diff --git a/src/container-comparison/CompareContainersWidget.tsx b/src/container-comparison/CompareContainersWidget.tsx
index 90f58e5f2..cb1b318bf 100644
--- a/src/container-comparison/CompareContainersWidget.tsx
+++ b/src/container-comparison/CompareContainersWidget.tsx
@@ -243,7 +243,7 @@ export const CompareContainersWidget = ({
   // the alert would disappear. By keeping this call in CompareContainersWidget,
   // the alert remains in the modal regardless of whether you navigate within the children.
   if (!isReadyToSyncIndividually && data?.upstreamReadyToSyncChildrenInfo
-      && data.upstreamReadyToSyncChildrenInfo.every(value => value.isModified && value.blockType === 'html')
+      && data.upstreamReadyToSyncChildrenInfo.every(value => value.downstreamCustomized.length > 0 && value.blockType === 'html')
   ) {
     localUpdateAlertCount = data.upstreamReadyToSyncChildrenInfo.length;
     if (localUpdateAlertCount === 1) {
diff --git a/src/container-comparison/ContainerRow.test.tsx b/src/container-comparison/ContainerRow.test.tsx
index 669c9a7c7..2826d41fc 100644
--- a/src/container-comparison/ContainerRow.test.tsx
+++ b/src/container-comparison/ContainerRow.test.tsx
@@ -74,6 +74,12 @@ describe('<ContainerRow />', () => {
     expect(await screen.findByText(messages.locallyContentUpdatedBeforeMessage.defaultMessage.replace('{blockType}', 'html'))).toBeInTheDocument();
   });
 
+  test('renders with rename and local content update', async () => {
+    render(<ContainerRow title="Test title" containerType="html" side="Before" state="locallyRenamedAndContentUpdated" originalName="Modified name" />);
+    expect(await screen.findByText(messages.renamedDiffBeforeMessage.defaultMessage.replace('{name}', 'Modified name'))).toBeInTheDocument();
+    expect(await screen.findByText(messages.locallyContentUpdatedBeforeMessage.defaultMessage.replace('{blockType}', 'html'))).toBeInTheDocument();
+  });
+
   test('renders with moved state', async () => {
     render(<ContainerRow title="Test title" containerType="subsection" side="After" state="moved" />);
     expect(await screen.findByText(
diff --git a/src/container-comparison/ContainerRow.tsx b/src/container-comparison/ContainerRow.tsx
index 3b215db14..ef242ee3e 100644
--- a/src/container-comparison/ContainerRow.tsx
+++ b/src/container-comparison/ContainerRow.tsx
@@ -23,33 +23,47 @@ export interface ContainerRowProps {
   onClick?: () => void;
 }
 
+interface StateContext {
+  className: string;
+  icon: React.ComponentType;
+  message?: MessageDescriptor;
+  message2?: MessageDescriptor;
+}
+
 const ContainerRow = ({
   title, containerType, state, side, originalName, onClick,
 }: ContainerRowProps) => {
   const isClickable = isRowClickable(state, containerType as ContainerType);
-  const stateContext = useMemo(() => {
+  const stateContext: StateContext = useMemo(() => {
     let message: MessageDescriptor | undefined;
+    let message2: MessageDescriptor | undefined;
     switch (state) {
       case 'added':
         message = side === 'Before' ? messages.addedDiffBeforeMessage : messages.addedDiffAfterMessage;
-        return ['text-white bg-success-500', Plus, message];
+        return { className: 'text-white bg-success-500', icon: Plus, message };
       case 'modified':
         message = side === 'Before' ? messages.modifiedDiffBeforeMessage : messages.modifiedDiffAfterMessage;
-        return ['text-white bg-warning-900', Cached, message];
+        return { className: 'text-white bg-warning-900', icon: Cached, message };
       case 'removed':
         message = side === 'Before' ? messages.removedDiffBeforeMessage : messages.removedDiffAfterMessage;
-        return ['text-white bg-danger-600', Delete, message];
+        return { className: 'text-white bg-danger-600', icon: Delete, message };
       case 'locallyRenamed':
         message = side === 'Before' ? messages.renamedDiffBeforeMessage : messages.renamedUpdatedDiffAfterMessage;
-        return ['bg-light-300 text-light-300 ', Done, message];
+        return { className: 'bg-light-300 text-light-300 ', icon: Done, message };
       case 'locallyContentUpdated':
         message = side === 'Before' ? messages.locallyContentUpdatedBeforeMessage : messages.locallyContentUpdatedAfterMessage;
-        return ['bg-light-300 text-light-300 ', Done, message];
+        return { className: 'bg-light-300 text-light-300 ', icon: Done, message };
+      case 'locallyRenamedAndContentUpdated':
+        message = side === 'Before' ? messages.renamedDiffBeforeMessage : messages.renamedUpdatedDiffAfterMessage;
+        message2 = side === 'Before' ? messages.locallyContentUpdatedBeforeMessage : messages.locallyContentUpdatedAfterMessage;
+        return {
+          className: 'bg-light-300 text-light-300 ', icon: Done, message, message2,
+        };
       case 'moved':
         message = side === 'Before' ? messages.movedDiffBeforeMessage : messages.movedDiffAfterMessage;
-        return ['bg-light-300 text-light-300', Done, message];
+        return { className: 'bg-light-300 text-light-300', icon: Done, message };
       default:
-        return ['bg-light-300 text-light-300', Done, message];
+        return { className: 'bg-light-300 text-light-300', icon: Done, message };
     }
   }, [state, side]);
 
