diff --git a/.changeset/itchy-bulldogs-dance.md b/.changeset/itchy-bulldogs-dance.md
new file mode 100644
index 0000000000..a5123c0c27
--- /dev/null
+++ b/.changeset/itchy-bulldogs-dance.md
@@ -0,0 +1,5 @@
+---
+'@backstage/plugin-catalog-react': patch
+---
+
+Fix bug with filter resetting based on user ownership
diff --git a/plugins/catalog-react/src/components/UserListPicker/UserListPicker.test.tsx b/plugins/catalog-react/src/components/UserListPicker/UserListPicker.test.tsx
index f6a4c59374..a032d8fc46 100644
--- a/plugins/catalog-react/src/components/UserListPicker/UserListPicker.test.tsx
+++ b/plugins/catalog-react/src/components/UserListPicker/UserListPicker.test.tsx
@@ -69,8 +69,9 @@ const apis = TestApiRegistry.from(
   [storageApiRef, MockStorageApi.create()],
 );
 
-const mockIsOwnedEntity = (entity: Entity) =>
-  entity.metadata.name === 'component-1';
+const mockIsOwnedEntity = jest.fn(
+  (entity: Entity) => entity.metadata.name === 'component-1',
+);
 
 const mockIsStarredEntity = (entity: Entity) =>
   entity.metadata.name === 'component-3';
@@ -250,4 +251,82 @@ describe('<UserListPicker />', () => {
       ),
     });
   });
+
+  describe('filter resetting', () => {
+    let updateFilters: jest.Mock;
+
+    const picker = ({ loading }: { loading: boolean }) => (
+      <ApiProvider apis={apis}>
+        <MockEntityListContextProvider
+          value={{ backendEntities, updateFilters, loading }}
+        >
+          <UserListPicker initialFilter="owned" />
+        </MockEntityListContextProvider>
+      </ApiProvider>
+    );
+
+    beforeEach(() => {
+      updateFilters = jest.fn();
+    });
+
+    describe('when the user does not own any entities', () => {
+      beforeEach(() => {
+        mockIsOwnedEntity.mockReturnValue(false);
+      });
+
+      it('does not reset the filter while entities are loading', () => {
+        render(picker({ loading: true }));
+
+        expect(updateFilters).not.toHaveBeenCalledWith({
+          user: new UserListFilter(
+            'all',
+            mockIsOwnedEntity,
+            mockIsStarredEntity,
+          ),
+        });
+      });
+
+      it('resets the filter to "all" when entities are loaded', () => {
+        render(picker({ loading: false }));
+
+        expect(updateFilters).toHaveBeenLastCalledWith({
+          user: new UserListFilter(
+            'all',
+            mockIsOwnedEntity,
+            mockIsStarredEntity,
+          ),
+        });
+      });
+    });
+
+    describe('when the user owns entities', () => {
+      beforeEach(() => {
+        mockIsOwnedEntity.mockReturnValue(true);
+      });
+
+      it('does not reset the filter while entities are loading', () => {
+        render(picker({ loading: true }));
+
+        expect(updateFilters).not.toHaveBeenCalledWith({
+          user: new UserListFilter(
+            'all',
+            mockIsOwnedEntity,
+            mockIsStarredEntity,
+          ),
+        });
+      });
+
+      it('does not reset the filter when entities are loaded', () => {
+        render(picker({ loading: false }));
+
+        expect(updateFilters).toHaveBeenLastCalledWith({
+          user: new UserListFilter(
+            'owned',
+            mockIsOwnedEntity,
+            mockIsStarredEntity,
+          ),
+        });
+      });
+    });
+  });
 });
diff --git a/plugins/catalog-react/src/components/UserListPicker/UserListPicker.tsx b/plugins/catalog-react/src/components/UserListPicker/UserListPicker.tsx
index 8746752b08..dcad74f760 100644
--- a/plugins/catalog-react/src/components/UserListPicker/UserListPicker.tsx
+++ b/plugins/catalog-react/src/components/UserListPicker/UserListPicker.tsx
@@ -130,7 +130,7 @@ export const UserListPicker = ({
   const classes = useStyles();
   const configApi = useApi(configApiRef);
   const orgName = configApi.getOptionalString('organization.name') ?? 'Company';
-  const { filters, updateFilters, backendEntities, queryParameters } =
+  const { filters, updateFilters, backendEntities, queryParameters, loading } =
     useEntityListProvider();
 
   // Remove group items that aren't in availableFilters and exclude
@@ -161,19 +161,36 @@ export const UserListPicker = ({
     [isOwnedEntity, isStarredEntity],
   );
 
+  const [selectedUserFilter, setSelectedUserFilter] = useState(
+    [queryParameters.user].flat()[0] ?? initialFilter,
+  );
+
   // To show proper counts for each section, apply all other frontend filters _except_ the user
   // filter that's controlled by this picker.
-  const [entitiesWithoutUserFilter, setEntitiesWithoutUserFilter] =
-    useState(backendEntities);
-  const totalOwnedUserEntities = entitiesWithoutUserFilter.filter(entity =>
-    ownedFilter.filterEntity(entity),
-  ).length;
-  const [selectedUserFilter, setSelectedUserFilter] = useState(
-    totalOwnedUserEntities > 0
-      ? [queryParameters.user].flat()[0] ?? initialFilter
-      : 'all',
+  const entitiesWithoutUserFilter = useMemo(
+    () =>
+      backendEntities.filter(
+        reduceEntityFilters(
+          compact(Object.values({ ...filters, user: undefined })),
+        ),
+      ),
+    [filters, backendEntities],
   );
 
+  const totalOwnedUserEntities = useMemo(
+    () =>
+      entitiesWithoutUserFilter.filter(entity =>
+        ownedFilter.filterEntity(entity),
+      ).length,
+    [entitiesWithoutUserFilter, ownedFilter],
+  );
+
+  useEffect(() => {
+    if (!loading && totalOwnedUserEntities === 0) {
+      setSelectedUserFilter('all');
+    }
+  }, [loading, totalOwnedUserEntities, setSelectedUserFilter]);
+
   useEffect(() => {
     updateFilters({
       user: selectedUserFilter
@@ -186,13 +203,6 @@ export const UserListPicker = ({
     });
   }, [selectedUserFilter, isOwnedEntity, isStarredEntity, updateFilters]);
 
-  useEffect(() => {
-    const filterFn = reduceEntityFilters(
-      compact(Object.values({ ...filters, user: undefined })),
-    );
-    setEntitiesWithoutUserFilter(backendEntities.filter(filterFn));
-  }, [filters, backendEntities]);
-
   function getFilterCount(id: UserListFilterKind) {
     switch (id) {
       case 'owned':