diff --git a/packages/language-core/lib/codegen/globalTypes.ts b/packages/language-core/lib/codegen/globalTypes.ts
index 1f7c027f01..a4a37e55a8 100644
--- a/packages/language-core/lib/codegen/globalTypes.ts
+++ b/packages/language-core/lib/codegen/globalTypes.ts
@@ -87,6 +87,26 @@ export function generateGlobalTypes(lib: string, target: number, strictTemplates
 		'__ctx' extends keyof __VLS_PickNotAny<K, {}> ? K extends { __ctx?: infer Ctx } ? Ctx : never : any
 		, T extends (props: any, ctx: infer Ctx) => any ? Ctx : any
 	>>;
+	type __VLS_IsUnion<T, U = T> = T extends U ? [U] extends [T] ? false : true : false;
+	type __VLS_InferUnionType<T, U, K> = K extends keyof T ? T[K] : K extends keyof U ? U[K] : never;
+	type __VLS_UnionKeys<T> = T extends any ? keyof T : never;
+	type __VLS_UnionRequiredKeys<T, K = __VLS_UnionKeys<T>> = Exclude<K, __VLS_UnionOptionalKeys<T>>;
+	type __VLS_UnionOptionalKeys<T, K = __VLS_UnionKeys<T>> = T extends any
+		? K extends keyof T
+			? {} extends Pick<T, K>
+				? K
+				: never
+			: never
+		: never;
+	type __VLS_MergeUnion<T, U = T> = T extends any
+		? { [V in __VLS_UnionRequiredKeys<U>]: __VLS_InferUnionType<T, U, V> }
+		& { [V in __VLS_UnionOptionalKeys<U>]?: __VLS_InferUnionType<T, U, V> }
+		: never;
+	type __VLS_PrettifyUnion<T> = {
+		[K in __VLS_UnionRequiredKeys<T>]: T[K]
+	} & {
+		[K in __VLS_UnionOptionalKeys<T>]?: T[K]
+	};
 
 	function __VLS_getVForSourceType(source: number): [number, number, number][];
 	function __VLS_getVForSourceType(source: string): [string, number, number][];
diff --git a/packages/language-core/lib/codegen/localTypes.ts b/packages/language-core/lib/codegen/localTypes.ts
index d4939c3bf6..acab9fa2e1 100644
--- a/packages/language-core/lib/codegen/localTypes.ts
+++ b/packages/language-core/lib/codegen/localTypes.ts
@@ -59,20 +59,13 @@ type __VLS_PropsChildren<S> = {
 	);
 	const TypePropsToOption = defineHelper(
 		`__VLS_TypePropsToOption`,
-		() => compilerOptions.exactOptionalPropertyTypes ?
-			`
-type __VLS_TypePropsToOption<T> = {
-	[K in keyof T]-?: {} extends Pick<T, K>
-		? { type: import('${vueCompilerOptions.lib}').PropType<T[K]> }
-		: { type: import('${vueCompilerOptions.lib}').PropType<T[K]>, required: true }
-};
-`.trimStart() :
-			`
-type __VLS_NonUndefinedable<T> = T extends undefined ? never : T;
-type __VLS_TypePropsToOption<T> = {
-	[K in keyof T]-?: {} extends Pick<T, K>
-		? { type: import('${vueCompilerOptions.lib}').PropType<__VLS_NonUndefinedable<T[K]>> }
-		: { type: import('${vueCompilerOptions.lib}').PropType<T[K]>, required: true }
+		() => `
+${compilerOptions.exactOptionalPropertyTypes ? '' : 'type __VLS_NonUndefinedable<T> = T extends undefined ? never : T;'}
+type __VLS_TypePropsToOption<T, U = __VLS_IsUnion<T> extends true ? __VLS_PrettifyUnion<__VLS_MergeUnion<T>> : T> = {
+	[K in keyof U]-?: {
+        type: import('${vueCompilerOptions.lib}').PropType<${compilerOptions.exactOptionalPropertyTypes ? 'U[K]' : '__VLS_NonUndefinedable<U[K]>'}>,
+        required: {} extends Pick<U, K> ? false : true
+    }
 };
 `.trimStart()
 	);
diff --git a/packages/language-core/lib/codegen/template/elementEvents.ts b/packages/language-core/lib/codegen/template/elementEvents.ts
index 57f57c4c74..e22f400c3b 100644
