diff --git a/src/Config.php b/src/Config.php
index d550f85e68..1c8d8dbdd1 100644
--- a/src/Config.php
+++ b/src/Config.php
@@ -104,6 +104,23 @@ class Config
      */
     const DEFAULT_REPORT_WIDTH = 80;
 
+    /**
+     * Translation table for config settings which can be changed via multiple CLI flags.
+     *
+     * If the flag name matches the setting name, there is no need to add it to this translation table.
+     * Similarly, if there is only one flag which can change a setting, there is no need to include
+     * it in this table, even if the flag name and the setting name don't match.
+     *
+     * @var array<string, string> Key is the CLI flag name, value the corresponding config setting name.
+     */
+    public const CLI_FLAGS_TO_SETTING_NAME = [
+        'n'                => 'warningSeverity',
+        'w'                => 'warningSeverity',
+        'warning-severity' => 'warningSeverity',
+        'no-colors'        => 'colors',
+        'no-cache'         => 'cache',
+    ];
+
     /**
      * An array of settings that PHPCS and PHPCBF accept.
      *
diff --git a/src/Ruleset.php b/src/Ruleset.php
index 2c243c0c9e..3b23442a0f 100644
--- a/src/Ruleset.php
+++ b/src/Ruleset.php
@@ -131,6 +131,14 @@ class Ruleset
      */
     private $configDirectivesApplied = [];
 
+    /**
+     * The `<arg>` directives which have been applied.
+     *
+     * @var array<string, int> Key is the name of the setting. Value is the ruleset depth
+     *                         at which this setting was applied (if not overruled from the CLI).
+     */
+    private $cliSettingsApplied = [];
+
     /**
      * An array of the names of sniffs which have been marked as deprecated.
      *
@@ -613,6 +621,92 @@ public function processRuleset($rulesetPath, $depth=0)
             }
         }//end foreach
 
+        // Process custom command line arguments.
+        // Processing rules:
+        // - Highest level ruleset take precedence.
+        // - If the same CLI flag is being set from two rulesets at the same level, *first* one "wins".
+        $cliArgs = [];
+        foreach ($ruleset->{'arg'} as $arg) {
+            if ($this->shouldProcessElement($arg) === false) {
+                continue;
+            }
+
+            // "Long" CLI argument. Arg is in the format `<arg name="name" [value="value"]/>`.
+            if (isset($arg['name']) === true) {
+                $name           = (string) $arg['name'];
+                $cliSettingName = $name;
+                if (isset($this->config::CLI_FLAGS_TO_SETTING_NAME[$name]) === true) {
+                    $cliSettingName = $this->config::CLI_FLAGS_TO_SETTING_NAME[$name];
+                }
+
+                if (isset($this->cliSettingsApplied[$cliSettingName]) === true
+                    && $this->cliSettingsApplied[$cliSettingName] < $depth
+                ) {
+                    // Ignore this CLI flag. A higher level ruleset has already set a value for this setting.
+                    if (PHP_CODESNIFFER_VERBOSITY > 1) {
+                        $statusMessage  = str_repeat("\t", $depth);
+                        $statusMessage .= "\t=> ignoring command line arg --".$name;
+                        if (isset($arg['value']) === true) {
+                            $statusMessage .= '='.(string) $arg['value'];
+                        }
+
+                        echo $statusMessage.' => already changed by a higher level ruleset '.PHP_EOL;
+                    }
+
+                    continue;
+                }
+
+                // Remember which settings we've seen.
+                $this->cliSettingsApplied[$cliSettingName] = $depth;
+
+                $argString = '--'.$name;
+                if (isset($arg['value']) === true) {
+                    $argString .= '='.(string) $arg['value'];
+                }
+            } else {
+                // "Short" CLI flag. Arg is in the format `<arg value="value"/>` and
+                // value can contain multiple flags, like `<arg value="ps"/>`.
