diff --git a/packages/language-core/lib/codegen/common.ts b/packages/language-core/lib/codegen/common.ts
index 5c8814310e..a2d925b5d3 100644
--- a/packages/language-core/lib/codegen/common.ts
+++ b/packages/language-core/lib/codegen/common.ts
@@ -45,11 +45,10 @@ export function collectVars(
 	ts: typeof import('typescript'),
 	node: ts.Node,
 	ast: ts.SourceFile,
-	results: string[] = [],
-	includesRest = true
+	results: string[] = []
 ) {
-	const identifiers = collectIdentifiers(ts, node, [], includesRest);
-	for (const id of identifiers) {
+	const identifiers = collectIdentifiers(ts, node, []);
+	for (const [id] of identifiers) {
 		results.push(getNodeText(ts, id, ast));
 	}
 	return results;
@@ -58,28 +57,26 @@ export function collectVars(
 export function collectIdentifiers(
 	ts: typeof import('typescript'),
 	node: ts.Node,
-	results: ts.Identifier[] = [],
-	includesRest = true
+	results: [id: ts.Identifier, isRest: boolean][] = [],
+	isRest = false
 ) {
 	if (ts.isIdentifier(node)) {
-		results.push(node);
+		results.push([node, isRest]);
 	}
 	else if (ts.isObjectBindingPattern(node)) {
 		for (const el of node.elements) {
-			if (includesRest || !el.dotDotDotToken) {
-				collectIdentifiers(ts, el.name, results, includesRest);
-			}
+			collectIdentifiers(ts, el.name, results, !!el.dotDotDotToken);
 		}
 	}
 	else if (ts.isArrayBindingPattern(node)) {
 		for (const el of node.elements) {
 			if (ts.isBindingElement(el)) {
-				collectIdentifiers(ts, el.name, results, includesRest);
+				collectIdentifiers(ts, el.name, results, !!el.dotDotDotToken);
 			}
 		}
 	}
 	else {
-		ts.forEachChild(node, node => collectIdentifiers(ts, node, results, includesRest));
+		ts.forEachChild(node, node => collectIdentifiers(ts, node, results, false));
 	}
 	return results;
 }
diff --git a/packages/language-core/lib/codegen/script/template.ts b/packages/language-core/lib/codegen/script/template.ts
index 6debf6c809..7ad0f73e53 100644
--- a/packages/language-core/lib/codegen/script/template.ts
+++ b/packages/language-core/lib/codegen/script/template.ts
@@ -231,6 +231,7 @@ function* generateCssVars(options: ScriptCodegenOptions, ctx: TemplateCodegenCon
 			for (const [segment, offset, onlyError] of forEachInterpolationSegment(
 				options.ts,
 				undefined,
+				undefined,
 				ctx,
 				cssBind.text,
 				cssBind.offset,
diff --git a/packages/language-core/lib/codegen/template/index.ts b/packages/language-core/lib/codegen/template/index.ts
index f7a55b2caf..feac4f497a 100644
--- a/packages/language-core/lib/codegen/template/index.ts
+++ b/packages/language-core/lib/codegen/template/index.ts
@@ -17,6 +17,7 @@ export interface TemplateCodegenOptions {
 	edited: boolean;
 	scriptSetupBindingNames: Set<string>;
 	scriptSetupImportComponentNames: Set<string>;
+	destructuredPropNames: Set<string>;
 	templateRefNames: Set<string>;
 	hasDefineSlots?: boolean;
 	slotsAssignName?: string;
diff --git a/packages/language-core/lib/codegen/template/interpolation.ts b/packages/language-core/lib/codegen/template/interpolation.ts
index fb6f4611cb..f2b35d5f12 100644
--- a/packages/language-core/lib/codegen/template/interpolation.ts
+++ b/packages/language-core/lib/codegen/template/interpolation.ts
@@ -25,6 +25,7 @@ export function* generateInterpolation(
 	}[] = [];
 	for (let [section, offset, onlyError] of forEachInterpolationSegment(
 		options.ts,
+		options.destructuredPropNames,
 		options.templateRefNames,
 		ctx,
 		code,
@@ -72,6 +73,7 @@ export function* generateInterpolation(
 
 export function* forEachInterpolationSegment(
 	ts: typeof import('typescript'),
+	destructuredPropNames: Set<string> | undefined,
 	templateRefNames: Set<string> | undefined,
 	ctx: TemplateCodegenContext,
 	code: string,
@@ -101,6 +103,9 @@ export function* forEachInterpolationSegment(
 				isShorthand: isShorthand,
 				offset: getStartEnd(ts, id, ast).start,
 			});
+			if (destructuredPropNames?.has(text)) {
+				return;
+			}
 			if (offset !== undefined) {
 				ctx.accessExternalVariable(text, offset + getStartEnd(ts, id, ast).start);
 			}
@@ -127,7 +132,7 @@ export function* forEachInterpolationSegment(
 			const curVar = ctxVars[i];
 			const nextVar = ctxVars[i + 1];
 
