diff --git a/lib/util/propTypes.js b/lib/util/propTypes.js
index 889d84596e..bb0804a10a 100644
--- a/lib/util/propTypes.js
+++ b/lib/util/propTypes.js
@@ -100,7 +100,7 @@ module.exports = function propTypesInstructions(context, components, utils) {
   const defaults = {customValidators: []};
   const configuration = Object.assign({}, defaults, context.options[0] || {});
   const customValidators = configuration.customValidators;
-  const allowedGenericTypes = new Set(['SFC', 'StatelessComponent', 'FunctionComponent', 'FC']);
+  const allowedGenericTypes = new Set(['PropsWithChildren', 'SFC', 'StatelessComponent', 'FunctionComponent', 'FC']);
   const genericReactTypesImport = new Set();
 
   /**
@@ -496,6 +496,36 @@ module.exports = function propTypesInstructions(context, components, utils) {
     return {};
   }
 
+  function isValidReactGenericTypeAnnotation(annotation) {
+    if (annotation.typeName) {
+      if (annotation.typeName.name) { // if FC<Props>
+        const typeName = annotation.typeName.name;
+        if (!genericReactTypesImport.has(typeName)) {
+          return false;
+        }
+      } else if (annotation.typeName.right.name) { // if React.FC<Props>
+        const right = annotation.typeName.right.name;
+        const left = annotation.typeName.left.name;
+
+        if (!genericReactTypesImport.has(left) || !allowedGenericTypes.has(right)) {
+          return false;
+        }
+      }
+    }
+    return true;
+  }
+
+  /**
+   * Returns the left most typeName of a node, e.g: FC<Props>, React.FC<Props>
+   * The representation is used to verify nested used properties.
+   * @param {ASTNode} node
+   * @return {string | undefined}
+   */
+  function getTypeName(node) {
+    if (node.name) return node.name;
+    if (node.left) return getTypeName(node.left);
+  }
+
   class DeclarePropTypesForTSTypeAnnotation {
     constructor(propTypes, declaredPropTypes) {
       this.propTypes = propTypes;
@@ -549,8 +579,13 @@ module.exports = function propTypesInstructions(context, components, utils) {
       let typeName;
       if (astUtil.isTSTypeReference(node)) {
         typeName = node.typeName.name;
-        const shouldTraverseTypeParams = !typeName || genericReactTypesImport.has(typeName);
+        const shouldTraverseTypeParams = genericReactTypesImport.has(getTypeName(node.typeName));
         if (shouldTraverseTypeParams && node.typeParameters && node.typeParameters.length !== 0) {
+          // All react Generic types are derived from:
+          // type PropsWithChildren<P> = P & { children?: ReactNode | undefined }
+          // So we should construct an optional children prop
+          this.shouldSpecifyOptionalChildrenProps = true;
+
           const nextNode = node.typeParameters.params[0];
           this.visitTSNode(nextNode);
           return;
@@ -725,6 +760,14 @@ module.exports = function propTypesInstructions(context, components, utils) {
     }
 
     endAndStructDeclaredPropTypes() {
+      if (this.shouldSpecifyOptionalChildrenProps) {
+        this.declaredPropTypes.children = {
+          fullName: 'children',
+          name: 'children',
+          node: {},
+          isRequired: false
+        };
+      }
       this.foundDeclaredPropertiesList.forEach((tsInterfaceBody) => {
         if (tsInterfaceBody && (tsInterfaceBody.type === 'TSPropertySignature' || tsInterfaceBody.type === 'TSMethodSignature')) {
           let accessor = 'name';
@@ -928,6 +971,16 @@ module.exports = function propTypesInstructions(context, components, utils) {
           }
         });
       } else {
+        // check if its a valid generic type when `X<{...}>`
+        if (
+          param.typeAnnotation
+          && param.typeAnnotation.typeAnnotation
+          && param.typeAnnotation.typeAnnotation.type === 'TSTypeReference'
+          && param.typeAnnotation.typeAnnotation.typeParameters != null
+          && !isValidReactGenericTypeAnnotation(param.typeAnnotation.typeAnnotation)
+        ) {
+          return;
+        }
         markPropTypesAsDeclared(node, resolveTypeAnnotation(param));
       }
     } else {
@@ -942,21 +995,8 @@ module.exports = function propTypesInstructions(context, components, utils) {
         return;
       }
 
-      if (annotation.typeName) {
-        if (annotation.typeName.name) { // if FC<Props>
-          const typeName = annotation.typeName.name;
-          if (!genericReactTypesImport.has(typeName)) {
-            return;
-          }
-        } else if (annotation.typeName.right.name) { // if React.FC<Props>
-          const right = annotation.typeName.right.name;
-          const left = annotation.typeName.left.name;
+      if (!isValidReactGenericTypeAnnotation(annotation)) return;
 
-          if (!genericReactTypesImport.has(left) || !allowedGenericTypes.has(right)) {
-            return;
-          }
-        }
-      }
       markPropTypesAsDeclared(node, resolveTypeAnnotation(siblingIdentifier));
     }
   }
diff --git a/tests/lib/rules/prop-types.js b/tests/lib/rules/prop-types.js
index 1e778596ec..d02c5f94a1 100644
--- a/tests/lib/rules/prop-types.js
+++ b/tests/lib/rules/prop-types.js
@@ -3292,6 +3292,17 @@ ruleTester.run('prop-types', rule, {
           }
         `,
         parser: parsers['@TYPESCRIPT_ESLINT']
+      },
+      {
+        code: `
+          import React from 'react';
+
+          const MyComponent = (props: React.PropsWithChildren<{ username: string }>): React.ReactElement => {
+            return <>{props.children}{props.username}</>;
+          };
+
+        `,
+        parser: parsers['@TYPESCRIPT_ESLINT']
       }
     ]),
     {