diff --git a/packages/runtime-core/__tests__/apiSetupContext.spec.ts b/packages/runtime-core/__tests__/apiSetupContext.spec.ts
index bc3c2065034..6f641da2a3a 100644
--- a/packages/runtime-core/__tests__/apiSetupContext.spec.ts
+++ b/packages/runtime-core/__tests__/apiSetupContext.spec.ts
@@ -24,14 +24,30 @@ describe('api: setup context', () => {
           // object exposed as-is
           object: reactive({ msg: 'bar' }),
           // primitive value exposed as-is
-          value: 'baz'
+          value: 'baz',
+          // nested ref at the end should auto-unwrap
+          nested: { ref: ref('qux') },
+          // ref with nested should auto-unwrap
+          refNested: ref({
+            nested: {
+              ref: ref('foo')
+            }
+          }),
+          // nested ref in the middle should auto-unwrap
+          refMiddleNested: {
+            nested: ref({
+              msg: 'bar'
+            })
+          }
         }
       },
       render() {
-        return `${this.ref} ${this.object.msg} ${this.value}`
+        return `${this.ref} ${this.object.msg} ${this.value} ${
+          this.nested.ref
+        } ${this.refNested.nested.ref} ${this.refMiddleNested.nested.msg}`
       }
     })
-    expect(renderToString(h(Comp))).toMatch(`foo bar baz`)
+    expect(renderToString(h(Comp))).toMatch(`foo bar baz qux foo bar`)
   })
 
   it('should support returning render function', () => {
diff --git a/packages/runtime-core/src/componentProxy.ts b/packages/runtime-core/src/componentProxy.ts
index 4582496e442..0a1627c1953 100644
--- a/packages/runtime-core/src/componentProxy.ts
+++ b/packages/runtime-core/src/componentProxy.ts
@@ -1,14 +1,26 @@
 import { ComponentInternalInstance, Data, Emit } from './component'
 import { nextTick, queueJob } from './scheduler'
 import { instanceWatch } from './apiWatch'
-import { EMPTY_OBJ, hasOwn, isGloballyWhitelisted, NOOP } from '@vue/shared'
+import {
+  EMPTY_OBJ,
+  hasOwn,
+  isGloballyWhitelisted,
+  NOOP,
+  isObject
+} from '@vue/shared'
 import {
   ExtractComputedReturns,
   ComponentOptionsBase,
   ComputedOptions,
   MethodOptions
 } from './apiOptions'
-import { UnwrapRef, ReactiveEffect, isRef, isReactive } from '@vue/reactivity'
+import {
+  UnwrapRef,
+  ReactiveEffect,
+  isRef,
+  isReactive,
+  reactive
+} from '@vue/reactivity'
 import { warn } from './warning'
 import { Slots } from './componentSlots'
 import {
@@ -72,7 +84,8 @@ const enum AccessTypes {
   OTHER
 }
 
-const unwrapRef = (val: unknown) => (isRef(val) ? val.value : val)
+const unwrapRef = (val: unknown) =>
+  isRef(val) ? val.value : isObject(val) ? reactive(val) : val
 
 export const PublicInstanceProxyHandlers: ProxyHandler<any> = {
   get(target: ComponentInternalInstance, key: string) {