diff --git a/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts b/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts
index 344159d0b6072..0fe516da977e3 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts
@@ -23,6 +23,7 @@ import {
   markPredecessors,
   reversePostorderBlocks,
 } from '../HIR/HIRBuilder';
+import {CompilerError} from '..';
 
 function createSymbolProperty(
   fn: HIRFunction,
@@ -151,6 +152,16 @@ function createPropsProperties(
   let refProperty: ObjectProperty | undefined;
   let keyProperty: ObjectProperty | undefined;
   const props: Array<ObjectProperty | SpreadPattern> = [];
+  const jsxAttributesWithoutKeyAndRef = propAttributes.filter(
+    p => p.kind === 'JsxAttribute' && p.name !== 'key' && p.name !== 'ref',
+  );
+  const jsxSpreadAttributes = propAttributes.filter(
+    p => p.kind === 'JsxSpreadAttribute',
+  );
+  const spreadPropsOnly =
+    jsxAttributesWithoutKeyAndRef.length === 0 &&
+    jsxSpreadAttributes.length === 1;
+
   propAttributes.forEach(prop => {
     switch (prop.kind) {
       case 'JsxAttribute': {
@@ -180,7 +191,6 @@ function createPropsProperties(
         break;
       }
       case 'JsxSpreadAttribute': {
-        // TODO: Optimize spreads to pass object directly if none of its properties are mutated
         props.push({
           kind: 'Spread',
           place: {...prop.argument},
@@ -189,6 +199,7 @@ function createPropsProperties(
       }
     }
   });
+
   const propsPropertyPlace = createTemporaryPlace(fn.env, instr.value.loc);
   if (children) {
     let childrenPropProperty: ObjectProperty;
@@ -268,23 +279,39 @@ function createPropsProperties(
     nextInstructions.push(keyInstruction);
   }
 
-  const propsInstruction: Instruction = {
-    id: makeInstructionId(0),
-    lvalue: {...propsPropertyPlace, effect: Effect.Mutate},
-    value: {
-      kind: 'ObjectExpression',
-      properties: props,
-      loc: instr.value.loc,
-    },
-    loc: instr.loc,
-  };
-  const propsProperty: ObjectProperty = {
-    kind: 'ObjectProperty',
-    key: {name: 'props', kind: 'string'},
-    type: 'property',
-    place: {...propsPropertyPlace, effect: Effect.Capture},
-  };
-  nextInstructions.push(propsInstruction);
+  let propsProperty: ObjectProperty;
+  if (spreadPropsOnly) {
+    const spreadProp = jsxSpreadAttributes[0];
+    CompilerError.invariant(spreadProp.kind === 'JsxSpreadAttribute', {
+      reason: 'Spread prop attribute must be of kind JSXSpreadAttribute',
+      loc: instr.loc,
+    });
+    propsProperty = {
+      kind: 'ObjectProperty',
+      key: {name: 'props', kind: 'string'},
+      type: 'property',
+      place: {...spreadProp.argument, effect: Effect.Mutate},
+    };
+  } else {
+    const propsInstruction: Instruction = {
+      id: makeInstructionId(0),
+      lvalue: {...propsPropertyPlace, effect: Effect.Mutate},
+      value: {
+        kind: 'ObjectExpression',
+        properties: props,
+        loc: instr.value.loc,
+      },
+      loc: instr.loc,
+    };
+    propsProperty = {
+      kind: 'ObjectProperty',
+      key: {name: 'props', kind: 'string'},
+      type: 'property',
+      place: {...propsPropertyPlace, effect: Effect.Capture},
+    };
+    nextInstructions.push(propsInstruction);
+  }
+
   return {refProperty, keyProperty, propsProperty};
 }
 