-			yield* generateVar(code, templateRefNames, curVar, nextVar);
+			yield* generateVar(code, destructuredPropNames, templateRefNames, curVar, nextVar);
 
 			if (nextVar.isShorthand) {
 				yield [code.substring(curVar.offset + curVar.text.length, nextVar.offset + nextVar.text.length), curVar.offset + curVar.text.length];
@@ -139,7 +144,7 @@ export function* forEachInterpolationSegment(
 		}
 
 		const lastVar = ctxVars.at(-1)!;
-		yield* generateVar(code, templateRefNames, lastVar);
+		yield* generateVar(code, destructuredPropNames, templateRefNames, lastVar);
 		yield [code.substring(lastVar.offset + lastVar.text.length), lastVar.offset + lastVar.text.length];
 	}
 	else {
@@ -149,6 +154,7 @@ export function* forEachInterpolationSegment(
 
 function* generateVar(
 	code: string,
+	destructuredPropNames: Set<string> | undefined,
 	templateRefNames: Set<string> | undefined,
 	curVar: {
 		text: string,
@@ -165,6 +171,7 @@ function* generateVar(
 	// fix https://github.com/vuejs/language-tools/issues/1264
 	yield ['', nextVar.offset, true];
 
+	const isDestructuredProp = destructuredPropNames?.has(curVar.text) ?? false;
 	const isTemplateRef = templateRefNames?.has(curVar.text) ?? false;
 	if (isTemplateRef) {
 		yield [`__VLS_unref(`, undefined];
@@ -172,7 +179,9 @@ function* generateVar(
 		yield [`)`, undefined];
 	}
 	else {
-		yield [`__VLS_ctx.`, undefined];
+		if (!isDestructuredProp) {
+			yield [`__VLS_ctx.`, undefined];
+		}
 		yield [code.substring(curVar.offset, curVar.offset + curVar.text.length), curVar.offset];
 	}
 }
diff --git a/packages/language-core/lib/parsers/scriptSetupRanges.ts b/packages/language-core/lib/parsers/scriptSetupRanges.ts
index 077bc4bdc9..4feccbde61 100644
--- a/packages/language-core/lib/parsers/scriptSetupRanges.ts
+++ b/packages/language-core/lib/parsers/scriptSetupRanges.ts
@@ -1,6 +1,6 @@
 import type * as ts from 'typescript';
 import type { VueCompilerOptions, TextRange } from '../types';
-import { collectVars } from '../codegen/common';
+import { collectIdentifiers } from '../codegen/common';
 
 export interface ScriptSetupRanges extends ReturnType<typeof parseScriptSetupRanges> { }
 