@@ -66,9 +80,9 @@ const ContainerRow = ({
     >
       <Stack direction="horizontal" gap={0}>
         <div
-          className={`px-1 align-self-stretch align-content-center rounded-left ${stateContext[0]}`}
+          className={`px-1 align-self-stretch align-content-center rounded-left ${stateContext.className}`}
         >
-          <Icon size="sm" src={stateContext[1]} />
+          <Icon size="sm" src={stateContext.icon} />
         </div>
         <ActionRow className="p-2">
           <Stack direction="vertical" gap={2}>
@@ -80,16 +94,29 @@ const ContainerRow = ({
               />
               <span className="small font-weight-bold">{title}</span>
             </Stack>
-            {stateContext[2] ? (
-              <span className="micro">
-                <FormattedMessage
-                  {...stateContext[2]}
-                  values={{
-                    blockType: containerType,
-                    name: originalName,
-                  }}
-                />
-              </span>
+            {stateContext.message ? (
+              <div className="d-flex flex-column">
+                <span className="micro">
+                  <FormattedMessage
+                    {...stateContext.message}
+                    values={{
+                      blockType: containerType,
+                      name: originalName,
+                    }}
+                  />
+                </span>
+                {stateContext.message2 && (
+                  <span className="micro">
+                    <FormattedMessage
+                      {...stateContext.message2}
+                      values={{
+                        blockType: containerType,
+                        name: originalName,
+                      }}
+                    />
+                  </span>
+                )}
+              </div>
             ) : (
               <span className="micro">&nbsp;</span>
             )}
diff --git a/src/container-comparison/data/api.mock.ts b/src/container-comparison/data/api.mock.ts
index 49dccb95f..d68b564f8 100644
--- a/src/container-comparison/data/api.mock.ts
+++ b/src/container-comparison/data/api.mock.ts
@@ -32,7 +32,7 @@ export async function mockGetCourseContainerChildren(containerId: string): Promi
         id: 'block-v1:UNIX+UX1+2025_T3+type@html+block@1',
         name: 'Html block 11',
         blockType: 'html',
-        isModified: true,
+        downstreamCustomized: ['display_name'],
         upstream: 'upstream-id',
       }];
       break;
@@ -44,14 +44,14 @@ export async function mockGetCourseContainerChildren(containerId: string): Promi
           id: 'block-v1:UNIX+UX1+2025_T3+type@html+block@1',
           name: 'Html block 11',
           blockType: 'html',
-          isModified: true,
+          downstreamCustomized: ['display_name'],
           upstream: 'upstream-id',
         },
         {
           id: 'block-v1:UNIX+UX1+2025_T3+type@html+block@2',
           name: 'Html block 22',
           blockType: 'html',
-          isModified: true,
+          downstreamCustomized: ['display_name'],
           upstream: 'upstream-id',
         },
       ];
@@ -78,7 +78,7 @@ export async function mockGetCourseContainerChildren(containerId: string): Promi
         versionSynced: 1,
         versionAvailable: 2,
         versionDeclined: null,
-        isModified: false,
+        downstreamCustomized: [],
       },
     }
   ));
@@ -107,7 +107,7 @@ mockGetCourseContainerChildren.childTemplate = {
     versionSynced: 1,
     versionAvailable: 2,
     versionDeclined: null,
-    isModified: false,
+    downstreamCustomized: [],
   },
 };
 /** Apply this mock. Returns a spy object that can tell you if it's been called. */
diff --git a/src/container-comparison/types.ts b/src/container-comparison/types.ts
index c546e0c48..e980279ed 100644
--- a/src/container-comparison/types.ts
+++ b/src/container-comparison/types.ts
@@ -1,6 +1,6 @@
 import { UpstreamInfo } from '@src/data/types';
 