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md
index f399317925c64..6dd899d5c7408 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md
@@ -28,9 +28,9 @@ function ParentAndRefAndKey(props) {
 function ParentAndChildren(props) {
   return (
     <Parent>
-      <Child key="a" />
+      <Child key="a" {...props} />
       <Child key="b">
-        <GrandChild className={props.foo} />
+        <GrandChild className={props.foo} {...props} />
       </Child>
     </Parent>
   );
@@ -38,7 +38,12 @@ function ParentAndChildren(props) {
 
 const propsToSpread = {a: 'a', b: 'b', c: 'c'};
 function PropsSpread() {
-  return <Test {...propsToSpread} />;
+  return (
+    <>
+      <Test {...propsToSpread} />
+      <Test {...propsToSpread} a="z" />
+    </>
+  );
 }
 
 export const FIXTURE_ENTRYPOINT = {
@@ -146,54 +151,59 @@ function ParentAndRefAndKey(props) {
 }
 
 function ParentAndChildren(props) {
-  const $ = _c2(3);
+  const $ = _c2(7);
   let t0;
-  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
+  if ($[0] !== props) {
     t0 = {
       $$typeof: Symbol.for("react.transitional.element"),
       type: Child,
       ref: null,
       key: "a",
-      props: {},
+      props: props,
     };
-    $[0] = t0;
+    $[0] = props;
+    $[1] = t0;
   } else {
-    t0 = $[0];
+    t0 = $[1];
   }
   let t1;
-  if ($[1] !== props.foo) {
+  if ($[2] !== props) {
     t1 = {
       $$typeof: Symbol.for("react.transitional.element"),
-      type: Parent,
+      type: Child,
       ref: null,
-      key: null,
+      key: "b",
       props: {
-        children: [
-          t0,
-          {
-            $$typeof: Symbol.for("react.transitional.element"),
-            type: Child,
-            ref: null,
-            key: "b",
-            props: {
-              children: {
-                $$typeof: Symbol.for("react.transitional.element"),
-                type: GrandChild,
-                ref: null,
-                key: null,
-                props: { className: props.foo },
-              },
-            },
-          },
-        ],
+        children: {
+          $$typeof: Symbol.for("react.transitional.element"),
+          type: GrandChild,
+          ref: null,
+          key: null,
+          props: { className: props.foo, ...props },
+        },
       },
     };
-    $[1] = props.foo;
-    $[2] = t1;
+    $[2] = props;
+    $[3] = t1;
   } else {
-    t1 = $[2];
+    t1 = $[3];
   }
-  return t1;
+  let t2;
+  if ($[4] !== t0 || $[5] !== t1) {
+    t2 = {
+      $$typeof: Symbol.for("react.transitional.element"),
+      type: Parent,
+      ref: null,
+      key: null,
+      props: { children: [t0, t1] },
+    };
+    $[4] = t0;
+    $[5] = t1;
+    $[6] = t2;
+  } else {
+    t2 = $[6];
+  }
+  return t2;
 }
 
 const propsToSpread = { a: "a", b: "b", c: "c" };
@@ -203,10 +213,27 @@ function PropsSpread() {
   if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
     t0 = {
       $$typeof: Symbol.for("react.transitional.element"),
-      type: Test,
+      type: Symbol.for("react.fragment"),
       ref: null,
       key: null,
-      props: { ...propsToSpread },
+      props: {
+        children: [
+          {
+            $$typeof: Symbol.for("react.transitional.element"),
+            type: Test,
+            ref: null,
+            key: null,
+            props: propsToSpread,
+          },
+          {
+            $$typeof: Symbol.for("react.transitional.element"),
+            type: Test,
+            ref: null,
+            key: null,
+            props: { ...propsToSpread, a: "z" },
+          },
+        ],
+      },
     };
     $[0] = t0;
   } else {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js
index 29acaf60d276f..4a9d53b6f4b96 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js
@@ -24,9 +24,9 @@ function ParentAndRefAndKey(props) {
 function ParentAndChildren(props) {
   return (
     <Parent>
-      <Child key="a" />
+      <Child key="a" {...props} />
       <Child key="b">
-        <GrandChild className={props.foo} />
+        <GrandChild className={props.foo} {...props} />
       </Child>
     </Parent>
   );
@@ -34,7 +34,12 @@ function ParentAndChildren(props) {
 
 const propsToSpread = {a: 'a', b: 'b', c: 'c'};
 function PropsSpread() {
-  return <Test {...propsToSpread} />;
+  return (
+    <>
+      <Test {...propsToSpread} />
+      <Test {...propsToSpread} a="z" />
+    </>
+  );
 }
 
 export const FIXTURE_ENTRYPOINT = {