diff --git a/packages/transaction-controller/CHANGELOG.md b/packages/transaction-controller/CHANGELOG.md
index 2d675e408e3..335e3deb6db 100644
--- a/packages/transaction-controller/CHANGELOG.md
+++ b/packages/transaction-controller/CHANGELOG.md
@@ -9,6 +9,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 ### Added
 
+- Add `updateAtomicBatchData` method ([#5380](https://github.com/MetaMask/core/pull/5380))
 - Support atomic batch transactions ([#5306](https://github.com/MetaMask/core/pull/5306))
   - Add methods:
     - `addTransactionBatch`
diff --git a/packages/transaction-controller/src/TransactionController.test.ts b/packages/transaction-controller/src/TransactionController.test.ts
index c317b4e326e..b6325809ee7 100644
--- a/packages/transaction-controller/src/TransactionController.test.ts
+++ b/packages/transaction-controller/src/TransactionController.test.ts
@@ -6136,4 +6136,127 @@ describe('TransactionController', () => {
       expect(addTransactionBatchMock).toHaveBeenCalledTimes(1);
     });
   });
+
+  describe('updateAtomicBatchData', () => {
+    /**
+     * Template for updateAtomicBatchData test.
+     *
+     * @returns The controller instance and function result;
+     */
+    async function updateAtomicBatchDataTemplate() {
+      const { controller } = setupController({
+        options: {
+          state: {
+            transactions: [
+              {
+                ...TRANSACTION_META_MOCK,
+                nestedTransactions: [
+                  {
+                    to: ACCOUNT_2_MOCK,
+                    data: '0x1234',
+                  },
+                  {
+                    to: ACCOUNT_2_MOCK,
+                    data: '0x4567',
+                  },
+                ],
+              },
+            ],
+          },
+        },
+      });
+
+      const result = await controller.updateAtomicBatchData({
+        transactionId: TRANSACTION_META_MOCK.id,
+        transactionIndex: 1,
+        transactionData: '0x89AB',
+      });
+
+      return { controller, result };
+    }
+
+    it('updates transaction params', async () => {
+      const { controller } = await updateAtomicBatchDataTemplate();
+
+      expect(controller.state.transactions[0]?.txParams.data).toContain('89ab');
+      expect(controller.state.transactions[0]?.txParams.data).not.toContain(
+        '4567',
+      );
+    });
+
+    it('updates nested transaction', async () => {
+      const { controller } = await updateAtomicBatchDataTemplate();
+
+      expect(
+        controller.state.transactions[0]?.nestedTransactions?.[1]?.data,
+      ).toBe('0x89AB');
+    });
+
+    it('returns updated batch transaction data', async () => {
+      const { result } = await updateAtomicBatchDataTemplate();
+
+      expect(result).toContain('89ab');
+      expect(result).not.toContain('4567');
+    });
+
+    it('updates gas', async () => {
+      const gasMock = '0x1234';
+      const gasLimitNoBufferMock = '0x123';
+      const simulationFailsMock = { reason: 'testReason', debug: {} };
+
+      updateGasMock.mockImplementationOnce(async (request) => {
+        request.txMeta.txParams.gas = gasMock;
+        request.txMeta.simulationFails = simulationFailsMock;
+        request.txMeta.gasLimitNoBuffer = gasLimitNoBufferMock;
+      });
+
+      const { controller } = await updateAtomicBatchDataTemplate();
+
+      const stateTransaction = controller.state.transactions[0];
+
+      expect(stateTransaction.txParams.gas).toBe(gasMock);
+      expect(stateTransaction.simulationFails).toStrictEqual(
+        simulationFailsMock,
+      );
+      expect(stateTransaction.gasLimitNoBuffer).toBe(gasLimitNoBufferMock);
+    });
+
+    it('throws if nested transaction does not exist', async () => {
+      const { controller } = setupController({
+        options: {
+          state: {
+            transactions: [TRANSACTION_META_MOCK],
+          },
+        },
+      });
+
+      await expect(
+        controller.updateAtomicBatchData({
+          transactionId: TRANSACTION_META_MOCK.id,
+          transactionIndex: 0,
+          transactionData: '0x89AB',
+        }),
+      ).rejects.toThrow('Nested transaction not found');
+    });
+
+    it('throws if batch transaction does not exist', async () => {
+      const { controller } = setupController({
+        options: {
+          state: {
+            transactions: [TRANSACTION_META_MOCK],
+          },
+        },
+      });
+
+      await expect(
+        controller.updateAtomicBatchData({
+          transactionId: 'invalidId',
+          transactionIndex: 0,
+          transactionData: '0x89AB',
+        }),
+      ).rejects.toThrow(
+        'Cannot update transaction as ID not found - invalidId',
+      );
+    });
+  });
 });
diff --git a/packages/transaction-controller/src/TransactionController.ts b/packages/transaction-controller/src/TransactionController.ts
index 436e20a1ccb..a1a994e6b1c 100644
--- a/packages/transaction-controller/src/TransactionController.ts
+++ b/packages/transaction-controller/src/TransactionController.ts
@@ -106,7 +106,10 @@ import {
   SimulationErrorCode,
 } from './types';
 import { addTransactionBatch, isAtomicBatchSupported } from './utils/batch';
-import { signAuthorizationList } from './utils/eip7702';
+import {
+  generateEIP7702BatchTransaction,
+  signAuthorizationList,
+} from './utils/eip7702';
 import { validateConfirmedExternalTransaction } from './utils/external-transactions';
 import { addGasBuffer, estimateGas, updateGas } from './utils/gas';
 import { updateGasFees } from './utils/gas-fees';
@@ -2351,6 +2354,83 @@ export class TransactionController extends BaseController<
     this.signAbortCallbacks.delete(transactionId);
   }
 
