diff --git a/packages/sanity/src/_internal/cli/actions/graphql/extractFromSanitySchema.ts b/packages/sanity/src/_internal/cli/actions/graphql/extractFromSanitySchema.ts
index 1ca695844c81..ec9a28d7d43d 100644
--- a/packages/sanity/src/_internal/cli/actions/graphql/extractFromSanitySchema.ts
+++ b/packages/sanity/src/_internal/cli/actions/graphql/extractFromSanitySchema.ts
@@ -481,7 +481,9 @@ export function extractFromSanitySchema(
     }
 
     try {
-      unionRecursionGuards.add(guardPathName)
+      if (guardPathName !== 'reference') {
+        unionRecursionGuards.add(guardPathName)
+      }
 
       candidates.forEach((def, i) => {
         if (typeNeedsHoisting(def)) {
diff --git a/packages/sanity/test/cli/graphql/extract.test.ts b/packages/sanity/test/cli/graphql/extract.test.ts
index 1e189f611cbb..8d2bf0582099 100644
--- a/packages/sanity/test/cli/graphql/extract.test.ts
+++ b/packages/sanity/test/cli/graphql/extract.test.ts
@@ -4,6 +4,7 @@ import {afterEach, beforeEach, describe, expect, it, vi} from 'vitest'
 import {extractFromSanitySchema} from '../../../src/_internal/cli/actions/graphql/extractFromSanitySchema'
 import {type ApiSpecification} from '../../../src/_internal/cli/actions/graphql/types'
 import testStudioSchema from './fixtures/test-studio'
+import unionRefsSchema from './fixtures/union-refs'
 
 describe('GraphQL - Schema extraction', () => {
   beforeEach(() => {
@@ -15,13 +16,21 @@ describe('GraphQL - Schema extraction', () => {
     vi.runAllTimers()
   })
 
-  it('Should be able to extract schema', () => {
+  it('Should be able to extract schema 1', () => {
     const extracted = extractFromSanitySchema(testStudioSchema, {
       nonNullDocumentFields: false,
     })
 
     expect(sortExtracted(extracted)).toMatchSnapshot()
   })
+
+  it('Should be able to extract schema 2', () => {
+    const extracted = extractFromSanitySchema(unionRefsSchema, {
+      nonNullDocumentFields: false,
+    })
+
+    expect(sortExtracted(extracted)).toMatchSnapshot()
+  })
 })
 
