diff --git a/packages/playwright-test/src/matchers/toMatchSnapshot.ts b/packages/playwright-test/src/matchers/toMatchSnapshot.ts
index 64802f0be99b6..a07897c75b61d 100644
--- a/packages/playwright-test/src/matchers/toMatchSnapshot.ts
+++ b/packages/playwright-test/src/matchers/toMatchSnapshot.ts
@@ -45,12 +45,15 @@ export function toMatchSnapshot(this: ReturnType<Expect['getState']>, received:
   // sanitizes path if string
   const pathSegments = Array.isArray(options.name) ? options.name : [addSuffixToFilePath(options.name, '', undefined, true)];
   const withNegateComparison = this.isNot;
+  let updateSnapshots = testInfo.config.updateSnapshots;
+  if (updateSnapshots === 'missing' && testInfo.retry < testInfo.project.retries)
+    updateSnapshots = 'none';
   const { pass, message, expectedPath, actualPath, diffPath, mimeType } = compare(
       received,
       pathSegments,
       testInfo.snapshotPath,
       testInfo.outputPath,
-      testInfo.retry < testInfo.project.retries ? 'none' : testInfo.config.updateSnapshots,
+      updateSnapshots,
       withNegateComparison,
       options
   );
diff --git a/tests/playwright-test/golden.spec.ts b/tests/playwright-test/golden.spec.ts
index 47b41684b104b..9526cceb991f3 100644
--- a/tests/playwright-test/golden.spec.ts
+++ b/tests/playwright-test/golden.spec.ts
@@ -655,6 +655,28 @@ test('should fail with missing expectations and retries', async ({ runInlineTest
   expect(data.toString()).toBe('Hello world');
 });
 
+test('should update expectations with retries', async ({ runInlineTest }, testInfo) => {
+  const result = await runInlineTest({
+    ...files,
+    'playwright.config.ts': `
+      module.exports = { retries: 1 };
+    `,
+    'a.spec.js': `
+      const { test } = require('./helper');
+      test('is a test', ({}) => {
+        expect('Hello world').toMatchSnapshot('snapshot.txt');
+      });
+    `
+  }, { 'update-snapshots': true });
+
+  expect(result.exitCode).toBe(0);
+  expect(result.passed).toBe(1);
+  const snapshotOutputPath = testInfo.outputPath('a.spec.js-snapshots/snapshot.txt');
+  expect(result.output).toContain(`${snapshotOutputPath} is missing in snapshots, writing actual`);
+  const data = fs.readFileSync(snapshotOutputPath);
+  expect(data.toString()).toBe('Hello world');
+});
+
 test('should allow comparing text with text without file extension', async ({ runInlineTest }) => {
   const result = await runInlineTest({
     ...files,