diff --git a/.dep-versions b/.dep-versions
index edc108195..6ed4ee1ae 100644
--- a/.dep-versions
+++ b/.dep-versions
@@ -16,7 +16,7 @@ enzyme=v0.0.149
 
 # For a custom PL version, update the package version here and at
 # 'doc/requirements.txt
-pennylane=0.42.0-dev33
+pennylane=0.42.0-dev45
 
 # For a custom LQ/LK version, update the package version here and at
 # 'doc/requirements.txt'
diff --git a/frontend/catalyst/jax_tracer.py b/frontend/catalyst/jax_tracer.py
index 71da0334e..9775d84b3 100644
--- a/frontend/catalyst/jax_tracer.py
+++ b/frontend/catalyst/jax_tracer.py
@@ -1328,6 +1328,31 @@ def trace_quantum_function(
         out_tree: PyTree shapen of the result
     """
 
+    if qml.transforms.set_shots in qnode.transform_program:
+        # Then just apply it immediately
+        user_transform = qnode.transform_program
+        set_shots_transform = TransformProgram()
+
+        # Find and extract the set_shots transform
+        for transform_container in user_transform:
+            if transform_container.transform == qml.set_shots.transform:
+                set_shots_transform = transform_container
+                break
+
+        if set_shots_transform:
+            # Apply set_shots transform to update device shots
+            shots_value = set_shots_transform.kwargs.get("shots", None)
+            # Update device shots
+            if hasattr(device, "shots"):
+                if isinstance(device, qml.devices.LegacyDevice):
+                    device._shots = shots_value
+                else:
+                    device._shots = qml.measurements.Shots(shots_value)
+
+            # # Remove set_shots from the transform program since we've applied it
+            # user_transform.remove(set_shots_transform)
+            # qnode_program = user_transform
+
     with EvaluationContext(EvaluationMode.QUANTUM_COMPILATION) as ctx:
         # (1) - Classical tracing
         quantum_tape = QuantumTape(shots=device.shots)
diff --git a/frontend/test/pytest/test_device_api.py b/frontend/test/pytest/test_device_api.py
index b8b760080..bc695d233 100644
--- a/frontend/test/pytest/test_device_api.py
+++ b/frontend/test/pytest/test_device_api.py
@@ -13,6 +13,7 @@
 # limitations under the License.
 """Test for the device API."""
 import platform
+from functools import partial
 
 import pennylane as qml
 import pytest
@@ -137,6 +138,21 @@ def circuit():
     assert circuit.mlir
 
 
+def test_simple_circuit_set_shots():
+    """Test that a circuit with the new device API is compiling to MLIR."""
+    dev = NullQubit(wires=2)
+
+    @qjit(target="mlir")
+    @partial(qml.set_shots, shots=2048)
+    @qml.qnode(device=dev)
+    def circuit():
+        qml.Hadamard(wires=0)
+        qml.CNOT(wires=[0, 1])
+        return qml.expval(qml.PauliZ(wires=0))
+
+    assert circuit.mlir
+
+
 def test_track_resources():
     """Test that resource tracking settings get passed to the device."""
     dev = NullQubit(wires=2)