+                $cleanedValue    = '';
+                $cliFlagsAsArray = str_split((string) $arg['value']);
+                foreach ($cliFlagsAsArray as $flag) {
+                    $cliSettingName = $flag;
+                    if (isset($this->config::CLI_FLAGS_TO_SETTING_NAME[$flag]) === true) {
+                        $cliSettingName = $this->config::CLI_FLAGS_TO_SETTING_NAME[$flag];
+                    }
+
+                    if (isset($this->cliSettingsApplied[$cliSettingName]) === true
+                        && $this->cliSettingsApplied[$cliSettingName] < $depth
+                    ) {
+                        // Ignore this CLI flag. A higher level ruleset has already set a value for this setting.
+                        if (PHP_CODESNIFFER_VERBOSITY > 1) {
+                            echo str_repeat("\t", $depth);
+                            echo "\t=> ignoring command line flag -".$flag.' => already changed by a higher level ruleset '.PHP_EOL;
+                        }
+
+                        continue;
+                    }
+
+                    // Remember which settings we've seen.
+                    $cleanedValue .= $flag;
+                    $this->cliSettingsApplied[$cliSettingName] = $depth;
+                }//end foreach
+
+                if ($cleanedValue === '') {
+                    // No flags found which should be applied.
+                    continue;
+                }
+
+                $argString = '-'.$cleanedValue;
+            }//end if
+
+            $cliArgs[] = $argString;
+
+            if (PHP_CODESNIFFER_VERBOSITY > 1) {
+                echo str_repeat("\t", $depth);
+                echo "\t=> set command line value $argString".PHP_EOL;
+            }
+        }//end foreach
+
         foreach ($ruleset->rule as $rule) {
             if (isset($rule['ref']) === false
                 || $this->shouldProcessElement($rule) === false
@@ -706,30 +800,6 @@ public function processRuleset($rulesetPath, $depth=0)
             $this->processRule($rule, $newSniffs, $depth);
         }//end foreach
 
-        // Process custom command line arguments.
-        $cliArgs = [];
-        foreach ($ruleset->{'arg'} as $arg) {
-            if ($this->shouldProcessElement($arg) === false) {
-                continue;
-            }
-
-            if (isset($arg['name']) === true) {
-                $argString = '--'.(string) $arg['name'];
-                if (isset($arg['value']) === true) {
-                    $argString .= '='.(string) $arg['value'];
-                }
-            } else {
-                $argString = '-'.(string) $arg['value'];
-            }
-
-            $cliArgs[] = $argString;
-
-            if (PHP_CODESNIFFER_VERBOSITY > 1) {
-                echo str_repeat("\t", $depth);
-                echo "\t=> set command line value $argString".PHP_EOL;
-            }
-        }//end foreach
-
         // Set custom php ini values as CLI args.
         foreach ($ruleset->{'ini'} as $arg) {
             if ($this->shouldProcessElement($arg) === false) {
diff --git a/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/.phpcs.xml b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/.phpcs.xml
new file mode 100644
index 0000000000..3e2f6e1066
--- /dev/null
+++ b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/.phpcs.xml
@@ -0,0 +1,27 @@
+<?xml version="1.0"?>
+<ruleset xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" name="ProcessRulesetCliArgsTest" xsi:noNamespaceSchemaLocation="https://raw.githubusercontent.com/PHPCSStandards/PHP_CodeSniffer/master/phpcs.xsd">
+
+    <!-- Issues squizlabs/PHP_CodeSniffer#2597 + squizlabs/PHP_CodeSniffer#2602: allow overruling CLI args when they have a single CLI flag names.
+         One value is set before the includes, one after to safeguard that the order in the file does not influence the results.
