diff --git a/changelogs/fragments/84578-dnf5-is_installed-provides.yml b/changelogs/fragments/84578-dnf5-is_installed-provides.yml
new file mode 100644
index 00000000000..f2760356099
--- /dev/null
+++ b/changelogs/fragments/84578-dnf5-is_installed-provides.yml
@@ -0,0 +1,2 @@
+bugfixes:
+  - "dnf5 - fix ``is_installed`` check for packages that are not installed but listed as provided by an installed package (https://github.com/ansible/ansible/issues/84578)"
diff --git a/lib/ansible/modules/dnf5.py b/lib/ansible/modules/dnf5.py
index 2eef580933e..eb340f0a3ff 100644
--- a/lib/ansible/modules/dnf5.py
+++ b/lib/ansible/modules/dnf5.py
@@ -378,10 +378,20 @@ def is_installed(base, spec):
         # If users wish to target the `sssd` binary they can by specifying the full path `name=/usr/sbin/sssd` explicitly
         # due to settings.set_with_filenames(True) being default.
         settings.set_with_binaries(False)
+        # Disable checking whether SPEC is provided by an installed package.
+        # Consider following real scenario from the rpmfusion repo:
+        #   * the `ffmpeg-libs` package is installed and provides `libavcodec-freeworld`
+        #   * but `libavcodec-freeworld` is NOT installed (???)
+        #   * due to `set_with_provides(True)` being default `is_installed(base, "libavcodec-freeworld")`
+        #     would  "unexpectedly" return True
+        # We disable provides only for this `is_installed` check, for actual installation we leave the default
+        # setting to mirror the dnf cmdline behavior.
+        settings.set_with_provides(False)
     except AttributeError:
         # dnf5 < 5.2.0.0
         settings.group_with_name = True
         settings.with_binaries = False
+        settings.with_provides = False
 
     installed_query = libdnf5.rpm.PackageQuery(base)
     installed_query.filter_installed()
diff --git a/test/integration/targets/dnf/tasks/repo.yml b/test/integration/targets/dnf/tasks/repo.yml
index cdec5a85ae7..6e1b78252ff 100644
--- a/test/integration/targets/dnf/tasks/repo.yml
+++ b/test/integration/targets/dnf/tasks/repo.yml
@@ -587,3 +587,35 @@
           - provides-binary
           - package-name
         state: absent
+
+# https://github.com/ansible/ansible/issues/84578
+- name: Test installing a package that is listed in `provides` in different package
+  block:
+    - dnf:
+        name: provides-package
+        state: present
+
+    - command: rpm -q provided-package
+      ignore_errors: true
+      register: r
+
+    - assert:
+        that:
+          - r is failed
+
+    - dnf:
+        name: provided-package
+        state: present
+      register: r
+
+    - assert:
+        that:
+          - r is changed
+  always:
+    - name: Clean up
+      dnf:
+        name: "{{ item }}"
+        state: absent
+      loop:
+        - provides-package
+        - provided-package
diff --git a/test/integration/targets/setup_rpm_repo/library/create_repo.py b/test/integration/targets/setup_rpm_repo/library/create_repo.py
index 6fffe5ad90b..ff1954313e0 100644
--- a/test/integration/targets/setup_rpm_repo/library/create_repo.py
+++ b/test/integration/targets/setup_rpm_repo/library/create_repo.py
@@ -33,6 +33,7 @@ class RPM:
     requires: list[str] | None = None
     file: str | None = None
     binary: str | None = None
+    provides: list[str] | None = None
 
 
 SPECS = [
@@ -63,6 +64,8 @@ SPECS = [
     RPM(name='broken-d', version='1.0', requires=['broken-a']),
     RPM(name='provides-binary', version='1.0', arch=[expectedArch], binary='/usr/sbin/package-name'),
     RPM(name='package-name', version='1.0'),
+    RPM(name='provides-package', version='1.0', provides=['provided-package']),
+    RPM(name='provided-package', version='1.0'),
 ]
 
 
@@ -78,6 +81,9 @@ def create_repo():
         for recommend in spec.recommends or []:
             pkg.add_recommends(recommend)
 
+        for provide in spec.provides or []:
+            pkg.add_provides(provide)
+
         if spec.file:
             pkg.add_installed_file(
                 "/" + spec.file,