diff --git a/packages/account-tree-controller/CHANGELOG.md b/packages/account-tree-controller/CHANGELOG.md
index 0ab49e590c4..e946e1c24b5 100644
--- a/packages/account-tree-controller/CHANGELOG.md
+++ b/packages/account-tree-controller/CHANGELOG.md
@@ -7,6 +7,11 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ## [Unreleased]
 
+### Fixed
+
+- Fix group naming for PK/Hardware accounts ([#6677](https://github.com/MetaMask/core/pull/6677))
+  - Previously, the first PK/Hardware account would start as `Account 2` as opposed to `Account 1` and thus subsequent group names were off as well.
+
 ## [1.0.0]
 
 ### Changed
diff --git a/packages/account-tree-controller/src/AccountTreeController.test.ts b/packages/account-tree-controller/src/AccountTreeController.test.ts
index 801c47c4cb2..cd7df67be00 100644
--- a/packages/account-tree-controller/src/AccountTreeController.test.ts
+++ b/packages/account-tree-controller/src/AccountTreeController.test.ts
@@ -587,7 +587,7 @@ describe('AccountTreeController', () => {
                   type: AccountGroupType.SingleAccount,
                   accounts: [MOCK_SNAP_ACCOUNT_2.id],
                   metadata: {
-                    name: 'Account 2', // Updated: per-wallet numbering (different wallet)
+                    name: 'Account 1', // Updated: per-wallet numbering (different wallet)
                     pinned: false,
                     hidden: false,
                   },
@@ -610,7 +610,7 @@ describe('AccountTreeController', () => {
                   type: AccountGroupType.SingleAccount,
                   accounts: [MOCK_HARDWARE_ACCOUNT_1.id],
                   metadata: {
-                    name: 'Account 2', // Updated: per-wallet numbering (different wallet)
+                    name: 'Account 1', // Updated: per-wallet numbering (different wallet)
                     pinned: false,
                     hidden: false,
                   },
@@ -652,13 +652,13 @@ describe('AccountTreeController', () => {
           },
           [expectedKeyringWalletIdGroup]: {
             name: {
-              value: 'Account 2', // Updated: per-wallet numbering (different wallet)
+              value: 'Account 1', // Updated: per-wallet numbering (different wallet)
               lastUpdatedAt: expect.any(Number),
             },
           },
           [expectedSnapWalletIdGroup]: {
             name: {
-              value: 'Account 2', // Updated: per-wallet numbering (different wallet)
+              value: 'Account 1', // Updated: per-wallet numbering (different wallet)
               lastUpdatedAt: expect.any(Number),
             },
           },
@@ -2430,8 +2430,8 @@ describe('AccountTreeController', () => {
 
       // Groups should use consistent default naming regardless of import time
       // Updated expectations based on per-wallet sequential naming logic
-      expect(group1?.metadata.name).toBe('Account 3'); // Updated: reflects actual naming logic
-      expect(group2?.metadata.name).toBe('Account 2'); // Updated: reflects actual naming logic
+      expect(group1?.metadata.name).toBe('Account 2'); // Updated: reflects actual naming logic
+      expect(group2?.metadata.name).toBe('Account 1'); // Updated: reflects actual naming logic
     });
 
     it('uses fallback naming when rule-based naming returns empty string', () => {
@@ -2902,9 +2902,9 @@ describe('AccountTreeController', () => {
       // Critical assertion: should have 2 unique names (no duplicates)
       expect(uniqueNames.size).toBe(2);
 
-      // Due to optimization, names start at wallet.length, so we get "Account 3" and "Account 4"
-      expect(allNames).toContain('Account 3');
-      expect(allNames).toContain('Account 4');
+      // Due to optimization, names start at wallet.length, so we get "Account 1" and "Account 2"
+      expect(allNames).toContain('Account 1');
+      expect(allNames).toContain('Account 2');
 
       // Verify they're actually different
       expect(group1.metadata.name).not.toBe(group2.metadata.name);
diff --git a/packages/account-tree-controller/src/AccountTreeController.ts b/packages/account-tree-controller/src/AccountTreeController.ts
index 1b7ab99549d..e9db61c8a15 100644
--- a/packages/account-tree-controller/src/AccountTreeController.ts
+++ b/packages/account-tree-controller/src/AccountTreeController.ts
@@ -458,11 +458,11 @@ export class AccountTreeController extends BaseController<
       } else {
         // For other wallet types, start with the number of existing groups
         // This gives us the next logical sequential number
-        proposedNameIndex = Object.keys(wallet.groups).length;
+        proposedNameIndex = Object.keys(wallet.groups).length - 1;
       }
 
       // Use the higher of the two: highest parsed index or computed index
-      proposedNameIndex = Math.max(highestAccountNameIndex, proposedNameIndex);
+      proposedNameIndex = Math.min(highestAccountNameIndex, proposedNameIndex);
 
       // Find a unique name by checking for conflicts and incrementing if needed
       let nameExists: boolean;