diff --git a/packages/nuxt/src/module.ts b/packages/nuxt/src/module.ts
index a7e81a49d045..377508e860a2 100644
--- a/packages/nuxt/src/module.ts
+++ b/packages/nuxt/src/module.ts
@@ -35,7 +35,7 @@ export default defineNuxtModule<ModuleOptions>({
     const moduleDirResolver = createResolver(import.meta.url);
     const buildDirResolver = createResolver(nuxt.options.buildDir);
 
-    const clientConfigFile = findDefaultSdkInitFile('client');
+    const clientConfigFile = findDefaultSdkInitFile('client', nuxt);
 
     if (clientConfigFile) {
       // Inject the client-side Sentry config file with a side effect import
@@ -59,7 +59,7 @@ export default defineNuxtModule<ModuleOptions>({
       addPlugin({ src: moduleDirResolver.resolve('./runtime/plugins/sentry.client'), mode: 'client' });
     }
 
-    const serverConfigFile = findDefaultSdkInitFile('server');
+    const serverConfigFile = findDefaultSdkInitFile('server', nuxt);
 
     if (serverConfigFile) {
       addServerPlugin(moduleDirResolver.resolve('./runtime/plugins/sentry.server'));
diff --git a/packages/nuxt/src/vite/utils.ts b/packages/nuxt/src/vite/utils.ts
index ea2db2bc21b8..f1ef1c9e4cf2 100644
--- a/packages/nuxt/src/vite/utils.ts
+++ b/packages/nuxt/src/vite/utils.ts
@@ -1,29 +1,49 @@
 import { consoleSandbox } from '@sentry/core';
 import * as fs from 'fs';
+import type { Nuxt } from 'nuxt/schema';
 import * as path from 'path';
 
 /**
  *  Find the default SDK init file for the given type (client or server).
  *  The sentry.server.config file is prioritized over the instrument.server file.
  */
-export function findDefaultSdkInitFile(type: 'server' | 'client'): string | undefined {
+export function findDefaultSdkInitFile(type: 'server' | 'client', nuxt?: Nuxt): string | undefined {
   const possibleFileExtensions = ['ts', 'js', 'mjs', 'cjs', 'mts', 'cts'];
-  const cwd = process.cwd();
+  const relativePaths: string[] = [];
 
-  const filePaths: string[] = [];
   if (type === 'server') {
     for (const ext of possibleFileExtensions) {
-      // order is important here - we want to prioritize the server.config file
-      filePaths.push(path.join(cwd, `sentry.${type}.config.${ext}`));
-      filePaths.push(path.join(cwd, 'public', `instrument.${type}.${ext}`));
+      relativePaths.push(`sentry.${type}.config.${ext}`);
+      relativePaths.push(path.join('public', `instrument.${type}.${ext}`));
     }
   } else {
     for (const ext of possibleFileExtensions) {
-      filePaths.push(path.join(cwd, `sentry.${type}.config.${ext}`));
+      relativePaths.push(`sentry.${type}.config.${ext}`);
+    }
+  }
+
+  // Get layers from highest priority to lowest
+  const layers = [...(nuxt?.options._layers ?? [])].reverse();
+
+  for (const layer of layers) {
+    for (const relativePath of relativePaths) {
+      const fullPath = path.resolve(layer.cwd, relativePath);
+      if (fs.existsSync(fullPath)) {
+        return fullPath;
+      }
+    }
+  }
+
+  // As a fallback, also check CWD (left for pure compatibility)
+  const cwd = process.cwd();
+  for (const relativePath of relativePaths) {
+    const fullPath = path.resolve(cwd, relativePath);
+    if (fs.existsSync(fullPath)) {
+      return fullPath;
     }
   }
 
-  return filePaths.find(filename => fs.existsSync(filename));
+  return undefined;
 }
 
 /**
diff --git a/packages/nuxt/test/vite/utils.test.ts b/packages/nuxt/test/vite/utils.test.ts
index 7ffd7654549e..f19ec98b4b64 100644
--- a/packages/nuxt/test/vite/utils.test.ts
+++ b/packages/nuxt/test/vite/utils.test.ts
@@ -1,4 +1,5 @@
 import * as fs from 'fs';
+import type { Nuxt } from 'nuxt/schema';
 import { afterEach, describe, expect, it, vi } from 'vitest';
 import {
   constructFunctionReExport,
@@ -69,6 +70,75 @@ describe('findDefaultSdkInitFile', () => {
     const result = findDefaultSdkInitFile('server');
     expect(result).toMatch('packages/nuxt/sentry.server.config.js');
   });
+
+  it('should return the latest layer config file path if client config exists', () => {
+    vi.spyOn(fs, 'existsSync').mockImplementation(filePath => {
+      return !(filePath instanceof URL) && filePath.includes('sentry.client.config.ts');
+    });
+
+    const nuxtMock = {
+      options: {
+        _layers: [
+          {
+            cwd: 'packages/nuxt/module',
+          },
+          {
+            cwd: 'packages/nuxt',
+          },
+        ],
+      },
+    } as Nuxt;
+
+    const result = findDefaultSdkInitFile('client', nuxtMock);
+    expect(result).toMatch('packages/nuxt/sentry.client.config.ts');
+  });
+
+  it('should return the latest layer config file path if server config exists', () => {
+    vi.spyOn(fs, 'existsSync').mockImplementation(filePath => {
+      return (
+        !(filePath instanceof URL) &&
+        (filePath.includes('sentry.server.config.ts') || filePath.includes('instrument.server.ts'))
+      );
+    });
+
+    const nuxtMock = {
+      options: {
+        _layers: [
+          {
+            cwd: 'packages/nuxt/module',
+          },
+          {
+            cwd: 'packages/nuxt',
+          },
+        ],
+      },
+    } as Nuxt;
+
+    const result = findDefaultSdkInitFile('server', nuxtMock);
+    expect(result).toMatch('packages/nuxt/sentry.server.config.ts');
+  });
+
+  it('should return the latest layer config file path if client config exists in former layer', () => {
+    vi.spyOn(fs, 'existsSync').mockImplementation(filePath => {
+      return !(filePath instanceof URL) && filePath.includes('nuxt/sentry.client.config.ts');
+    });
+
+    const nuxtMock = {
+      options: {
+        _layers: [
+          {
+            cwd: 'packages/nuxt/module',
+          },
+          {
+            cwd: 'packages/nuxt',
+          },
+        ],
+      },
+    } as Nuxt;
+
+    const result = findDefaultSdkInitFile('client', nuxtMock);
+    expect(result).toMatch('packages/nuxt/sentry.client.config.ts');
+  });
 });
 
 describe('getFilenameFromPath', () => {