diff --git a/Source/Editor/CustomEditors/Editors/AssetRefEditor.cs b/Source/Editor/CustomEditors/Editors/AssetRefEditor.cs
index 88f916ae4..e89c80372 100644
--- a/Source/Editor/CustomEditors/Editors/AssetRefEditor.cs
+++ b/Source/Editor/CustomEditors/Editors/AssetRefEditor.cs
@@ -38,6 +38,7 @@ namespace FlaxEditor.CustomEditors.Editors
         /// </summary>
         public AssetPicker Picker;
 
+        private bool _isRefreshing;
         private ScriptType _valueType;
 
         /// <inheritdoc />
@@ -89,6 +90,8 @@ namespace FlaxEditor.CustomEditors.Editors
 
         private void OnSelectedItemChanged()
         {
+            if (_isRefreshing)
+                return;
             if (typeof(AssetItem).IsAssignableFrom(_valueType.Type))
                 SetValue(Picker.SelectedItem);
             else if (_valueType.Type == typeof(Guid))
@@ -108,6 +111,7 @@ namespace FlaxEditor.CustomEditors.Editors
 
             if (!HasDifferentValues)
             {
+                _isRefreshing = true;
                 if (Values[0] is AssetItem assetItem)
                     Picker.SelectedItem = assetItem;
                 else if (Values[0] is Guid guid)
@@ -118,6 +122,7 @@ namespace FlaxEditor.CustomEditors.Editors
                     Picker.SelectedPath = path;
                 else
                     Picker.SelectedAsset = Values[0] as Asset;
+                _isRefreshing = false;
             }
         }
     }
diff --git a/Source/Editor/CustomEditors/Editors/ModelInstanceEntryEditor.cs b/Source/Editor/CustomEditors/Editors/ModelInstanceEntryEditor.cs
index 1f04115de..277f9ecb0 100644
--- a/Source/Editor/CustomEditors/Editors/ModelInstanceEntryEditor.cs
+++ b/Source/Editor/CustomEditors/Editors/ModelInstanceEntryEditor.cs
@@ -15,7 +15,11 @@ namespace FlaxEditor.CustomEditors.Editors
     {
         private GroupElement _group;
         private bool _updateName;
+        private int _entryIndex;
+        private bool _isRefreshing;
         private MaterialBase _material;
+        private ModelInstanceActor _modelInstance;
+        private AssetRefEditor _materialEditor;
 
         /// <inheritdoc />
         public override void Initialize(LayoutElementsContainer layout)
@@ -32,58 +36,75 @@ namespace FlaxEditor.CustomEditors.Editors
             materialLabel.TooltipText = "The mesh surface material used for the rendering.";
             if (ParentEditor.ParentEditor?.Values[0] is ModelInstanceActor modelInstance)
             {
-                // Ensure that entry with default material set is set back to null
-                var defaultValue = GPUDevice.Instance.DefaultMaterial;
+                _entryIndex = entryIndex;
+                _modelInstance = modelInstance;
+                var slots = modelInstance.MaterialSlots;
+                if (entry.Material == slots[entryIndex].Material)
                 {
-                    var slots = modelInstance.MaterialSlots;
-                    if (entry.Material == slots[entryIndex].Material)
-                    {
-                        modelInstance.SetMaterial(entryIndex, null);
-                    }
-                    _material = modelInstance.GetMaterial(entryIndex);
-                    if (slots[entryIndex].Material)
-                    {
-                        defaultValue = slots[entryIndex].Material;
-                    }
+                    // Ensure that entry with default material set is set back to null
+                    modelInstance.SetMaterial(entryIndex, null);
+                }
+                _material = modelInstance.GetMaterial(entryIndex);
+                var defaultValue = GPUDevice.Instance.DefaultMaterial;
+                if (slots[entryIndex].Material)
+                {
+                    // Use default value set on asset (eg. Model Asset)
+                    defaultValue = slots[entryIndex].Material;
                 }
 
