diff --git a/gradle.properties b/gradle.properties
index e214b2cd6..6ef51c057 100644
--- a/gradle.properties
+++ b/gradle.properties
@@ -5,6 +5,7 @@ kotlin.stdlib.default.dependency=false
 org.gradle.caching=true
 org.gradle.configuration-cache=true
 org.gradle.configuration-cache.parallel=true
+org.gradle.isolated-projects=true
 org.gradle.jvmargs=-Dfile.encoding=UTF-8 -Xmx4g
 org.gradle.kotlin.dsl.allWarningsAsErrors=true
 org.gradle.tooling.parallel=true
diff --git a/gradle/wrapper/gradle-wrapper.jar b/gradle/wrapper/gradle-wrapper.jar
index b1b8ef56b..eddabd2ee 100644
Binary files a/gradle/wrapper/gradle-wrapper.jar and b/gradle/wrapper/gradle-wrapper.jar differ
diff --git a/gradle/wrapper/gradle-wrapper.properties b/gradle/wrapper/gradle-wrapper.properties
index a9db11550..9367079c9 100644
--- a/gradle/wrapper/gradle-wrapper.properties
+++ b/gradle/wrapper/gradle-wrapper.properties
@@ -1,6 +1,6 @@
 distributionBase=GRADLE_USER_HOME
 distributionPath=wrapper/dists
-distributionUrl=https\://services.gradle.org/distributions/gradle-9.6.1-bin.zip
+distributionUrl=https\://services.gradle.org/distributions/gradle-9.7.0-rc-1-bin.zip
 networkTimeout=10000
 retries=0
 retryBackOffMs=500
diff --git a/src/testKit/kotlin/com/github/jengelman/gradle/plugins/shadow/testkit/GradleRunner.kt b/src/testKit/kotlin/com/github/jengelman/gradle/plugins/shadow/testkit/GradleRunner.kt
index 2106f2050..20bae39c6 100644
--- a/src/testKit/kotlin/com/github/jengelman/gradle/plugins/shadow/testkit/GradleRunner.kt
+++ b/src/testKit/kotlin/com/github/jengelman/gradle/plugins/shadow/testkit/GradleRunner.kt
@@ -28,6 +28,15 @@ val enableNoImplicitLookupInParentProjects: String
       else -> ""
     }
 
+// TODO: this could be inlined after bumping the min Gradle requirement to 9.7 or above.
+private val isolatedProjectsFlag: String
+  get() =
+    when {
+      GradleVersion.version(testGradleVersion) >= GradleVersion.version("9.7.0-rc-1") ->
+        "--isolated-projects"
+      else -> "-Dorg.gradle.unsafe.isolated-projects=true"
+    }
+
 val commonGradleArgs =
   setOf(
     "--configuration-cache",
@@ -36,7 +45,7 @@ val commonGradleArgs =
     // https://docs.gradle.org/current/userguide/configuration_cache.html#config_cache:usage:parallel
     "-Dorg.gradle.configuration-cache.parallel=true",
     // https://docs.gradle.org/current/userguide/isolated_projects.html#how_do_i_use_it
-    "-Dorg.gradle.unsafe.isolated-projects=true",
+    isolatedProjectsFlag,
   )
 
 fun gradleRunner(