diff --git a/.changeset/spotty-poets-bathe.md b/.changeset/spotty-poets-bathe.md
new file mode 100644
index 000000000..8228beca7
--- /dev/null
+++ b/.changeset/spotty-poets-bathe.md
@@ -0,0 +1,5 @@
+---
+'formik': patch
+---
+
+Value of setFieldValue can be a function that takes previous field value
diff --git a/docs/api/formik.md b/docs/api/formik.md
index 09c0c159b..9fa07f3a4 100644
--- a/docs/api/formik.md
+++ b/docs/api/formik.md
@@ -193,7 +193,7 @@ Trigger a form submission. The promise will be rejected if form is invalid.
 Number of times user tried to submit the form. Increases when [`handleSubmit`](#handlesubmit-e-reactformeventhtmlformelement--void) is called, resets after calling
 [`handleReset`](#handlereset---void). `submitCount` is readonly computed property and should not be mutated directly.
 
-#### `setFieldValue: (field: string, value: any, shouldValidate?: boolean) => Promise<void | FormikErrors>`
+#### `setFieldValue: (field: string, value: React.SetStateAction<any>, shouldValidate?: boolean) => Promise<void | FormikErrors>`
 
 Set the value of a field imperatively. `field` should match the key of
 `values` you wish to update. Useful for creating custom input change handlers. Calling this will trigger validation to run if `validateOnChange` is set to `true` (which it is by default). You can also explicitly prevent/skip validation by passing a third argument as `false`.
diff --git a/packages/formik/src/Formik.tsx b/packages/formik/src/Formik.tsx
index 80d868665..0dd631bb7 100755
--- a/packages/formik/src/Formik.tsx
+++ b/packages/formik/src/Formik.tsx
@@ -582,18 +582,20 @@ export function useFormik<Values extends FormikValues = FormikValues>({
   );
 
   const setFieldValue = useEventCallback(
-    (field: string, value: any, shouldValidate?: boolean) => {
+    (field: string, value: React.SetStateAction<any>, shouldValidate?: boolean) => {
+      const resolvedValue = isFunction(value) ? value(state.values[field]) : value;
+
       dispatch({
         type: 'SET_FIELD_VALUE',
         payload: {
           field,
-          value,
+          value: resolvedValue,
         },
       });
       const willValidate =
         shouldValidate === undefined ? validateOnChange : shouldValidate;
       return willValidate
-        ? validateFormWithHighPriority(setIn(state.values, field, value))
+        ? validateFormWithHighPriority(setIn(state.values, field, resolvedValue))
         : Promise.resolve();
     }
   );
diff --git a/packages/formik/test/Formik.test.tsx b/packages/formik/test/Formik.test.tsx
index 98b6ef3c9..864589643 100644
--- a/packages/formik/test/Formik.test.tsx
+++ b/packages/formik/test/Formik.test.tsx
@@ -740,6 +740,55 @@ describe('<Formik>', () => {
         });
       });
 
+      it('setFieldValue sets value by key when takes a setter function', async () => {
+        const { getProps, rerender } = renderFormik<Values>();
+
+        act(() => {
+          getProps().setFieldValue('name', (prev: string) => {
+            return prev + ' chronicus';
+          });
+        });
+        rerender();
+        await waitFor(() => {
+          expect(getProps().values.name).toEqual('jared chronicus');
+        });
+      });
+
+      it(
+        'setFieldValue should run validations with resolved value when takes a setter function and validateOnChange is true (default)',
+        async () => {
+          const validate = jest.fn(() =>({}));
+          const { getProps, rerender } = renderFormik({ validate });
+
+          act(() => {
+            getProps().setFieldValue('name', (prev: string) => prev + ' chronicus');
+          });
+          rerender();
+          await waitFor(() => {
+            // the validate function is called with the second arg as undefined always in this case
+            expect(validate).toHaveBeenCalledWith(expect.objectContaining({
+              name: 'jared chronicus',
+            }), undefined);
+          });
+        }
+      );
+
+      it('setFieldValue should NOT run validations when takes a setter function and validateOnChange is false', async () => {
+        const validate = jest.fn();
+        const { getProps, rerender } = renderFormik({
+          validate,
+          validateOnChange: false,
+        });
+
+        act(() => {
+          getProps().setFieldValue('name', (prev: string) => prev + ' chronicus');
+        });
+        rerender();
+        await waitFor(() => {
+          expect(validate).not.toHaveBeenCalled();
+        });
+      });
+
       it('setTouched sets touched', () => {
         const { getProps } = renderFormik();