-                var matContainer = new CustomValueContainer(new ScriptType(typeof(MaterialBase)), _material, (instance, index) => _material, (instance, index, value) => _material = value as MaterialBase);
-                var materialEditor = (AssetRefEditor)_group.Property(materialLabel, matContainer);
+                // Create material picker
+                var materialValue = new CustomValueContainer(new ScriptType(typeof(MaterialBase)), _material, (instance, index) => _material, (instance, index, value) => _material = value as MaterialBase);
+                var materialEditor = (AssetRefEditor)_group.Property(materialLabel, materialValue);
                 materialEditor.Values.SetDefaultValue(defaultValue);
                 materialEditor.RefreshDefaultValue();
-                materialEditor.Picker.SelectedItemChanged += () =>
-                {
-                    var slots = modelInstance.MaterialSlots;
-                    var material = materialEditor.Picker.SelectedAsset as MaterialBase;
-                    var defaultMaterial = GPUDevice.Instance.DefaultMaterial;
-                    if (!material)
-                    {
-                        modelInstance.SetMaterial(entryIndex, defaultMaterial);
-                        materialEditor.Picker.SelectedAsset = defaultMaterial;
-                    }
-                    else if (material == slots[entryIndex].Material)
-                    {
-                        modelInstance.SetMaterial(entryIndex, null);
-                    }
-                    else if (material == defaultMaterial && !slots[entryIndex].Material)
-                    {
-                        modelInstance.SetMaterial(entryIndex, null);
-                    }
-                    else
-                    {
-                        modelInstance.SetMaterial(entryIndex, material);
-                    }
-                };
+                materialEditor.Picker.SelectedItemChanged += OnSelectedMaterialChanged;
+                _materialEditor = materialEditor;
             }
 
             base.Initialize(group);
         }
 
+        private void OnSelectedMaterialChanged()
+        {
+            if (_isRefreshing)
+                return;
+            _isRefreshing = true;
+            var slots = _modelInstance.MaterialSlots;
+            var material = _materialEditor.Picker.SelectedAsset as MaterialBase;
+            var defaultMaterial = GPUDevice.Instance.DefaultMaterial;
+            var value = (ModelInstanceEntry)Values[0];
+            var prevMaterial = value.Material;
+            if (!material)
+            {
+                // Fallback to default material
+                _materialEditor.Picker.SelectedAsset = defaultMaterial;
+                value.Material = defaultMaterial;
+            }
+            else if (material == slots[_entryIndex].Material)
+            {
+                // Asset default material
+                value.Material = null;
+            }
+            else if (material == defaultMaterial && !slots[_entryIndex].Material)
+            {
+                // Default material while asset has no set as well
+                value.Material = null;
+            }
+            else
+            {
+                // Custom material
+                value.Material = material;
+            }
+            if (prevMaterial != value.Material)
+                SetValue(value);
+            _isRefreshing = false;
+        }
+
         /// <inheritdoc />
         protected override void SpawnProperty(LayoutElementsContainer itemLayout, ValueContainer itemValues, ItemInfo item)
         {
             // Skip material member as it is overridden
-            if (item.Info.Name == "Material")
+            if (item.Info.Name == "Material" && _materialEditor != null)
                 return;
             base.SpawnProperty(itemLayout, itemValues, item);
         }
@@ -91,6 +112,7 @@ namespace FlaxEditor.CustomEditors.Editors
         /// <inheritdoc />
         public override void Refresh()
         {
+            // Update panel title to match material slot name
             if (_updateName &&
                 _group != null &&
                 ParentEditor?.ParentEditor != null &&
@@ -102,13 +124,26 @@ namespace FlaxEditor.CustomEditors.Editors
                     var slots = modelInstance.MaterialSlots;
                     if (slots != null && slots.Length > entryIndex)
                     {
-                        _group.Panel.HeaderText = "Entry " + slots[entryIndex].Name;
                         _updateName = false;
+                        _group.Panel.HeaderText = "Entry " + slots[entryIndex].Name;
                     }
                 }
             }
 
+            // Refresh currently selected material
+            _material = _modelInstance.GetMaterial(_entryIndex);
+
             base.Refresh();
         }
+
+        /// <inheritdoc />
+        protected override void Deinitialize()
+        {
+            _material = null;
+            _modelInstance = null;
+            _materialEditor = null;
+
+            base.Deinitialize();
+        }
     }
 }