+    -->
+    <arg name="extensions" value="inc,install,module,php,profile,test,theme"/>
+
+    <!-- Issue squizlabs/PHP_CodeSniffer#2395: allow overruling CLI args when they have different CLI flag names. -->
+    <arg name="no-colors"/>
+
+    <!-- Miscellaneous other settings. -->
+    <arg name="report" value="full,summary,source"/>
+
+    <!-- Include the overrides. -->
+    <rule ref="./phpcs.xml.dist"/>
+    <rule ref="./config/phpcs/include-overrules.xml"/>
+
+    <!-- Issues squizlabs/PHP_CodeSniffer#2597 + squizlabs/PHP_CodeSniffer#2602: second test. -->
+    <arg name="tab-width" value="3"/>
+
+    <!-- Issue squizlabs/PHP_CodeSniffer#2395: second test. -->
+    <arg value="w"/>
+
+    <!-- Prevent a "no sniffs were registered" error. -->
+    <rule ref="Generic.PHP.BacktickOperator"/>
+</ruleset>
diff --git a/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/config/phpcs/include-overrules.xml b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/config/phpcs/include-overrules.xml
new file mode 100644
index 0000000000..000d3d0415
--- /dev/null
+++ b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/config/phpcs/include-overrules.xml
@@ -0,0 +1,15 @@
+<?xml version="1.0"?>
+<ruleset xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" name="ProcessRulesetCliArgsTest" xsi:noNamespaceSchemaLocation="https://raw.githubusercontent.com/PHPCSStandards/PHP_CodeSniffer/master/phpcs.xsd">
+
+    <!-- Issues squizlabs/PHP_CodeSniffer#2597 + squizlabs/PHP_CodeSniffer#2602: allow overruling CLI args when they have the CLI flag names.
+         The value from the parent ruleset should be applied, not the one from the child.
+    -->
+    <arg name="tab-width" value="5"/>
+
+    <!-- Paths must be resolved based on the ruleset location which included the directive. -->
+    <arg name="report-file" value="./report.txt"/>
+
+    <!-- Miscellaneous other settings. -->
+    <arg name="report-width" value="60"/>
+
+</ruleset>
diff --git a/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/phpcs.xml.dist b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/phpcs.xml.dist
new file mode 100644
index 0000000000..0a6b7e76b2
--- /dev/null
+++ b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/phpcs.xml.dist
@@ -0,0 +1,28 @@
+<?xml version="1.0"?>
+<ruleset xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" name="ProcessRulesetCliArgsTest" xsi:noNamespaceSchemaLocation="https://raw.githubusercontent.com/PHPCSStandards/PHP_CodeSniffer/master/phpcs.xsd">
+
+    <!-- Issue squizlabs/PHP_CodeSniffer#2395: allow overruling CLI args when they have different CLI flag names.
+         The values from the parent ruleset should be applied, not those from the child.
+    -->
+    <arg name="colors"/>
+    <arg value="qn"/>
+
+    <!-- Paths must be resolved based on the ruleset location which included the directive. -->
+    <arg name="basepath" value="./"/>
+
+    <!-- Miscellaneous other settings. -->
+    <arg name="parallel" value="10"/>
+
+    <!-- Include the overrides. -->
+    <rule ref="./vendor/OrgName/ExtStandard/ruleset.xml"/>
+
+    <!-- Issues squizlabs/PHP_CodeSniffer#2597 + squizlabs/PHP_CodeSniffer#2602: allow overruling CLI args when they have the CLI flag names.
+         The values from the parent ruleset should be applied, not those from the child.
+    -->
+    <arg name="extensions" value="inc,php"/>
+    <arg name="tab-width" value="4"/>
+
+    <!-- Miscellaneous other settings. -->
+    <arg name="report-width" value="120"/>
+
+</ruleset>
diff --git a/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/vendor/OrgName/ExtStandard/bootstrap.php b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/vendor/OrgName/ExtStandard/bootstrap.php
new file mode 100644
index 0000000000..ae64a5c679
--- /dev/null
+++ b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/vendor/OrgName/ExtStandard/bootstrap.php
@@ -0,0 +1,3 @@
+<?php
+
+// Do nothing. This is just a placeholder file for the "bootstrap" CLI flag test.
