diff --git a/changelog/fix_incorrect_autocorrect_for_style_hash_transform_values.md b/changelog/fix_incorrect_autocorrect_for_style_hash_transform_values.md
new file mode 100644
index 00000000000..217c35b0a0a
--- /dev/null
+++ b/changelog/fix_incorrect_autocorrect_for_style_hash_transform_values.md
@@ -0,0 +1 @@
+* [#9940](https://github.com/rubocop/rubocop/issues/9940): Fix an incorrect auto-correct for `Style/HashTransformValues` when value is a hash literal for `_.to_h{...}`. ([@koic][])
diff --git a/lib/rubocop/cop/mixin/hash_transform_method.rb b/lib/rubocop/cop/mixin/hash_transform_method.rb
index 099a0807044..68df99b76ba 100644
--- a/lib/rubocop/cop/mixin/hash_transform_method.rb
+++ b/lib/rubocop/cop/mixin/hash_transform_method.rb
@@ -175,7 +175,12 @@ def set_new_arg_name(transformed_argname, corrector)
         end
 
         def set_new_body_expression(transforming_body_expr, corrector)
-          corrector.replace(block_node.body, transforming_body_expr.loc.expression.source)
+          body_source = transforming_body_expr.loc.expression.source
+          if transforming_body_expr.hash_type? && !transforming_body_expr.braces?
+            body_source = "{ #{body_source} }"
+          end
+
+          corrector.replace(block_node.body, body_source)
         end
       end
     end
diff --git a/spec/rubocop/cop/style/hash_transform_values_spec.rb b/spec/rubocop/cop/style/hash_transform_values_spec.rb
index 30bee15271f..0f3ec021226 100644
--- a/spec/rubocop/cop/style/hash_transform_values_spec.rb
+++ b/spec/rubocop/cop/style/hash_transform_values_spec.rb
@@ -211,6 +211,28 @@
       RUBY
     end
 
+    it 'register and corrects an offense _.to_h{...} when value is a hash literal and is enclosed in braces' do
+      expect_offense(<<~RUBY)
+        {a: 1, b: 2}.to_h { |key, val| [key, { value: val }] }
+        ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Prefer `transform_values` over `to_h {...}`.
+      RUBY
+
+      expect_correction(<<~RUBY)
+        {a: 1, b: 2}.transform_values { |val| { value: val } }
+      RUBY
+    end
+
+    it 'register and corrects an offense _.to_h{...} when value is a hash literal and is not enclosed in braces' do
+      expect_offense(<<~RUBY)
+        {a: 1, b: 2}.to_h { |key, val| [key, value: val] }
+        ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Prefer `transform_values` over `to_h {...}`.
+      RUBY
+
+      expect_correction(<<~RUBY)
+        {a: 1, b: 2}.transform_values { |val| { value: val } }
+      RUBY
+    end
+
     it 'does not flag `_.to_h{...}` when both key & value are transformed' do
       expect_no_offenses(<<~RUBY)
         x.to_h { |k, v| [k.to_sym, foo(v)] }