diff --git a/changes/1710-PrettyWood.md b/changes/1710-PrettyWood.md
index 9faa736578..67926fe454 100644
--- a/changes/1710-PrettyWood.md
+++ b/changes/1710-PrettyWood.md
@@ -1 +1 @@
-fix validation of nested models with `default_factory`
\ No newline at end of file
+fix validation and parsing of nested models with `default_factory`
\ No newline at end of file
diff --git a/tests/test_main.py b/tests/test_main.py
index 571a45f920..05e931a6df 100644
--- a/tests/test_main.py
+++ b/tests/test_main.py
@@ -1186,6 +1186,19 @@ class Parent(BaseModel):
         Parent(children=[{'x': 1}, {'y': 2}])
 
 
+def test_default_factory_parse():
+    class Inner(BaseModel):
+        val: int = Field(0)
+
+    class Outer(BaseModel):
+        inner_1: Inner = Field(default_factory=Inner)
+        inner_2: Inner = Field(Inner())
+
+    default = Outer().dict()
+    parsed = Outer.parse_obj(default)
+    assert repr(parsed) == 'Outer(inner_1=Inner(val=0), inner_2=Inner(val=0))'
+
+
 @pytest.mark.skipif(sys.version_info < (3, 7), reason='field constraints are set but not enforced with python 3.6')
 def test_none_min_max_items():
     # None default