-export type ContainerState = 'removed' | 'added' | 'modified' | 'childrenModified' | 'locallyContentUpdated' | 'locallyRenamed' | 'moved';
+export type ContainerState = 'removed' | 'added' | 'modified' | 'childrenModified' | 'locallyContentUpdated' | 'locallyRenamed' | 'locallyRenamedAndContentUpdated' | 'moved';
 
 export type WithState<T> = T & { state?: ContainerState, originalName?: string };
 export type WithIndex<T> = T & { index: number };
diff --git a/src/container-comparison/utils.test.ts b/src/container-comparison/utils.test.ts
index 2b732b41e..42a36547c 100644
--- a/src/container-comparison/utils.test.ts
+++ b/src/container-comparison/utils.test.ts
@@ -2,7 +2,7 @@ import { ContainerChildBase, CourseContainerChildBase } from './types';
 import { diffPreviewContainerChildren } from './utils';
 
 export const getMockCourseContainerData = (
-  type: 'added|deleted' | 'moved|deleted' | 'all',
+  type: 'added|deleted' | 'moved|deleted' | 'all' | 'locallyEdited',
 ): [CourseContainerChildBase[], ContainerChildBase[]] => {
   switch (type) {
     case 'moved|deleted':
@@ -17,7 +17,7 @@ export const getMockCourseContainerData = (
               versionSynced: 11,
               versionAvailable: 11,
               versionDeclined: null,
-              isModified: true,
+              downstreamCustomized: ['display_name'],
             },
           },
           {
@@ -29,7 +29,7 @@ export const getMockCourseContainerData = (
               versionSynced: 7,
               versionAvailable: 7,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
           {
@@ -41,7 +41,7 @@ export const getMockCourseContainerData = (
               versionSynced: 2,
               versionAvailable: 2,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
           {
@@ -53,7 +53,7 @@ export const getMockCourseContainerData = (
               versionSynced: 1,
               versionAvailable: 1,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
         ],
@@ -87,7 +87,7 @@ export const getMockCourseContainerData = (
               versionSynced: 11,
               versionAvailable: 11,
               versionDeclined: null,
-              isModified: true,
+              downstreamCustomized: ['display_name'],
             },
           },
           {
@@ -99,7 +99,7 @@ export const getMockCourseContainerData = (
               versionSynced: 7,
               versionAvailable: 7,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
           {
@@ -111,7 +111,7 @@ export const getMockCourseContainerData = (
               versionSynced: 2,
               versionAvailable: 2,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
           {
@@ -123,7 +123,7 @@ export const getMockCourseContainerData = (
               versionSynced: 1,
               versionAvailable: 1,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
         ],
@@ -162,7 +162,7 @@ export const getMockCourseContainerData = (
               versionSynced: 11,
               versionAvailable: 11,
               versionDeclined: null,
-              isModified: true,
+              downstreamCustomized: ['display_name'],
             },
           },
           {
@@ -174,7 +174,7 @@ export const getMockCourseContainerData = (
               versionSynced: 7,
               versionAvailable: 7,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
           {
@@ -186,7 +186,7 @@ export const getMockCourseContainerData = (
               versionSynced: 2,
               versionAvailable: 2,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
           {
@@ -198,7 +198,7 @@ export const getMockCourseContainerData = (
               versionSynced: 1,
               versionAvailable: 1,
               versionDeclined: null,
-              isModified: false,
+              downstreamCustomized: [],
             },
           },
         ],
@@ -225,6 +225,64 @@ export const getMockCourseContainerData = (
           },
         ],
       ] as [CourseContainerChildBase[], ContainerChildBase[]];
+    case 'locallyEdited':
+      return [
+        [
+          {
+            id: 'block-v1:UNIX+UX1+2025_T3+type@vertical+block@1',
+            name: 'Unit 1 remote edit - local edit',
+            blockType: 'vertical',
+            upstreamLink: {
+              upstreamRef: 'lct:UNIX:CS1:unit:unit-1-2a1741',
+              versionSynced: 11,
+              versionAvailable: 11,
+              versionDeclined: null,
+              downstreamCustomized: ['display_name'],
+            },
+          },
+          {
+            id: 'block-v1:UNIX+UX1+2025_T3+type@vertical+block@2',
+            name: 'New unit remote edit',
+            blockType: 'vertical',
+            upstreamLink: {
+              upstreamRef: 'lct:UNIX:CS1:unit:new-unit-remote-7eb9d1',
+              versionSynced: 7,
+              versionAvailable: 7,
+              versionDeclined: null,
+              downstreamCustomized: ['data'],
+            },
+          },
+          {