--- a/packages/language-core/lib/codegen/template/elementEvents.ts
+++ b/packages/language-core/lib/codegen/template/elementEvents.ts
@@ -43,7 +43,9 @@ export function* generateElementEvents(
 			}
 			yield `(${newLine}`;
 			yield `__VLS_IsFunction<typeof ${propsVar}, '${originalPropName}'> extends true${newLine}`;
-			yield `? typeof ${propsVar}${newLine}`;
+			yield `? {${newLine}`;
+			yield `${originalPropNameObjectKey}?: typeof ${propsVar}['${originalPropName}']${newLine}`;
+			yield `}${newLine}`;
 			yield `: __VLS_IsFunction<typeof ${eventsVar}, '${prop.arg.loc.source}'> extends true${newLine}`;
 			yield `? {${newLine}`;
 			yield `/**__VLS_emit,${emitVar},${prop.arg.loc.source}*/${newLine}`;
diff --git a/packages/tsc/tests/__snapshots__/dts.spec.ts.snap b/packages/tsc/tests/__snapshots__/dts.spec.ts.snap
index 8e2099a109..900b157b2a 100644
--- a/packages/tsc/tests/__snapshots__/dts.spec.ts.snap
+++ b/packages/tsc/tests/__snapshots__/dts.spec.ts.snap
@@ -328,23 +328,21 @@ exports[`vue-tsc-dts > Input: reference-type-model/component.vue, Output: refere
     "qux"?: string;
     quxModifiers?: Record<'lazy' | 'trim', true>;
 };
-declare const _default: import("vue").DefineComponent<import("vue").ExtractPropTypes<__VLS_TypePropsToOption<__VLS_PublicProps>>, {}, {}, {}, {}, import("vue").ComponentOptionsMixin, import("vue").ComponentOptionsMixin, {
+declare const _default: import("vue").DefineComponent<import("vue").ExtractPropTypes<__VLS_TypePropsToOption<__VLS_PublicProps, __VLS_PublicProps>>, {}, {}, {}, {}, import("vue").ComponentOptionsMixin, import("vue").ComponentOptionsMixin, {
     "update:foo": (foo: number) => void;
     "update:bar": (bar: string[]) => void;
     "update:qux": (qux: string) => void;
-}, string, import("vue").PublicProps, Readonly<import("vue").ExtractPropTypes<__VLS_TypePropsToOption<__VLS_PublicProps>>> & Readonly<{
+}, string, import("vue").PublicProps, Readonly<import("vue").ExtractPropTypes<__VLS_TypePropsToOption<__VLS_PublicProps, __VLS_PublicProps>>> & Readonly<{
     "onUpdate:foo"?: (foo: number) => any;
     "onUpdate:bar"?: (bar: string[]) => any;
     "onUpdate:qux"?: (qux: string) => any;
 }>, {}, {}, {}, {}, string, import("vue").ComponentProvideOptions, true, {}, any>;
 export default _default;
 type __VLS_NonUndefinedable<T> = T extends undefined ? never : T;
-type __VLS_TypePropsToOption<T> = {
-    [K in keyof T]-?: {} extends Pick<T, K> ? {
-        type: import('vue').PropType<__VLS_NonUndefinedable<T[K]>>;
-    } : {
-        type: import('vue').PropType<T[K]>;
-        required: true;
+type __VLS_TypePropsToOption<T, U = __VLS_IsUnion<T> extends true ? __VLS_PrettifyUnion<__VLS_MergeUnion<T>> : T> = {
+    [K in keyof U]-?: {
+        type: import('vue').PropType<__VLS_NonUndefinedable<U[K]>>;
+        required: {} extends Pick<U, K> ? false : true;
     };
 };
 "
@@ -352,10 +350,10 @@ type __VLS_TypePropsToOption<T> = {
 
 exports[`vue-tsc-dts > Input: reference-type-props/component.vue, Output: reference-type-props/component.vue.d.ts 1`] = `
 "import { MyProps } from './my-props';
-declare const _default: import("vue").DefineComponent<import("vue").ExtractPropTypes<__VLS_WithDefaults<__VLS_TypePropsToOption<MyProps>, {
+declare const _default: import("vue").DefineComponent<import("vue").ExtractPropTypes<__VLS_WithDefaults<__VLS_TypePropsToOption<MyProps, MyProps>, {