+  /**
+   * Update the transaction data of a single nested transaction within an atomic batch transaction.
+   *
+   * @param options - The options bag.
+   * @param options.transactionId - ID of the atomic batch transaction.
+   * @param options.transactionIndex - Index of the nested transaction within the atomic batch transaction.
+   * @param options.transactionData - New data to set for the nested transaction.
+   * @returns The updated data for the atomic batch transaction.
+   */
+  async updateAtomicBatchData({
+    transactionId,
+    transactionIndex,
+    transactionData,
+  }: {
+    transactionId: string;
+    transactionIndex: number;
+    transactionData: Hex;
+  }) {
+    log('Updating atomic batch data', {
+      transactionId,
+      transactionIndex,
+      transactionData,
+    });
+
+    const updatedTransactionMeta = this.#updateTransactionInternal(
+      {
+        transactionId,
+        note: 'TransactionController#updateAtomicBatchData - Atomic batch data updated',
+      },
+      (transactionMeta) => {
+        const { nestedTransactions, txParams } = transactionMeta;
+        const from = txParams.from as Hex;
+        const nestedTransaction = nestedTransactions?.[transactionIndex];
+
+        if (!nestedTransaction) {
+          throw new Error(
+            `Nested transaction not found with index - ${transactionIndex}`,
+          );
+        }
+
+        nestedTransaction.data = transactionData;
+
+        const batchTransaction = generateEIP7702BatchTransaction(
+          from,
+          nestedTransactions,
+        );
+
+        transactionMeta.txParams.data = batchTransaction.data;
+      },
+    );
+
+    const draftTransaction = cloneDeep({
+      ...updatedTransactionMeta,
+      txParams: {
+        ...updatedTransactionMeta.txParams,
+        // Clear existing gas to force estimation
+        gas: undefined,
+      },
+    });
+
+    await this.#updateGasEstimate(draftTransaction);
+
+    this.#updateTransactionInternal(
+      {
+        transactionId,
+        note: 'TransactionController#updateAtomicBatchData - Gas estimate updated',
+      },
+      (transactionMeta) => {
+        transactionMeta.txParams.gas = draftTransaction.txParams.gas;
+        transactionMeta.simulationFails = draftTransaction.simulationFails;
+        transactionMeta.gasLimitNoBuffer = draftTransaction.gasLimitNoBuffer;
+      },
+    );
+
+    return updatedTransactionMeta.txParams.data as Hex;
+  }
+
   private addMetadata(transactionMeta: TransactionMeta) {
     validateTxParams(transactionMeta.txParams);
     this.update((state) => {
@@ -2369,24 +2449,14 @@ export class TransactionController extends BaseController<
       transactionMeta.txParams.type !== TransactionEnvelopeType.legacy &&
       (await this.getEIP1559Compatibility(transactionMeta.networkClientId));
 
-    const { networkClientId, chainId } = transactionMeta;
-
-    const isCustomNetwork =
-      this.#multichainTrackingHelper.getNetworkClient({ networkClientId })
-        .configuration.type === NetworkClientType.Custom;
-
+    const { networkClientId } = transactionMeta;
     const ethQuery = this.#getEthQuery({ networkClientId });
     const provider = this.#getProvider({ networkClientId });
 
     await this.#trace(
       { name: 'Update Gas', parentContext: traceContext },
       async () => {
-        await updateGas({
-          ethQuery,
-          chainId,
-          isCustomNetwork,
-          txMeta: transactionMeta,
-        });
+        await this.#updateGasEstimate(transactionMeta);
       },
     );
 
@@ -3569,6 +3639,12 @@ export class TransactionController extends BaseController<
         ({ id }) => id === transactionId,
       );
 
+      if (index === -1) {
+        throw new Error(
+          `Cannot update transaction as ID not found - ${transactionId}`,
+        );
+      }
+
       let transactionMeta = state.transactions[index];
 
       const originalTransactionMeta = cloneDeep(transactionMeta);
@@ -3860,4 +3936,21 @@ export class TransactionController extends BaseController<
       submitHistory.unshift(submitHistoryEntry);
     });
   }
+
+  async #updateGasEstimate(transactionMeta: TransactionMeta) {
+    const { chainId, networkClientId } = transactionMeta;
+
+    const isCustomNetwork =
+      this.#multichainTrackingHelper.getNetworkClient({ networkClientId })
+        .configuration.type === NetworkClientType.Custom;
+
+    const ethQuery = this.#getEthQuery({ networkClientId });
+
+    await updateGas({
+      chainId,
+      ethQuery,
+      isCustomNetwork,
+      txMeta: transactionMeta,
+    });
+  }
 }