+            id: 'block-v1:UNIX+UX1+2025_T3+type@vertical+block@3',
+            name: 'Unit with tags - local edit',
+            blockType: 'vertical',
+            upstreamLink: {
+              upstreamRef: 'lct:UNIX:CS1:unit:unit-with-tags-bec5f9',
+              versionSynced: 2,
+              versionAvailable: 2,
+              versionDeclined: null,
+              downstreamCustomized: ['display_name', 'data'],
+            },
+          },
+        ],
+        [
+          {
+            id: 'lct:UNIX:CS1:unit:unit-1-2a1741',
+            displayName: 'Unit 1 remote edit - remote edit',
+            containerType: 'unit',
+          },
+          {
+            id: 'lct:UNIX:CS1:unit:new-unit-remote-7eb9d1',
+            displayName: 'New unit remote edit',
+            containerType: 'unit',
+          },
+          {
+            id: 'lct:UNIX:CS1:unit:unit-with-tags-bec5f9',
+            displayName: 'Unit with tags - remote edit',
+            containerType: 'unit',
+          },
+        ],
+      ] as [CourseContainerChildBase[], ContainerChildBase[]];
     default:
       throw new Error();
   }
@@ -280,4 +338,22 @@ describe('diffPreviewContainerChildren', () => {
     expect(result[1][2].state).toEqual('added');
     expect(result[1][2].id).toEqual(result[0][2].id);
   });
+
+  it('should handle locally edited content', () => {
+    const [a, b] = getMockCourseContainerData('locallyEdited');
+    const result = diffPreviewContainerChildren(a as CourseContainerChildBase[], b);
+    expect(result[0].length).toEqual(result[1].length);
+    // renamed
+    expect(result[0][0].state).toEqual('locallyRenamed');
+    expect(result[1][0].state).toEqual('locallyRenamed');
+    expect(result[1][0].id).toEqual(result[0][0].id);
+    // content updated
+    expect(result[0][1].state).toEqual('locallyContentUpdated');
+    expect(result[1][1].state).toEqual('locallyContentUpdated');
+    expect(result[1][1].id).toEqual(result[0][1].id);
+    // renamed and content updated
+    expect(result[0][2].state).toEqual('locallyRenamedAndContentUpdated');
+    expect(result[1][2].state).toEqual('locallyRenamedAndContentUpdated');
+    expect(result[1][2].id).toEqual(result[0][2].id);
+  });
 });
diff --git a/src/container-comparison/utils.ts b/src/container-comparison/utils.ts
index 2d4ddb4d2..03382418b 100644
--- a/src/container-comparison/utils.ts
+++ b/src/container-comparison/utils.ts
@@ -54,26 +54,29 @@ export function diffPreviewContainerChildren<A extends CourseContainerChildBase,
     } else {
       // It was present in previous version
       let state: ContainerState | undefined;
-      const displayName = oldVersion.upstreamLink.isModified ? oldVersion.name : newVersion.displayName;
+      const displayName = oldVersion.upstreamLink.downstreamCustomized.includes('display_name') ? oldVersion.name : newVersion.displayName;
       let originalName: string | undefined;
       // FIXME: This logic doesn't work when the content is updated locally and the upstream display name is updated.
       // `isRenamed` becomes true.
       // We probably need to differentiate between `contentModified` and `rename` in the backend or
       // send `downstream_customized` field to the frontend and use it here.
       const isRenamed = displayName !== newVersion.displayName && displayName === oldVersion.name;
+      const isContentModified = oldVersion.upstreamLink.downstreamCustomized.includes('data');
       if (index !== oldVersion.index) {
         // has moved from its position
         state = 'moved';
       }
-      if (oldVersion.upstreamLink.isModified && !isRenamed) {
-        // The content is updated, not the name.
-        state = 'locallyContentUpdated';
-      } else if (isRenamed) {
-        // Has been renamed.
-        // TODO: At this point we can't know if the content is updated or not
-        // because `upstreamLink.isModified` is also true when renaming.
-        state = 'locallyRenamed';
-        originalName = newVersion.displayName;
+      if ((oldVersion.upstreamLink.downstreamCustomized.length || 0) > 0) {
+        if (isRenamed) {
+          state = 'locallyRenamed';
+          originalName = newVersion.displayName;
+        }
+        if (isContentModified) {
+          state = 'locallyContentUpdated';
+        }
+        if (isRenamed && isContentModified) {
+          state = 'locallyRenamedAndContentUpdated';
+        }
       } else if (checkIsReadyToSync(oldVersion.upstreamLink)) {
         // has a new version ready to sync
         state = 'modified';
diff --git a/src/course-outline/section-card/SectionCard.test.tsx b/src/course-outline/section-card/SectionCard.test.tsx
index 35e83057f..f2c37de59 100644
--- a/src/course-outline/section-card/SectionCard.test.tsx
+++ b/src/course-outline/section-card/SectionCard.test.tsx
@@ -74,6 +74,7 @@ const section = {
     versionAvailable: 2,
     versionDeclined: null,
     errorMessage: null,
+    downstreamCustomized: [] as string[],
   },
 } satisfies Partial<XBlock> as XBlock;
 