 function sortExtracted(schema: ApiSpecification) {
diff --git a/packages/sanity/test/cli/graphql/fixtures/union-refs.ts b/packages/sanity/test/cli/graphql/fixtures/union-refs.ts
new file mode 100644
index 000000000000..94cdf6d4b5aa
--- /dev/null
+++ b/packages/sanity/test/cli/graphql/fixtures/union-refs.ts
@@ -0,0 +1,483 @@
+import {Schema} from '@sanity/schema'
+import {defineField, defineType} from 'sanity'
+
+export const root = defineType({
+  name: 'title',
+  type: 'array',
+  of: [
+    {
+      type: 'reference',
+      to: [{type: 'union'}, {type: 'a'}],
+    },
+  ],
+})
+
+export const union = defineType({
+  type: 'document',
+  name: 'union',
+  fields: [
+    defineField({
+      name: 'body',
+      type: 'array',
+      of: [
+        {
+          type: 'reference',
+          to: [{type: 'a'}, {type: 'b'}],
+        },
+        {type: 'a'},
+      ],
+    }),
+  ],
+})
+
+export const a = defineType({
+  type: 'document',
+  name: 'a',
+  fields: [defineField({name: 'title', type: 'string'})],
+})
+export const b = defineType({
+  type: 'document',
+  name: 'b',
+  fields: [defineField({name: 'title', type: 'string'})],
+})
+//export const schemaTypes = [root, union, a, b]
+export default Schema.compile({
+  types: [
+    root,
+    union,
+    a,
+    b,
+    {
+      title: 'Geographical Point',
+      name: 'geopoint',
+      type: 'object',
+      fields: [
+        {
+          name: 'lat',
+          type: 'number',
+          title: 'Latitude',
+        },
+        {
+          name: 'lng',
+          type: 'number',
+          title: 'Longitude',
+        },
+        {
+          name: 'alt',
+          type: 'number',
+          title: 'Altitude',
+        },
+      ],
+    },
+    {
+      name: 'sanity.fileAsset',
+      title: 'File',
+      type: 'document',
+      fieldsets: [
+        {
+          name: 'system',
+          title: 'System fields',
+          description: 'These fields are managed by the system and not editable',
+        },
+      ],
+      fields: [
+        {
+          name: 'originalFilename',
+          type: 'string',
+          title: 'Original file name',
+          readOnly: true,
+        },
+        {
+          name: 'label',
+          type: 'string',
+          title: 'Label',
+        },
+        {
+          name: 'title',
+          type: 'string',
+          title: 'Title',
+        },
+        {
+          name: 'description',
+          type: 'string',
+          title: 'Description',
+        },
+        {
+          name: 'altText',
+          type: 'string',
+          title: 'Alternative text',
+        },
+        {
+          name: 'sha1hash',
+          type: 'string',
+          title: 'SHA1 hash',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'extension',
+          type: 'string',
+          title: 'File extension',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'mimeType',
+          type: 'string',
+          title: 'Mime type',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'size',
+          type: 'number',
+          title: 'File size in bytes',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'assetId',
+          type: 'string',
+          title: 'Asset ID',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'path',
+          type: 'string',
+          title: 'Path',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'url',
+          type: 'string',
+          title: 'Url',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'source',
+          type: 'sanity.assetSourceData',
+          title: 'Source',
+          readOnly: true,
+          fieldset: 'system',
+        },
+      ],
+      preview: {
+        select: {
+          title: 'originalFilename',
+          path: 'path',
+          mimeType: 'mimeType',
+          size: 'size',
+        },
+        prepare(doc: any) {
+          return {
+            title: doc.title || doc.path.split('/').slice(-1)[0],
+            subtitle: `${doc.mimeType} (${(doc.size / 1024 / 1024).toFixed(2)} MB)`,
+          }
+        },
+      },
+      orderings: [
+        {
+          title: 'File size',
+          name: 'fileSizeDesc',
+          by: [{field: 'size', direction: 'desc'}],
+        },
+      ],
+    },
+    {
+      name: 'sanity.imageHotspot',
+      title: 'Image hotspot',
+      type: 'object',
+      fields: [
+        {
+          name: 'x',
+          type: 'number',
+        },
+        {
+          name: 'y',
+          type: 'number',
+        },
+        {
+          name: 'height',
+          type: 'number',
+        },
+        {
+          name: 'width',
+          type: 'number',
+        },
+      ],
+    },
+    {
+      name: 'sanity.imageMetadata',
+      title: 'Image metadata',
+      type: 'object',
+      fieldsets: [
+        {
+          name: 'extra',
+          title: 'Extra metadata…',
+          options: {
+            collapsable: true,
+          },
+        },
+      ],
+      fields: [
+        {
+          name: 'location',
+          type: 'geopoint',
+        },
+        {
+          name: 'dimensions',
+          title: 'Dimensions',
+          type: 'sanity.imageDimensions',
+          fieldset: 'extra',
+        },
+        {
+          name: 'palette',
+          type: 'sanity.imagePalette',
+          title: 'Palette',
+          fieldset: 'extra',
+        },
+        {
+          name: 'lqip',
+          title: 'LQIP (Low-Quality Image Placeholder)',
+          type: 'string',
+          readOnly: true,
+        },
+        {
+          name: 'blurHash',
+          title: 'BlurHash',
+          type: 'string',
+          readOnly: true,
+        },
+        {
+          name: 'hasAlpha',
+          title: 'Has alpha channel',
+          type: 'boolean',
+          readOnly: true,
+        },
+        {
+          name: 'isOpaque',
+          title: 'Is opaque',
+          type: 'boolean',
+          readOnly: true,
+        },
+      ],
+    },
+    {
+      name: 'sanity.assetSourceData',
+      title: 'Asset Source Data',
+      type: 'object',
+      fields: [
+        {
+          name: 'name',
+          title: 'Source name',