@@ -15,7 +15,8 @@ export function parseScriptSetupRanges(
 
 	const props: {
 		name?: string;
-		destructured?: string[];
+		destructured?: Set<string>;
+		destructuredRest?: string;
 		define?: ReturnType<typeof parseDefineFunction> & {
 			statement: TextRange;
 		};
@@ -308,7 +309,17 @@ export function parseScriptSetupRanges(
 			else if (vueCompilerOptions.macros.defineProps.includes(callText)) {
 				if (ts.isVariableDeclaration(parent)) {
 					if (ts.isObjectBindingPattern(parent.name)) {
-						props.destructured = collectVars(ts, parent.name, ast, [], false);
+						props.destructured = new Set();
+						const identifiers = collectIdentifiers(ts, parent.name, []);
+						for (const [id, isRest] of identifiers) {
+							const name = getNodeText(ts, id, ast);
+							if (isRest) {
+								props.destructuredRest = name;
+							}
+							else {
+								props.destructured.add(name);
+							}
+						}
 					}
 					else {
 						props.name = getNodeText(ts, parent.name, ast);
diff --git a/packages/language-core/lib/plugins/vue-tsx.ts b/packages/language-core/lib/plugins/vue-tsx.ts
index c529addb79..5bbea9aec1 100644
--- a/packages/language-core/lib/plugins/vue-tsx.ts
+++ b/packages/language-core/lib/plugins/vue-tsx.ts
@@ -104,6 +104,7 @@ function createTsx(
 			edited: ctx.vueCompilerOptions.__test || (fileEditTimes.get(fileName) ?? 0) >= 2,
 			scriptSetupBindingNames: scriptSetupBindingNames(),
 			scriptSetupImportComponentNames: scriptSetupImportComponentNames(),
+			destructuredPropNames: destructuredPropNames(),
 			templateRefNames: templateRefNames(),
 			hasDefineSlots: hasDefineSlots(),
 			slotsAssignName: slotsAssignName(),
@@ -144,6 +145,17 @@ function createTsx(
 		}
 		return newNames;
 	});
+	const destructuredPropNames = computed<Set<string>>(oldNames => {
+		const newNames = scriptSetupRanges()?.props.destructured ?? new Set();
+		const rest = scriptSetupRanges()?.props.destructuredRest;
+		if (rest) {
+			newNames.add(rest);
+		}
+		if (oldNames && twoSetsEqual(newNames, oldNames)) {
+			return oldNames;
+		}
+		return newNames;
+	});
 	const templateRefNames = computed<Set<string>>(oldNames => {
 		const newNames = new Set(
 			scriptSetupRanges()?.templateRefs
diff --git a/packages/language-service/lib/plugins/vue-inlayhints.ts b/packages/language-service/lib/plugins/vue-inlayhints.ts
index c17fbb7692..1e0f28f2c3 100644
--- a/packages/language-service/lib/plugins/vue-inlayhints.ts
+++ b/packages/language-service/lib/plugins/vue-inlayhints.ts
@@ -105,7 +105,7 @@ type Scope = Record<string, boolean>;
 export function findDestructuredProps(
 	ts: typeof import('typescript'),
 	ast: ts.SourceFile,
-	props: string[]
+	props: Set<string>
 ) {
 	const rootScope: Scope = {};
 	const scopeStack: Scope[] = [rootScope];
@@ -180,7 +180,7 @@ export function findDestructuredProps(
 			&& ts.isCallExpression(initializer)
 			&& initializer.expression.getText(ast) === 'defineProps';
 
-		for (const id of collectIdentifiers(ts, name)) {
+		for (const [id] of collectIdentifiers(ts, name)) {
 			if (isDefineProps) {
 				excludedIds.add(id);
 			} else {
@@ -196,7 +196,7 @@ export function findDestructuredProps(
 		}
 
 		for (const p of parameters) {
-			for (const id of collectIdentifiers(ts, p)) {
+			for (const [id] of collectIdentifiers(ts, p)) {
 				registerLocalBinding(id);
 			}
 		}
diff --git a/test-workspace/tsc/passedFixtures/vue2/tsconfig.json b/test-workspace/tsc/passedFixtures/vue2/tsconfig.json
index 156a2a05a2..cc86334474 100644
--- a/test-workspace/tsc/passedFixtures/vue2/tsconfig.json
+++ b/test-workspace/tsc/passedFixtures/vue2/tsconfig.json
@@ -25,6 +25,7 @@
 		"../vue3/#4646",
 		"../vue3/#4649",
 		"../vue3/#4777",
+		"../vue3/#4820",
 		"../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 fb41610f8e..8a5d76fcfa 100644
--- a/test-workspace/tsc/passedFixtures/vue3.4/tsconfig.json
+++ b/test-workspace/tsc/passedFixtures/vue3.4/tsconfig.json
@@ -11,6 +11,7 @@
 	"exclude": [
 		"../vue3/#3820",
 		"../vue3/#4777",
+		"../vue3/#4820",
 		"../vue3/rootEl",
 		"../vue3/templateRef",
 		"../vue3/templateRef_native",
diff --git a/test-workspace/tsc/passedFixtures/vue3/#4820/main.vue b/test-workspace/tsc/passedFixtures/vue3/#4820/main.vue
new file mode 100644
index 0000000000..3a43973dc8
--- /dev/null
+++ b/test-workspace/tsc/passedFixtures/vue3/#4820/main.vue
@@ -0,0 +1,22 @@
+<script lang="ts">
+type Foo = {
+	a: string;
+	b: number;
+};
+
+declare function func<TFoo extends Foo>(foo: TFoo, fooKey: keyof TFoo): any;
+</script>
+
+<script setup lang="ts" generic="TFoo extends Foo, TFooKey extends keyof TFoo">
+const { foo, fooKey, ...props } = defineProps<{
+	foo: TFoo;
+	fooKey: TFooKey;
+	bar: TFoo;
+	barKey: TFooKey;
+}>();
+</script>
+
+<template>
+	{{ func(foo, fooKey) }}
+	{{ func(props.bar, props.barKey) }}
+</template>