diff --git a/packages/router-core/src/new-process-route-tree.ts b/packages/router-core/src/new-process-route-tree.ts
index 2dcaceebd35..f6397275e80 100644
--- a/packages/router-core/src/new-process-route-tree.ts
+++ b/packages/router-core/src/new-process-route-tree.ts
@@ -846,6 +846,13 @@ function findMatch<T extends RouteLike>(
   }
 }
 
+type ParamExtractionState = {
+  part: number
+  node: number
+  path: number
+  segment: number
+}
+
 /**
  * This function is "resumable":
  * - the `leaf` input can contain `extract` and `rawParams` properties from a previous `extractParams` call
@@ -859,27 +866,42 @@ function extractParams<T extends RouteLike>(
   leaf: {
     node: AnySegmentNode<T>
     skipped: number
-    extract?: { part: number; node: number; path: number }
+    extract?: ParamExtractionState
     rawParams?: Record<string, string>
   },
-): [
-  rawParams: Record<string, string>,
-  state: { part: number; node: number; path: number },
-] {
+): [rawParams: Record<string, string>, state: ParamExtractionState] {
   const list = buildBranch(leaf.node)
   let nodeParts: Array<string> | null = null
   const rawParams: Record<string, string> = {}
+  /** which segment of the path we're currently processing */
   let partIndex = leaf.extract?.part ?? 0
+  /** which node of the route tree branch we're currently processing */
   let nodeIndex = leaf.extract?.node ?? 0
+  /** index of the 1st character of the segment we're processing in the path string */
   let pathIndex = leaf.extract?.path ?? 0
-  for (; nodeIndex < list.length; partIndex++, nodeIndex++, pathIndex++) {
+  /** which fullPath segment we're currently processing */
+  let segmentCount = leaf.extract?.segment ?? 0
+  for (
+    ;
+    nodeIndex < list.length;
+    partIndex++, nodeIndex++, pathIndex++, segmentCount++
+  ) {
     const node = list[nodeIndex]!
+    // index nodes are terminating nodes, nothing to extract, just leave
+    if (node.kind === SEGMENT_TYPE_INDEX) break
+    // pathless nodes do not consume a path segment
+    if (node.kind === SEGMENT_TYPE_PATHLESS) {
+      segmentCount--
+      partIndex--
+      pathIndex--
+      continue
+    }
     const part = parts[partIndex]
     const currentPathIndex = pathIndex
     if (part) pathIndex += part.length
     if (node.kind === SEGMENT_TYPE_PARAM) {
       nodeParts ??= leaf.node.fullPath.split('/')
-      const nodePart = nodeParts[nodeIndex]!
+      const nodePart = nodeParts[segmentCount]!
       const preLength = node.prefix?.length ?? 0
       // we can't rely on the presence of prefix/suffix to know whether it's curly-braced or not, because `/{$param}/` is valid, but has no prefix/suffix
       const isCurlyBraced = nodePart.charCodeAt(preLength) === 123 // '{'
@@ -903,7 +925,7 @@ function extractParams<T extends RouteLike>(
         continue
       }
       nodeParts ??= leaf.node.fullPath.split('/')
-      const nodePart = nodeParts[nodeIndex]!
+      const nodePart = nodeParts[segmentCount]!
       const preLength = node.prefix?.length ?? 0
       const sufLength = node.suffix?.length ?? 0
       const name = nodePart.substring(
@@ -929,7 +951,15 @@ function extractParams<T extends RouteLike>(
     }
   }
   if (leaf.rawParams) Object.assign(rawParams, leaf.rawParams)
-  return [rawParams, { part: partIndex, node: nodeIndex, path: pathIndex }]
+  return [
+    rawParams,
+    {
+      part: partIndex,
+      node: nodeIndex,
+      path: pathIndex,
+      segment: segmentCount,
+    },
+  ]
 }
 
 function buildRouteBranch<T extends RouteLike>(route: T) {
@@ -968,7 +998,7 @@ type MatchStackFrame<T extends RouteLike> = {
   dynamics: number
   optionals: number
   /** intermediary state for param extraction */
-  extract?: { part: number; node: number; path: number }
+  extract?: ParamExtractionState
   /** intermediary params from param extraction */
   rawParams?: Record<string, string>
   parsedParams?: Record<string, unknown>
diff --git a/packages/router-core/tests/new-process-route-tree.test.ts b/packages/router-core/tests/new-process-route-tree.test.ts
index 6c2007cd0ec..936df988c14 100644
--- a/packages/router-core/tests/new-process-route-tree.test.ts
+++ b/packages/router-core/tests/new-process-route-tree.test.ts
@@ -1109,6 +1109,83 @@ describe('findRouteMatch', () => {
         }
       `)
     })
+    it('does not consume a path segment during param extraction', () => {
+      const tree = {
+        id: '__root__',
+        isRoot: true,
+        fullPath: '/',
+        path: '/',
+        children: [
+          {
+            id: '/$foo/_layout',
+            fullPath: '/$foo',
+            path: '$foo',
+            options: {
+              params: {
+                parse: (params: Record<string, string>) => params,
+              },
+              // force the creation of a pathless node
+              skipRouteOnParseError: { params: true },
+            },
+            children: [
+              {
+                id: '/$foo/_layout/$bar',
+                fullPath: '/$foo/$bar',
+                path: '$bar',
+                options: {},
+              },
+            ],
+          },
+        ],
+      }
+      const { processedTree } = processRouteTree(tree)
+      const result = findRouteMatch('/abc/def', processedTree)
+      expect(result?.route.id).toBe('/$foo/_layout/$bar')
+      expect(result?.rawParams).toEqual({ foo: 'abc', bar: 'def' })
+    })
+    it('skipped optional uses the correct node index with pathless nodes', () => {
+      const tree = {
+        id: '__root__',
+        isRoot: true,
+        fullPath: '/',
+        path: '/',
+        children: [
+          {
+            id: '/one_{-$foo}/_layout',
+            fullPath: '/one_{-$foo}',
+            path: 'one_{-$foo}',
+            options: {
+              params: {
+                parse: (params: Record<string, string>) => params,
+              },
+              // force the creation of a pathless node
+              skipRouteOnParseError: { params: true },
+            },
+            children: [
+              {
+                id: '/one_{-$foo}/_layout/two_{-$bar}/baz',
+                fullPath: '/one_{-$foo}/two_{-$bar}/baz',
+                path: 'two_{-$bar}/baz',
+                options: {},
+              },
+            ],
+          },
+        ],
+      }
+      const { processedTree } = processRouteTree(tree)
+      // match first, skip second
+      {
+        const result = findRouteMatch('/one_value/baz', processedTree)
+        expect(result?.route.id).toBe('/one_{-$foo}/_layout/two_{-$bar}/baz')
+        expect(result?.rawParams).toEqual({ foo: 'value' })
+      }
+      // skip first, match second
+      {
+        const result = findRouteMatch('/two_value/baz', processedTree)
+        expect(result?.route.id).toBe('/one_{-$foo}/_layout/two_{-$bar}/baz')
+        expect(result?.rawParams).toEqual({ bar: 'value' })
+      }
+    })
   })
 })