diff --git a/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/vendor/OrgName/ExtStandard/ruleset.xml b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/vendor/OrgName/ExtStandard/ruleset.xml
new file mode 100644
index 0000000000..78953068ee
--- /dev/null
+++ b/tests/Core/Ruleset/Fixtures/ProcessRulesetCliArgsTest/vendor/OrgName/ExtStandard/ruleset.xml
@@ -0,0 +1,15 @@
+<?xml version="1.0"?>
+<ruleset xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" name="ProcessRulesetCliArgsTest" xsi:noNamespaceSchemaLocation="https://raw.githubusercontent.com/PHPCSStandards/PHP_CodeSniffer/master/phpcs.xsd">
+
+    <!-- Issue squizlabs/PHP_CodeSniffer#2395. -->
+    <arg name="warning-severity" value="3"/>
+    <arg value="p"/>
+
+    <!-- Paths must be resolved based on the ruleset location which included the directive. -->
+    <arg name="bootstrap" value="./bootstrap.php"/>
+
+    <!-- Miscellaneous other settings. -->
+    <arg name="parallel" value="2"/>
+    <arg name="report" value="code,summary"/>
+
+</ruleset>
diff --git a/tests/Core/Ruleset/ProcessRulesetCliArgsTest.php b/tests/Core/Ruleset/ProcessRulesetCliArgsTest.php
new file mode 100644
index 0000000000..0231c5d84a
--- /dev/null
+++ b/tests/Core/Ruleset/ProcessRulesetCliArgsTest.php
@@ -0,0 +1,225 @@
+<?php
+/**
+ * Tests for the \PHP_CodeSniffer\Ruleset class.
+ *
+ * @copyright 2025 PHPCSStandards and contributors
+ * @license   https://github.com/PHPCSStandards/PHP_CodeSniffer/blob/master/licence.txt BSD Licence
+ */
+
+namespace PHP_CodeSniffer\Tests\Core\Ruleset;
+
+use PHP_CodeSniffer\Ruleset;
+use PHP_CodeSniffer\Tests\ConfigDouble;
+use PHPUnit\Framework\TestCase;
+
+/**
+ * Tests for the \PHP_CodeSniffer\Ruleset class.
+ *
+ * @covers \PHP_CodeSniffer\Ruleset::processRuleset
+ */
+final class ProcessRulesetCliArgsTest extends TestCase
+{
+
+    /**
+     * Directory in which the XML fixtures for this test can be found (without trailing slash).
+     *
+     * @var string
+     */
+    private const FIXTURE_DIR = __DIR__.'/Fixtures/ProcessRulesetCliArgsTest';
+
+    /**
+     * The Config object.
+     *
+     * @var \PHP_CodeSniffer\Config
+     */
+    private static $config;
+
+
+    /**
+     * Initialize the config and ruleset objects for this test only once (but do allow recording code coverage).
+     *
+     * @return void
+     */
+    protected function setUp(): void
+    {
+        if (isset(self::$config) === false) {
+            // Set up the ruleset.
+            $standard     = self::FIXTURE_DIR.'/.phpcs.xml';
+            self::$config = new ConfigDouble(["--standard=$standard"]);
+            new Ruleset(self::$config);
+        }
+
+    }//end setUp()
+
+
+    /**
+     * Make sure the Config object is destroyed.
+     *
+     * @return void
+     */
+    public static function tearDownAfterClass(): void
+    {
+        // Explicitly trigger __destruct() on the ConfigDouble to reset the Config statics.
+        // The explicit method call prevents potential stray test-local references to the $config object
+        // preventing the destructor from running the clean up (which without stray references would be
+        // automagically triggered when this object is destroyed, but we can't definitively rely on that).
+        if (isset(self::$config) === true) {
+            self::$config->__destruct();
+        }
+
+    }//end tearDownAfterClass()
+
+
+    /**
+     * Verify the CLI arguments passed from within rulesets are set based on the nesting level of the ruleset.
+     *
+     * - Highest level ruleset (root) should win over lower level (included) ruleset.
+     * - When two rulesets at the same "level" both set the same ini, last included ruleset should win.
+     * - But if no higher level ruleset sets the value, the values from lowel levels should be applied.
+     * - The order of includes versus ini directives in a ruleset file is deliberately irrelevant.
+     *
+     * @param string $name     The name of the PHP ini setting we're checking.
+     * @param mixed  $expected The expected value for that ini setting.
+     *
+     * @dataProvider dataCliArgs
+     *
+     * @return void
+     */
+    public function testCliArgs($name, $expected)
+    {
+        $this->assertSame($expected, self::$config->{$name});
+
+    }//end testCliArgs()
+
+
+    /**
+     * Data provider.
