diff --git a/packages/runtime-core/src/apiSetupHelpers.ts b/packages/runtime-core/src/apiSetupHelpers.ts
index a8b7fcdef31..ab2151a1272 100644
--- a/packages/runtime-core/src/apiSetupHelpers.ts
+++ b/packages/runtime-core/src/apiSetupHelpers.ts
@@ -142,9 +142,9 @@ type InferDefault<P, T> = T extends
   ? T | ((props: P) => T)
   : (props: P) => T
 
-type PropsWithDefaults<Base, Defaults> = Base & {
-  [K in keyof Defaults]: K extends keyof Base ? NotUndefined<Base[K]> : never
-}
+type PropsWithDefaults<Base, Defaults> = Base & ({
+  [K in keyof Defaults]: K extends keyof Base ?Defaults[K]& NotUndefined<Base[K]>  : never
+})
 
 /**
  * Vue `<script setup>` compiler macro for providing props default values when
diff --git a/test-dts/setupHelpers.test-d.ts b/test-dts/setupHelpers.test-d.ts
index 6b9c67b2897..176aec8412c 100644
--- a/test-dts/setupHelpers.test-d.ts
+++ b/test-dts/setupHelpers.test-d.ts
@@ -29,13 +29,15 @@ describe('defineProps w/ type declaration + withDefaults', () => {
       fn?: (e: string) => void
       x?: string
       genStr?: string
+      y?: string
     }>(),
     {
       number: 123,
       arr: () => [],
       obj: () => ({ x: 123 }),
       fn: () => {},
-      genStr: () => ''
+      genStr: () => '',
+      y:undefined
     }
   )
 
@@ -46,6 +48,8 @@ describe('defineProps w/ type declaration + withDefaults', () => {
   // @ts-expect-error
   res.x.slice()
   res.genStr.slice()
+  // @ts-expect-error
+  res.y.split('')
 })
 
 describe('defineProps w/ union type declaration + withDefaults', () => {