diff --git a/src/__tests__/github_issues/358-test.ts b/src/__tests__/github_issues/358-test.ts
new file mode 100644
index 00000000..3f45edc1
--- /dev/null
+++ b/src/__tests__/github_issues/358-test.ts
@@ -0,0 +1,42 @@
+import { composeMongoose } from '../../index';
+import { mongoose } from '../../__mocks__/mongooseCommon';
+
+// mongoose.set('debug', true);
+
+const WithSubSchema = new mongoose.Schema({
+  subDocument: new mongoose.Schema({
+    field: { type: String, default: 'Hey' },
+  }),
+});
+
+const WithoutSubSchema = new mongoose.Schema({
+  subDocument: {
+    field: { type: String, default: 'Hey' },
+  },
+});
+
+const WithSubModel = mongoose.model('WithSubModel', WithSubSchema);
+const WithoutSubModel = mongoose.model('WithoutSubModel', WithoutSubSchema);
+
+describe('defaultsAsNonNull falsely reports non-nullability for subdocuments that have a Schema  - issue #358', () => {
+  it('with sub schema', async () => {
+    const WithSubTC = composeMongoose(WithSubModel, { defaultsAsNonNull: true });
+
+    // sub-Schema breaks the "recursive default value assignation" behavior
+    const data = new WithSubModel().subDocument;
+    expect(data).toEqual(undefined);
+
+    // so field should not be non-null
+    expect(WithSubTC.getFieldTypeName('subDocument')).toBe('WithSubModelSubDocument');
+  });
+
+  it('as nested fields', async () => {
+    const WithoutSubTC = composeMongoose(WithoutSubModel, { defaultsAsNonNull: true });
+
+    const data = new WithoutSubModel().subDocument;
+    expect(data).toEqual({ field: 'Hey' });
+
+    // should be non-null!
+    expect(WithoutSubTC.getFieldTypeName('subDocument')).toBe('WithoutSubModelSubDocument!');
+  });
+});
diff --git a/src/composeMongoose.ts b/src/composeMongoose.ts
index 0500fa74..456f0458 100644
--- a/src/composeMongoose.ts
+++ b/src/composeMongoose.ts
@@ -163,6 +163,12 @@ function makeFieldsNonNullWithDefaultValues(
     const fc = tc.getField(fieldName);
     // traverse nested Object types
     if (fc.type instanceof ObjectTypeComposer) {
+      if (fc.extensions?.isSingleNestedMongooseSchema) {
+        // sub-Schema breaks the "recursive default value assignation" behavior
+        // @see https://github.com/graphql-compose/graphql-compose-mongoose/issues/358
+        return;
+      }
+
       makeFieldsNonNullWithDefaultValues(fc.type);
       if (fc.type.getExtension('hasFieldsWithDefaultValue')) {
         tc.makeFieldNonNull(fieldName);
diff --git a/src/fieldsConverter.ts b/src/fieldsConverter.ts
index aa01d8e2..a2e07240 100644
--- a/src/fieldsConverter.ts
+++ b/src/fieldsConverter.ts
@@ -189,6 +189,12 @@ export function convertModelToGraphQL<TDoc extends Document, TContext>(
       description: _getFieldDescription(mongooseField),
     };
 
+    if (mongooseField?.schema && (mongooseField as any)?.$isSingleNested) {
+      graphqlFields[fieldName].extensions = {
+        isSingleNestedMongooseSchema: true,
+      };
+    }
+
     if (mongooseField?.defaultValue !== null && mongooseField?.defaultValue !== undefined) {
       if (!graphqlFields[fieldName].extensions) graphqlFields[fieldName].extensions = {};
       (graphqlFields as any)[fieldName].extensions.defaultValue = mongooseField?.defaultValue;