diff --git a/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts b/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts
index 396e6ad1be..89efa78469 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/Optimization/InlineJsxTransform.ts
@@ -405,6 +405,17 @@ export function inlineJsxTransform(
           nextInstructions.push(reactElementInstruction);
           break;
         }
+        case 'FunctionExpression':
+        case 'ObjectMethod': {
+          inlineJsxTransform(
+            instr.value.loweredFunc.func,
+            inlineJsxTransformConfig,
+          );
+          if (nextInstructions !== null) {
+            nextInstructions.push(instr);
+          }
+          break;
+        }
         default: {
           if (nextInstructions !== null) {
             nextInstructions.push(instr);
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md
index 6dd899d5c7..2078575e83 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.expect.md
@@ -26,11 +26,15 @@ function ParentAndRefAndKey(props) {
 }
 
 function ParentAndChildren(props) {
+  const render = () => {
+    return <div key="d">{props.foo}</div>;
+  };
   return (
     <Parent>
       <Child key="a" {...props} />
       <Child key="b">
-        <GrandChild className={props.foo} {...props} />
+        <GrandChild key="c" className={props.foo} {...props} />
+        {render()}
       </Child>
     </Parent>
   );
@@ -40,8 +44,8 @@ const propsToSpread = {a: 'a', b: 'b', c: 'c'};
 function PropsSpread() {
   return (
     <>
-      <Test {...propsToSpread} />
-      <Test {...propsToSpread} a="z" />
+      <Test key="a" {...propsToSpread} />
+      <Test key="b" {...propsToSpread} a="z" />
     </>
   );
 }
@@ -151,37 +155,30 @@ function ParentAndRefAndKey(props) {
 }
 
 function ParentAndChildren(props) {
-  const $ = _c2(7);
+  const $ = _c2(14);
   let t0;
-  if ($[0] !== props) {
-    t0 = {
+  if ($[0] !== props.foo) {
+    t0 = () => ({
       $$typeof: Symbol.for("react.transitional.element"),
-      type: Child,
+      type: "div",
       ref: null,
-      key: "a",
-      props: props,
-    };
-    $[0] = props;
+      key: "d",
+      props: { children: props.foo },
+    });
+    $[0] = props.foo;
     $[1] = t0;
   } else {
     t0 = $[1];
   }
+  const render = t0;
   let t1;
   if ($[2] !== props) {
     t1 = {
       $$typeof: Symbol.for("react.transitional.element"),
       type: Child,
       ref: null,
-      key: "b",
-      props: {
-        children: {
-          $$typeof: Symbol.for("react.transitional.element"),
-          type: GrandChild,
-          ref: null,
-          key: null,
-          props: { className: props.foo, ...props },
-        },
-      },
+      key: "a",
+      props: props,
     };
     $[2] = props;
     $[3] = t1;
@@ -189,21 +186,58 @@ function ParentAndChildren(props) {
     t1 = $[3];
   }
   let t2;
-  if ($[4] !== t0 || $[5] !== t1) {
+  if ($[4] !== props) {
     t2 = {
+      $$typeof: Symbol.for("react.transitional.element"),
+      type: GrandChild,
+      ref: null,
+      key: "c",
+      props: { className: props.foo, ...props },
+    };
+    $[4] = props;
+    $[5] = t2;
+  } else {
+    t2 = $[5];
+  }
+  let t3;
+  if ($[6] !== render) {
+    t3 = render();
+    $[6] = render;
+    $[7] = t3;
+  } else {
+    t3 = $[7];
+  }
+  let t4;
+  if ($[8] !== t2 || $[9] !== t3) {
+    t4 = {
+      $$typeof: Symbol.for("react.transitional.element"),
+      type: Child,
+      ref: null,
+      key: "b",
+      props: { children: [t2, t3] },
+    };
+    $[8] = t2;
+    $[9] = t3;
+    $[10] = t4;
+  } else {
+    t4 = $[10];
+  }
+  let t5;
+  if ($[11] !== t1 || $[12] !== t4) {
+    t5 = {
       $$typeof: Symbol.for("react.transitional.element"),
       type: Parent,
       ref: null,
       key: null,
-      props: { children: [t0, t1] },
+      props: { children: [t1, t4] },
     };
-    $[4] = t0;
-    $[5] = t1;
-    $[6] = t2;
+    $[11] = t1;
+    $[12] = t4;
+    $[13] = t5;
   } else {
-    t2 = $[6];
+    t5 = $[13];
   }
-  return t2;
+  return t5;
 }
 
 const propsToSpread = { a: "a", b: "b", c: "c" };
@@ -222,14 +256,14 @@ function PropsSpread() {
             $$typeof: Symbol.for("react.transitional.element"),
             type: Test,
             ref: null,
-            key: null,
+            key: "a",
             props: propsToSpread,
           },
           {
             $$typeof: Symbol.for("react.transitional.element"),
             type: Test,
             ref: null,
-            key: null,
+            key: "b",
             props: { ...propsToSpread, a: "z" },
           },
         ],
@@ -250,4 +284,4 @@ export const FIXTURE_ENTRYPOINT = {
 ```
       
 ### Eval output
-(kind: ok) <div><span class="abc">Hello world</span></div>
\ No newline at end of file
+(kind: ok) <div><span class="abc">Hello world</span><div>abc</div></div>
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js
index 4a9d53b6f4..6fe9553dcd 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/inline-jsx-transform.js
@@ -22,11 +22,15 @@ function ParentAndRefAndKey(props) {
 }
 
 function ParentAndChildren(props) {
+  const render = () => {
+    return <div key="d">{props.foo}</div>;
+  };
   return (
     <Parent>
       <Child key="a" {...props} />
       <Child key="b">
-        <GrandChild className={props.foo} {...props} />
+        <GrandChild key="c" className={props.foo} {...props} />
+        {render()}
       </Child>
     </Parent>
   );
@@ -36,8 +40,8 @@ const propsToSpread = {a: 'a', b: 'b', c: 'c'};
 function PropsSpread() {
   return (
     <>
-      <Test {...propsToSpread} />
-      <Test {...propsToSpread} a="z" />
+      <Test key="a" {...propsToSpread} />
+      <Test key="b" {...propsToSpread} a="z" />
     </>
   );
 }