diff --git a/tests/engine/test_arg_utils.py b/tests/engine/test_arg_utils.py
index b82e839638041..8628aed1c9df7 100644
--- a/tests/engine/test_arg_utils.py
+++ b/tests/engine/test_arg_utils.py
@@ -247,6 +247,60 @@ def test_compilation_config():
             and args.compilation_config.use_inductor)
 
 
+def test_compilation_config_json_and_dot_notation():
+    """Test that JSON and dot notation arguments can be combined correctly."""
+    parser = EngineArgs.add_cli_args(FlexibleArgumentParser())
+    
+    # Test case 1: JSON then dot notation
+    args = parser.parse_args([
+        '-O', '{"cudagraph_mode": "FULL_DECODE_ONLY"}',
+        '-O.debug_dump_path=/home/alexm/debug_dump'
+    ])
+    config = args.compilation_config
+    assert config.cudagraph_mode.name == "FULL_DECODE_ONLY"
+    assert config.debug_dump_path == "/home/alexm/debug_dump"
+    
+    # Test case 2: Dot notation then JSON
+    args = parser.parse_args([
+        '-O.debug_dump_path=/home/alexm/debug_dump',
+        '-O', '{"cudagraph_mode": "FULL_DECODE_ONLY"}'
+    ])
+    config = args.compilation_config
+    assert config.cudagraph_mode.name == "FULL_DECODE_ONLY"
+    assert config.debug_dump_path == "/home/alexm/debug_dump"
+    
+    # Test case 3: Multiple dot notation arguments
+    args = parser.parse_args([
+        '-O.cudagraph_mode=FULL_DECODE_ONLY',
+        '-O.debug_dump_path=/home/alexm/debug_dump'
+    ])
+    config = args.compilation_config
+    assert config.cudagraph_mode.name == "FULL_DECODE_ONLY"
+    assert config.debug_dump_path == "/home/alexm/debug_dump"
+    
+    # Test case 4: Multiple JSON arguments
+    args = parser.parse_args([
+        '-O', '{"cudagraph_mode": "FULL_DECODE_ONLY"}',
+        '-O', '{"debug_dump_path": "/home/alexm/debug_dump"}'
+    ])
+    config = args.compilation_config
+    assert config.cudagraph_mode.name == "FULL_DECODE_ONLY"
+    assert config.debug_dump_path == "/home/alexm/debug_dump"
+    
+    # Test case 5: Mix all formats
+    args = parser.parse_args([
+        '-O', '{"level": 1}',
+        '-O.cudagraph_mode=FULL_DECODE_ONLY',
+        '-O', '{"debug_dump_path": "/home/alexm/debug_dump"}',
+        '-O.use_inductor=true'
+    ])
+    config = args.compilation_config
+    assert config.level == 1
+    assert config.cudagraph_mode.name == "FULL_DECODE_ONLY"
+    assert config.debug_dump_path == "/home/alexm/debug_dump"
+    assert config.use_inductor is True
+
+
 def test_prefix_cache_default():
     parser = EngineArgs.add_cli_args(FlexibleArgumentParser())
     args = parser.parse_args([])
diff --git a/vllm/utils/__init__.py b/vllm/utils/__init__.py
index 49c706bc37a84..8c2006760880b 100644
--- a/vllm/utils/__init__.py
+++ b/vllm/utils/__init__.py
@@ -1910,6 +1910,24 @@ class FlexibleArgumentParser(ArgumentParser):
                                                        arg_dict)
                 duplicates |= {f'{key}.{d}' for d in arg_duplicates}
                 delete.add(i)
+            elif (processed_arg.startswith("-") 
+                  and i + 1 < len(processed_args) 
+                  and not processed_args[i + 1].startswith("-")):
+                # Handle standalone JSON arguments like -O '{"key": "value"}'
+                value_str = processed_args[i + 1]
+                try:
+                    parsed_json = json.loads(value_str)
+                    if isinstance(parsed_json, dict):
+                        # This is a JSON argument, merge it with existing dict_args
+                        key = processed_arg
+                        arg_duplicates = recursive_dict_update(dict_args[key],
+                                                               parsed_json)
+                        duplicates |= {f'{key}.{d}' for d in arg_duplicates}
+                        delete.add(i)
+                        delete.add(i + 1)
+                except json.decoder.JSONDecodeError:
+                    # Not a JSON argument, let it pass through normally
+                    pass
         # Filter out the dict args we set to None
         processed_args = [
             a for i, a in enumerate(processed_args) if i not in delete