+     *
+     * @return array<string, array<string, mixed>>
+     */
+    public static function dataCliArgs()
+    {
+        return [
+            'Issue squiz#2395: "no-colors" set in parent before includes; "colors" set in child; parent should win'                  => [
+                'name'     => 'colors',
+                'expected' => false,
+            ],
+            'Issue squiz#2395: "w" set in parent after includes; "n" set in child; warningSeverity in grandchild; parent should win' => [
+                'name'     => 'warningSeverity',
+                'expected' => 5,
+            ],
+            'Issue squiz#2395: "q" in child A before includes; "p" set in grandchild A, child A should win'                          => [
+                'name'     => 'showProgress',
+                'expected' => false,
+            ],
+
+            'Issue squiz#2597: "extensions" set in parent before includes; also set in child; parent should win'                     => [
+                'name'     => 'extensions',
+                'expected' => [
+                    'inc'     => 'PHP',
+                    'install' => 'PHP',
+                    'module'  => 'PHP',
+                    'php'     => 'PHP',
+                    'profile' => 'PHP',
+                    'test'    => 'PHP',
+                    'theme'   => 'PHP',
+                ],
+            ],
+            'Issue squiz#2602: "tab-width" set in parent after includes; also set in both children; parent should win'               => [
+                'name'     => 'tabWidth',
+                'expected' => 3,
+            ],
+
+            // Verify overrule order for various other miscellaneous settings.
+            'Flag set in child A before includes; also set in grandchild A; child A should win'                                      => [
+                'name'     => 'parallel',
+                'expected' => 10,
+            ],
+            'Flag set in parent before includes; also set in grandchild A; parent should win'                                        => [
+                'name'     => 'reports',
+                'expected' => [
+                    'full'    => null,
+                    'summary' => null,
+                    'source'  => null,
+                ],
+            ],
+            'Flag set in child A after includes; also set in child B; child A should win'                                            => [
+                'name'     => 'reportWidth',
+                'expected' => 120,
+            ],
+        ];
+
+    }//end dataCliArgs()
+
+
+    /**
+     * Verify that path resolution for CLI flags passing paths is done based on the location of the ruleset setting the flag.
+     *
+     * @param string               $name     The name of the Config setting we're checking.
+     * @param string|array<string> $expected The expected value for that setting.
+     *
+     * @dataProvider dataCliArgsWithPaths
+     *
+     * @return void
+     */
+    public function testCliArgsWithPaths($name, $expected)
+    {
+        // Normalize slashes everywhere to allow the tests to pass on all OS-es.
+        $expected = $this->normalizeSlashes($expected);
+        $actual   = $this->normalizeSlashes(self::$config->{$name});
+
+        $this->assertSame($expected, $actual);
+
+    }//end testCliArgsWithPaths()
+
+
+    /**
+     * Data provider.
+     *
+     * @return array<string, array<string, string|array<string>>>
+     */
+    public static function dataCliArgsWithPaths()
+    {
+        return [
+            'Paths should be resolved based on the ruleset location: basepath'   => [
+                'name'     => 'basepath',
+                'expected' => self::FIXTURE_DIR,
+            ],
+            'Paths should be resolved based on the ruleset location: reportFile' => [
+                'name'     => 'reportFile',
+                'expected' => self::FIXTURE_DIR.'/config/phpcs/report.txt',
+            ],
+            'Paths should be resolved based on the ruleset location: bootstrap'  => [
+                'name'     => 'bootstrap',
+                'expected' => [
+                    self::FIXTURE_DIR.'/vendor/OrgName/ExtStandard/bootstrap.php',
+                ],
+            ],
+        ];
+
+    }//end dataCliArgsWithPaths()
+
+
+    /**
+     * Test helper to allow for path comparisons to succeed, independently of the OS on which the tests are run.
+     *
+     * @param string|array<string> $path Path(s) to normalize.
+     *
+     * @return string|array<string>
+     */
+    private function normalizeSlashes($path)
+    {
+        if (is_array($path) === true) {
+            foreach ($path as $k => $v) {
+                $path[$k] = $this->normalizeSlashes($v);
+            }
+
+            return $path;
+        }
+
+        return str_replace(DIRECTORY_SEPARATOR, '/', $path);
+
+    }//end normalizeSlashes()
+
+
+}//end class