diff --git a/zerver/lib/mention.py b/zerver/lib/mention.py
index bc7c535d4f..5795b0be37 100644
--- a/zerver/lib/mention.py
+++ b/zerver/lib/mention.py
@@ -4,7 +4,7 @@ from dataclasses import dataclass
 from re import Match
 
 from django.conf import settings
-from django.db.models import Q
+from django.db.models import Prefetch, Q
 
 from zerver.lib.users import get_inaccessible_user_ids
 from zerver.models import NamedUserGroup, UserProfile
@@ -269,9 +269,19 @@ class MentionData:
         self.user_group_members: dict[int, list[int]] = {}
         user_group_names = possible_user_group_mentions(content)
         if user_group_names:
+            # We are not directly doing 'prefetch_related("direct_members")'
+            # because then we would have to filter out deactivated users
+            # using 'group.direct_members.filter(is_active=True)', and that
+            # would take away the advantage of using 'prefetch_related'
+            # because of not using group.direct_members.all().
             for group in NamedUserGroup.objects.filter(
                 realm_id=realm_id, name__in=user_group_names, is_system_group=False
-            ).prefetch_related("direct_members"):
+            ).prefetch_related(
+                Prefetch(
+                    "direct_members",
+                    queryset=UserProfile.objects.filter(realm_id=realm_id, is_active=True),
+                )
+            ):
                 self.user_group_name_info[group.name.lower()] = group
                 self.user_group_members[group.id] = [m.id for m in group.direct_members.all()]
 
diff --git a/zerver/tests/test_markdown.py b/zerver/tests/test_markdown.py
index 00490fdd68..3eee89c099 100644
--- a/zerver/tests/test_markdown.py
+++ b/zerver/tests/test_markdown.py
@@ -293,6 +293,15 @@ class MarkdownMiscTest(ZulipTestCase):
         mention_data = MentionData(mention_backend, content, message_sender=None)
         self.assertTrue(mention_data.message_has_topic_wildcards())
 
+        content = "@*hamletcharacters*"
+        group = NamedUserGroup.objects.get(realm=realm, name="hamletcharacters")
+        mention_data = MentionData(mention_backend, content, message_sender=None)
+        self.assertCountEqual(mention_data.get_group_members(group.id), [hamlet.id, cordelia.id])
+
+        change_user_is_active(cordelia, False)
+        mention_data = MentionData(mention_backend, content, message_sender=None)
+        self.assertEqual(mention_data.get_group_members(group.id), [hamlet.id])
+
     def test_invalid_katex_path(self) -> None:
         with self.settings(DEPLOY_ROOT="/nonexistent"):
             with self.assertLogs(level="ERROR") as m:
diff --git a/zerver/tests/test_notification_data.py b/zerver/tests/test_notification_data.py
index 0c49e2deb6..a36f72bb27 100644
--- a/zerver/tests/test_notification_data.py
+++ b/zerver/tests/test_notification_data.py
@@ -1,4 +1,5 @@
 from zerver.actions.user_groups import check_add_user_group
+from zerver.actions.users import do_deactivate_user
 from zerver.lib.mention import MentionBackend, MentionData
 from zerver.lib.notification_data import UserMessageNotificationsData, get_user_group_mentions_data
 from zerver.lib.test_classes import ZulipTestCase
@@ -457,3 +458,19 @@ class TestNotificationData(ZulipTestCase):
                 cordelia.id: hamlet_and_cordelia.id,
             },
         )
+
+        # Deactivated users are excluded.
+        do_deactivate_user(hamlet, acting_user=None)
+        result = get_user_group_mentions_data(
+            mentioned_user_ids=set(),
+            mentioned_user_group_ids=[hamlet_and_cordelia.id],
+            mention_data=MentionData(
+                mention_backend, "hey @*hamlet_and_cordelia*!", message_sender=None
+            ),
+        )
+        self.assertDictEqual(
+            result,
+            {
+                cordelia.id: hamlet_and_cordelia.id,
+            },
+        )