     bar: number;
     baz: () => string[];
-}>>, {}, {}, {}, {}, import("vue").ComponentOptionsMixin, import("vue").ComponentOptionsMixin, {}, string, import("vue").PublicProps, Readonly<import("vue").ExtractPropTypes<__VLS_WithDefaults<__VLS_TypePropsToOption<MyProps>, {
+}>>, {}, {}, {}, {}, import("vue").ComponentOptionsMixin, import("vue").ComponentOptionsMixin, {}, string, import("vue").PublicProps, Readonly<import("vue").ExtractPropTypes<__VLS_WithDefaults<__VLS_TypePropsToOption<MyProps, MyProps>, {
     bar: number;
     baz: () => string[];
 }>>> & Readonly<{}>, {
@@ -369,12 +367,10 @@ type __VLS_WithDefaults<P, D> = {
     }> : P[K];
 };
 type __VLS_NonUndefinedable<T> = T extends undefined ? never : T;
-type __VLS_TypePropsToOption<T> = {
-    [K in keyof T]-?: {} extends Pick<T, K> ? {
-        type: import('vue').PropType<__VLS_NonUndefinedable<T[K]>>;
-    } : {
-        type: import('vue').PropType<T[K]>;
-        required: true;
+type __VLS_TypePropsToOption<T, U = __VLS_IsUnion<T> extends true ? __VLS_PrettifyUnion<__VLS_MergeUnion<T>> : T> = {
+    [K in keyof U]-?: {
+        type: import('vue').PropType<__VLS_NonUndefinedable<U[K]>>;
+        required: {} extends Pick<U, K> ? false : true;
     };
 };
 type __VLS_PrettifyLocal<T> = {
diff --git a/test-workspace/tsc/passedFixtures/vue2/tsconfig.json b/test-workspace/tsc/passedFixtures/vue2/tsconfig.json
index cc86334474..648f05fa46 100644
--- a/test-workspace/tsc/passedFixtures/vue2/tsconfig.json
+++ b/test-workspace/tsc/passedFixtures/vue2/tsconfig.json
@@ -26,6 +26,7 @@
 		"../vue3/#4649",
 		"../vue3/#4777",
 		"../vue3/#4820",
+		"../vue3/core#12110",
 		"../vue3/components",
 		"../vue3/defineEmits",
 		"../vue3/defineModel",
diff --git a/test-workspace/tsc/passedFixtures/vue3.4/tsconfig.json b/test-workspace/tsc/passedFixtures/vue3.4/tsconfig.json
index 8a5d76fcfa..ac98bde3b2 100644
--- a/test-workspace/tsc/passedFixtures/vue3.4/tsconfig.json
+++ b/test-workspace/tsc/passedFixtures/vue3.4/tsconfig.json
@@ -12,6 +12,7 @@
 		"../vue3/#3820",
 		"../vue3/#4777",
 		"../vue3/#4820",
+		"../vue3/core#12110",
 		"../vue3/rootEl",
 		"../vue3/templateRef",
 		"../vue3/templateRef_native",
diff --git a/test-workspace/tsc/passedFixtures/vue3/core#12110/comp.vue b/test-workspace/tsc/passedFixtures/vue3/core#12110/comp.vue
new file mode 100644
index 0000000000..0d6309d91a
--- /dev/null
+++ b/test-workspace/tsc/passedFixtures/vue3/core#12110/comp.vue
@@ -0,0 +1,16 @@
+<script setup lang="ts">
+type Props = {
+	foo: string;
+} | {
+	foo?: boolean;
+	bar: string;
+};
+
+withDefaults(defineProps<Props>(), {
+	foo: true
+});
+
+defineEmits<{
+	click: [e: number]
+}>();
+</script>
diff --git a/test-workspace/tsc/passedFixtures/vue3/core#12110/main.vue b/test-workspace/tsc/passedFixtures/vue3/core#12110/main.vue
new file mode 100644
index 0000000000..396c6e5950
--- /dev/null
+++ b/test-workspace/tsc/passedFixtures/vue3/core#12110/main.vue
@@ -0,0 +1,9 @@
+<script setup lang="ts">
+import Comp from './comp.vue';
+import { exactType } from '../../shared';
+</script>
+
+<template>
+	<Comp foo="..." @click="(e) => exactType(e, {} as number)" />
+	<Comp bar="..." @click="(e) => exactType(e, {} as number)" />
+</template>