown_field.*", err)
+	})
+
+	t.Run("known fields can be disabled between documents", func(t *testing.T) {
+		input := "name: Alice\n---\nname: Bob\nunknown_field: ok\n"
+		dec := yaml.NewDecoder(bytes.NewReader([]byte(input)))
+		dec.KnownFields(true)
+
+		var v1 nodeDecodeTarget
+		err := dec.Decode(&v1)
+		assert.NoError(t, err)
+		assert.Equal(t, "Alice", v1.Name)
+
+		dec.KnownFields(false)
+
+		var v2 nodeDecodeTarget
+		err = dec.Decode(&v2)
+		assert.NoError(t, err)
+		assert.Equal(t, "Bob", v2.Name)
+	})
+}
+
+type raceDecodeTarget struct {
+	Name     string `yaml:"name"`
+	onDecode func()
+}
+
+func (t *raceDecodeTarget) UnmarshalYAML(node *yaml.Node) error {
+	if t.onDecode != nil {
+		t.onDecode()
+	}
+	type plain struct {
+		Name string `yaml:"name"`
+	}
+	var p plain
+	if err := node.Decode(&p); err != nil {
+		return err
+	}
+	t.Name = p.Name
+	return nil
+}
+
+// TestSetKnownFieldsRaceWithNodeDecode checks for a data race between Decoder.KnownFields()
+// and Node.Decode() inside UnmarshalYAML (run with '-race')
+func TestSetKnownFieldsRaceWithNodeDecode(t *testing.T) {
+	input := "name: Alice\n"
+	dec := yaml.NewDecoder(bytes.NewReader([]byte(input)))
+	dec.KnownFields(true)
+
+	var wg sync.WaitGroup
+	wg.Add(1)
+	v := &raceDecodeTarget{
+		onDecode: func() {
+			go func() {
+				defer wg.Done()
+				dec.KnownFields(false)
+			}()
+		},
+	}
+	_ = dec.Decode(v)
+	wg.Wait()
+}
diff --git a/yaml_bench_test.go b/yaml_bench_test.go
new file mode 100644
index 00000000..8131c5bf
--- /dev/null
+++ b/yaml_bench_test.go
@@ -0,0 +1,103 @@
+// Copyright 2025 The go-yaml Project Contributors
+// SPDX-License-Identifier: Apache-2.0
+
+package yaml_test
+
+import (
+	"bytes"
+	"fmt"
+	"strings"
+	"testing"
+
+	yaml "go.yaml.in/yaml/v4"
+)
+
+// benchPlain is a decode target with no custom UnmarshalYAML.
+type benchPlain struct {
+	Fields map[string]string `yaml:",inline"`
+}
+
+// benchCustom is a decode target whose UnmarshalYAML calls node.Decode —
+// the path that will inherit loader options after the tree-stamp fix.
+type benchCustom struct {
+	Fields map[string]string `yaml:",inline"`
+}
+
+func (b *benchCustom) UnmarshalYAML(node *yaml.Node) error {
+	type plain benchCustom
+	return node.Decode((*plain)(b))
+}
+
+func makeKVDoc(n int) []byte {
+	var sb strings.Builder
+	for i := 0; i < n; i++ {
+		fmt.Fprintf(&sb, "key%d: value%d\n", i, i)
+	}
+	return []byte(sb.String())
+}
+
+var (
+	benchSmallDoc  = makeKVDoc(10)
+	benchMediumDoc = makeKVDoc(100)
+	benchLargeDoc  = makeKVDoc(1000)
+)
+
+func BenchmarkDecode(b *testing.B) {
+	targets := []struct {
+		name   string
+		decode func(data []byte, known bool) error
+	}{
+		{
+			name: "plain",
+			decode: func(data []byte, known bool) error {
+				var v benchPlain
+				dec := yaml.NewDecoder(bytes.NewReader(data))
+				dec.KnownFields(known)
+				return dec.Decode(&v)
+			},
+		},
+		{
+			name: "custom",
+			decode: func(data []byte, known bool) error {
+				var v benchCustom
+				dec := yaml.NewDecoder(bytes.NewReader(data))
+				dec.KnownFields(known)
+				return dec.Decode(&v)
+			},
+		},
+	}
+
+	options := []struct {
+		name        string
+		knownFields bool
+	}{
+		{"default", false},
+		{"known-fields", true},
+	}
+
+	sizes := []struct {
+		name string
+		data []byte
+	}{
+		{"small", benchSmallDoc},
+		{"medium", benchMediumDoc},
+		{"large", benchLargeDoc},
+	}
+
+	for _, size := range sizes {
+		for _, target := range targets {
+			for _, opt := range options {
+				size, target, opt := size, target, opt
+				name := fmt.Sprintf("target=%s/option=%s/size=%s", target.name, opt.name, size.name)
+				b.Run(name, func(b *testing.B) {
+					b.ReportAllocs()
+					for i := 0; i < b.N; i++ {
+						if err := target.decode(size.data, opt.knownFields); err != nil {
+							b.Fatal(err)
+						}
+					}
+				})
+			}
+		}
+	}
+}