diff --git a/src/course-outline/subsection-card/SubsectionCard.test.tsx b/src/course-outline/subsection-card/SubsectionCard.test.tsx
index 969852070..159f8bd5a 100644
--- a/src/course-outline/subsection-card/SubsectionCard.test.tsx
+++ b/src/course-outline/subsection-card/SubsectionCard.test.tsx
@@ -78,6 +78,7 @@ const subsection: XBlock = {
     versionAvailable: 2,
     versionDeclined: null,
     errorMessage: null,
+    downstreamCustomized: [] as string[],
   },
 } satisfies Partial<XBlock> as XBlock;
 
diff --git a/src/course-outline/unit-card/UnitCard.test.tsx b/src/course-outline/unit-card/UnitCard.test.tsx
index e6f8c605c..c8282a273 100644
--- a/src/course-outline/unit-card/UnitCard.test.tsx
+++ b/src/course-outline/unit-card/UnitCard.test.tsx
@@ -68,6 +68,7 @@ const unit = {
     versionAvailable: 2,
     versionDeclined: null,
     errorMessage: null,
+    downstreamCustomized: [] as string[],
   },
 } satisfies Partial<XBlock> as XBlock;
 
diff --git a/src/course-unit/data/types.ts b/src/course-unit/data/types.ts
index 99884cae5..6624dac89 100644
--- a/src/course-unit/data/types.ts
+++ b/src/course-unit/data/types.ts
@@ -43,7 +43,7 @@ export interface UpstreamReadyToSyncChildrenInfo {
   name: string;
   upstream: string;
   blockType: string;
-  isModified: boolean;
+  downstreamCustomized: string[];
 }
 
 export interface CourseContainerChildrenData {
diff --git a/src/data/types.ts b/src/data/types.ts
index 86df4cb40..4906c15c7 100644
--- a/src/data/types.ts
+++ b/src/data/types.ts
@@ -61,7 +61,7 @@ export interface UpstreamInfo {
   versionAvailable: number | null,
   versionDeclined: number | null,
   errorMessage: string | null,
-  isModified?: boolean,
+  downstreamCustomized: string[],
   hasTopLevelParent?: boolean,
   readyToSyncChildren?: UpstreamChildrenInfo[],
   isReadyToSyncIndividually?: boolean,
diff --git a/src/studio-home/tabs-section/messages.ts b/src/studio-home/tabs-section/messages.ts
index efb2cc7f1..d69b196eb 100644
--- a/src/studio-home/tabs-section/messages.ts
+++ b/src/studio-home/tabs-section/messages.ts
@@ -118,7 +118,7 @@ const messages = defineMessages({
     defaultMessage: 'Welcome to the new Content Libraries experience! Libraries have been redesigned'
       + ' from the ground up, making it much easier to reuse content. You can create, organize and manage'
       + ' new content, reuse your content in as many courses as you\'d like, publish updates, and create/randomize'
-      + ' problem sets. See {link} for details.',
+      + ' Problem Banks. See {link} for details.',
     description: 'Description for the alert message while there are no libraries pending migration on v2 tab.',
   },
   alertDescriptionV2MigrationPending: {