diff --git a/packages/nuxt/src/app/composables/asyncData.ts b/packages/nuxt/src/app/composables/asyncData.ts
index 75d21f30a479..eba8f205a519 100644
--- a/packages/nuxt/src/app/composables/asyncData.ts
+++ b/packages/nuxt/src/app/composables/asyncData.ts
@@ -13,7 +13,14 @@ export type PickFrom<T, K extends Array<string>> = T extends Array<any>
     : Pick<T, K[number]>
   : T
 
-export type KeysOf<T> = Array<keyof T extends string ? keyof T : string>
+export type KeysOf<T> = Array<
+  T extends T // Include all keys of union types, not just common keys
+  ? keyof T extends string
+    ? keyof T
+    : string
+  : never
+>
+
 export type KeyOfRes<Transform extends _Transform> = KeysOf<ReturnType<Transform>>
 
 type MultiWatchSources = (WatchSource<unknown> | object)[]
diff --git a/test/fixtures/basic/server/api/union.ts b/test/fixtures/basic/server/api/union.ts
new file mode 100644
index 000000000000..9358a00ecc29
--- /dev/null
+++ b/test/fixtures/basic/server/api/union.ts
@@ -0,0 +1,4 @@
+export default defineEventHandler(() => ({
+  type: 'a',
+  foo: 'bar'
+}) as { type: 'a', foo: string } | { type: 'b', baz: string })
diff --git a/test/fixtures/basic/types.ts b/test/fixtures/basic/types.ts
index a73c8738f2c7..db32fda10d43 100644
--- a/test/fixtures/basic/types.ts
+++ b/test/fixtures/basic/types.ts
@@ -17,6 +17,7 @@ describe('API routes', () => {
   it('generates types for routes', () => {
     expectTypeOf($fetch('/api/hello')).toEqualTypeOf<Promise<string>>()
     expectTypeOf($fetch('/api/hey')).toEqualTypeOf<Promise<{ foo: string, baz: string }>>()
+    expectTypeOf($fetch('/api/union')).toEqualTypeOf<Promise<{ type: 'a', foo: string } | { type: 'b', baz: string }>>()
     expectTypeOf($fetch('/api/other')).toEqualTypeOf<Promise<unknown>>()
     expectTypeOf($fetch<TestResponse>('/test')).toEqualTypeOf<Promise<TestResponse>>()
   })
@@ -25,6 +26,8 @@ describe('API routes', () => {
     expectTypeOf(useAsyncData('api-hello', () => $fetch('/api/hello')).data).toEqualTypeOf<Ref<string | null>>()
     expectTypeOf(useAsyncData('api-hey', () => $fetch('/api/hey')).data).toEqualTypeOf<Ref<{ foo: string, baz: string } | null>>()
     expectTypeOf(useAsyncData('api-hey-with-pick', () => $fetch('/api/hey'), { pick: ['baz'] }).data).toEqualTypeOf<Ref<{ baz: string } | null>>()
+    expectTypeOf(useAsyncData('api-union', () => $fetch('/api/union')).data).toEqualTypeOf<Ref<{ type: 'a', foo: string } | { type: 'b', baz: string } | null>>()
+    expectTypeOf(useAsyncData('api-union-with-pick', () => $fetch('/api/union'), { pick: ['type'] }).data).toEqualTypeOf<Ref<{ type: 'a' } | { type: 'b' } | null>>()
     expectTypeOf(useAsyncData('api-other', () => $fetch('/api/other')).data).toEqualTypeOf<Ref<unknown>>()
     expectTypeOf(useAsyncData<TestResponse>('api-generics', () => $fetch('/test')).data).toEqualTypeOf<Ref<TestResponse | null>>()
 
@@ -34,6 +37,8 @@ describe('API routes', () => {
     expectTypeOf(useLazyAsyncData('lazy-api-hello', () => $fetch('/api/hello')).data).toEqualTypeOf<Ref<string | null>>()
     expectTypeOf(useLazyAsyncData('lazy-api-hey', () => $fetch('/api/hey')).data).toEqualTypeOf<Ref<{ foo: string, baz: string } | null>>()
     expectTypeOf(useLazyAsyncData('lazy-api-hey-with-pick', () => $fetch('/api/hey'), { pick: ['baz'] }).data).toEqualTypeOf<Ref<{ baz: string } | null>>()
+    expectTypeOf(useLazyAsyncData('lazy-api-union', () => $fetch('/api/union')).data).toEqualTypeOf<Ref<{ type: 'a', foo: string } | { type: 'b', baz: string } | null>>()
+    expectTypeOf(useLazyAsyncData('lazy-api-union-with-pick', () => $fetch('/api/union'), { pick: ['type'] }).data).toEqualTypeOf<Ref<{ type: 'a' } | { type: 'b' } | null>>()
     expectTypeOf(useLazyAsyncData('lazy-api-other', () => $fetch('/api/other')).data).toEqualTypeOf<Ref<unknown>>()
     expectTypeOf(useLazyAsyncData<TestResponse>('lazy-api-generics', () => $fetch('/test')).data).toEqualTypeOf<Ref<TestResponse | null>>()
 
@@ -45,6 +50,8 @@ describe('API routes', () => {
     expectTypeOf(useFetch('/api/hello').data).toEqualTypeOf<Ref<string | null>>()
     expectTypeOf(useFetch('/api/hey').data).toEqualTypeOf<Ref<{ foo: string, baz: string } | null>>()
     expectTypeOf(useFetch('/api/hey', { pick: ['baz'] }).data).toEqualTypeOf<Ref<{ baz: string } | null>>()
+    expectTypeOf(useFetch('/api/union').data).toEqualTypeOf<Ref<{ type: 'a', foo: string } | { type: 'b', baz: string } | null>>()
+    expectTypeOf(useFetch('/api/union', { pick: ['type'] }).data).toEqualTypeOf<Ref<{ type: 'a' } | { type: 'b' } | null>>()
     expectTypeOf(useFetch('/api/other').data).toEqualTypeOf<Ref<unknown>>()
     expectTypeOf(useFetch<TestResponse>('/test').data).toEqualTypeOf<Ref<TestResponse | null>>()
 
@@ -54,7 +61,8 @@ describe('API routes', () => {
     expectTypeOf(useLazyFetch('/api/hello').data).toEqualTypeOf<Ref<string | null>>()
     expectTypeOf(useLazyFetch('/api/hey').data).toEqualTypeOf<Ref<{ foo: string, baz: string } | null>>()
     expectTypeOf(useLazyFetch('/api/hey', { pick: ['baz'] }).data).toEqualTypeOf<Ref<{ baz: string } | null>>()
-    expectTypeOf(useLazyFetch('/api/other').data).toEqualTypeOf<Ref<unknown>>()
+    expectTypeOf(useLazyFetch('/api/union').data).toEqualTypeOf<Ref<{ type: 'a', foo: string } | { type: 'b', baz: string } | null>>()
+    expectTypeOf(useLazyFetch('/api/union', { pick: ['type'] }).data).toEqualTypeOf<Ref<{ type: 'a' } | { type: 'b' } | null>>()
     expectTypeOf(useLazyFetch('/api/other').data).toEqualTypeOf<Ref<unknown>>()
     expectTypeOf(useLazyFetch<TestResponse>('/test').data).toEqualTypeOf<Ref<TestResponse | null>>()