+          description: 'A canonical name for the source this asset is originating from',
+          type: 'string',
+        },
+        {
+          name: 'id',
+          title: 'Asset Source ID',
+          description:
+            'The unique ID for the asset within the originating source so you can programatically find back to it',
+          type: 'string',
+        },
+        {
+          name: 'url',
+          title: 'Asset information URL',
+          description: 'A URL to find more information about this asset in the originating source',
+          type: 'string',
+        },
+      ],
+    },
+    {
+      name: 'sanity.imageCrop',
+      title: 'Image crop',
+      type: 'object',
+      fields: [
+        {
+          name: 'top',
+          type: 'number',
+        },
+        {
+          name: 'bottom',
+          type: 'number',
+        },
+        {
+          name: 'left',
+          type: 'number',
+        },
+        {
+          name: 'right',
+          type: 'number',
+        },
+      ],
+    },
+    {
+      name: 'sanity.imageDimensions',
+      type: 'object',
+      title: 'Image dimensions',
+      fields: [
+        {name: 'height', type: 'number', title: 'Height', readOnly: true},
+        {name: 'width', type: 'number', title: 'Width', readOnly: true},
+        {name: 'aspectRatio', type: 'number', title: 'Aspect ratio', readOnly: true},
+      ],
+    },
+    {
+      name: 'sanity.imagePalette',
+      title: 'Image palette',
+      type: 'object',
+      fields: [
+        {name: 'darkMuted', type: 'sanity.imagePaletteSwatch', title: 'Dark Muted'},
+        {name: 'lightVibrant', type: 'sanity.imagePaletteSwatch', title: 'Light Vibrant'},
+        {name: 'darkVibrant', type: 'sanity.imagePaletteSwatch', title: 'Dark Vibrant'},
+        {name: 'vibrant', type: 'sanity.imagePaletteSwatch', title: 'Vibrant'},
+        {name: 'dominant', type: 'sanity.imagePaletteSwatch', title: 'Dominant'},
+        {name: 'lightMuted', type: 'sanity.imagePaletteSwatch', title: 'Light Muted'},
+        {name: 'muted', type: 'sanity.imagePaletteSwatch', title: 'Muted'},
+      ],
+    },
+    {
+      name: 'sanity.imagePaletteSwatch',
+      title: 'Image palette swatch',
+      type: 'object',
+      fields: [
+        {name: 'background', type: 'string', title: 'Background', readOnly: true},
+        {name: 'foreground', type: 'string', title: 'Foreground', readOnly: true},
+        {name: 'population', type: 'number', title: 'Population', readOnly: true},
+        {name: 'title', type: 'string', title: 'String', readOnly: true},
+      ],
+    },
+    {
+      name: 'sanity.imageAsset',
+      title: 'Image',
+      type: 'document',
+      fieldsets: [
+        {
+          name: 'system',
+          title: 'System fields',
+          description: 'These fields are managed by the system and not editable',
+        },
+      ],
+      fields: [
+        {
+          name: 'originalFilename',
+          type: 'string',
+          title: 'Original file name',
+          readOnly: true,
+        },
+        {
+          name: 'label',
+          type: 'string',
+          title: 'Label',
+        },
+        {
+          name: 'title',
+          type: 'string',
+          title: 'Title',
+        },
+        {
+          name: 'description',
+          type: 'string',
+          title: 'Description',
+        },
+        {
+          name: 'altText',
+          type: 'string',
+          title: 'Alternative text',
+        },
+        {
+          name: 'sha1hash',
+          type: 'string',
+          title: 'SHA1 hash',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'extension',
+          type: 'string',
+          readOnly: true,
+          title: 'File extension',
+          fieldset: 'system',
+        },
+        {
+          name: 'mimeType',
+          type: 'string',
+          readOnly: true,
+          title: 'Mime type',
+          fieldset: 'system',
+        },
+        {
+          name: 'size',
+          type: 'number',
+          title: 'File size in bytes',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'assetId',
+          type: 'string',
+          title: 'Asset ID',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'uploadId',
+          type: 'string',
+          readOnly: true,
+          hidden: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'path',
+          type: 'string',
+          title: 'Path',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'url',
+          type: 'string',
+          title: 'Url',
+          readOnly: true,
+          fieldset: 'system',
+        },
+        {
+          name: 'metadata',
+          type: 'sanity.imageMetadata',
+          title: 'Metadata',
+        },
+        {
+          name: 'source',
+          type: 'sanity.assetSourceData',
+          title: 'Source',
+          readOnly: true,
+          fieldset: 'system',
+        },
+      ],
+      preview: {
+        select: {
+          id: '_id',
+          title: 'originalFilename',
+          mimeType: 'mimeType',
+          size: 'size',
+        },
+        prepare(doc: any) {
+          return {
+            title: doc.title || doc.path.split('/').slice(-1)[0],
+            media: {asset: {_ref: doc.id}},
+            subtitle: `${doc.mimeType} (${(doc.size / 1024 / 1024).toFixed(2)} MB)`,
+          }
+        },
+      },
+      orderings: [
+        {
+          title: 'File size',
+          name: 'fileSizeDesc',
+          by: [{field: 'size', direction: 'desc'}],
+        },
+      ],
+    },
+  ],
+})
diff --git a/packages/sanity/test/cli/graphql/gen3.test.ts b/packages/sanity/test/cli/graphql/gen3.test.ts
index c57d7d7bb5f4..f1316a4078ce 100644
--- a/packages/sanity/test/cli/graphql/gen3.test.ts
+++ b/packages/sanity/test/cli/graphql/gen3.test.ts
@@ -46,6 +46,7 @@ describe('GraphQL - Generation 3', () => {
   describe.each([
     {name: 'testStudioSchema', sanitySchema: testStudioSchema},
     {name: 'manySelfRefsSchema', sanitySchema: manySelfRefsSchema},
+    {name: 'unionRefsSchema', sanitySchema: unionRefsSchema},
   ])(`Union cache: sanitySchema: $name`, ({sanitySchema}) => {
     /**
      * @jest-environment jsdom