diff --git a/packages/orm/src/client/zod/factory.ts b/packages/orm/src/client/zod/factory.ts
index 29a8a616a..5919f5a3d 100644
--- a/packages/orm/src/client/zod/factory.ts
+++ b/packages/orm/src/client/zod/factory.ts
@@ -384,7 +384,11 @@ export class ZodSchemaFactory<
         const schema = z.looseObject(
             Object.fromEntries(
                 Object.entries(typeDef.fields).map(([field, def]) => {
-                    let fieldSchema = this.makeScalarSchema(def.type);
+                    // Wrap nested typedef references in z.lazy() so cyclic or self-referencing
+                    // typedefs don't recurse infinitely while building schemas.
+                    let fieldSchema: ZodType = isTypeDef(this.schema, def.type)
+                        ? z.lazy(() => this.makeTypeDefSchema(def.type))
+                        : this.makeScalarSchema(def.type);
                     if (def.array) {
                         fieldSchema = fieldSchema.array();
                     }
diff --git a/tests/regression/test/issue-2654.test.ts b/tests/regression/test/issue-2654.test.ts
new file mode 100644
index 000000000..aa66e39c6
--- /dev/null
+++ b/tests/regression/test/issue-2654.test.ts
@@ -0,0 +1,72 @@
+import { createTestClient } from '@zenstackhq/testtools';
+import { describe, expect, it } from 'vitest';
+
+// https://github.com/zenstackhq/zenstack/issues/2654
+describe('Regression for issue 2654', () => {
+    it('handles cyclic references between JSON typedefs', async () => {
+        const schema = `
+type A {
+    name String
+    b    B
+}
+
+type B {
+    a A[]
+    x String
+}
+
+model User {
+    id String @id @default(cuid())
+    a  A      @json
+}
+`;
+
+        const db = await createTestClient(schema, { provider: 'postgresql' });
+
+        const data = {
+            id: 'u1',
+            a: { name: 'abc', b: { x: '123', a: [] } },
+        };
+        await expect(db.user.create({ data })).resolves.toMatchObject(data);
+
+        const nested = {
+            id: 'u2',
+            a: {
+                name: 'root',
+                b: {
+                    x: 'b1',
+                    a: [{ name: 'inner', b: { x: 'b2', a: [] } }],
+                },
+            },
+        };
+        await expect(db.user.create({ data: nested })).resolves.toMatchObject(nested);
+    });
+
+    it('handles self-referencing JSON typedef', async () => {
+        const schema = `
+type Tree {
+    name     String
+    children Tree[]?
+}
+
+model Node {
+    id   String @id @default(cuid())
+    tree Tree   @json
+}
+`;
+
+        const db = await createTestClient(schema, { provider: 'postgresql' });
+
+        const data = {
+            id: 'n1',
+            tree: {
+                name: 'root',
+                children: [
+                    { name: 'child1', children: [] },
+                    { name: 'child2', children: [{ name: 'grandchild', children: [] }] },
+                ],
+            },
+        };
+        await expect(db.node.create({ data })).resolves.toMatchObject(data);
+    });
+});