diff --git a/tests/engine/test_arg_utils.py b/tests/engine/test_arg_utils.py
index ab78aa7da21b..cfbc7c245ffd 100644
--- a/tests/engine/test_arg_utils.py
+++ b/tests/engine/test_arg_utils.py
@@ -5,14 +5,14 @@ import json
 from argparse import ArgumentError, ArgumentTypeError
 from contextlib import nullcontext
 from dataclasses import dataclass, field
-from typing import Literal, Optional
+from typing import Annotated, Literal, Optional
 
 import pytest
 
 from vllm.config import CompilationConfig, config
 from vllm.engine.arg_utils import (EngineArgs, contains_type, get_kwargs,
-                                   get_type, is_not_builtin, is_type,
-                                   literal_to_kwargs, nullable_kvs,
+                                   get_type, get_type_hints, is_not_builtin,
+                                   is_type, literal_to_kwargs, nullable_kvs,
                                    optional_type, parse_type)
 from vllm.utils import FlexibleArgumentParser
 
@@ -160,6 +160,18 @@ def test_is_not_builtin(type_hint, expected):
     assert is_not_builtin(type_hint) == expected
 
 
+@pytest.mark.parametrize(
+    ("type_hint", "expected"), [
+        (Annotated[int, "annotation"], {int}),
+        (Optional[int], {int, type(None)}),
+        (Annotated[Optional[int], "annotation"], {int, type(None)}),
+        (Optional[Annotated[int, "annotation"]], {int, type(None)}),
+    ],
+    ids=["Annotated", "Optional", "Annotated_Optional", "Optional_Annotated"])
+def test_get_type_hints(type_hint, expected):
+    assert get_type_hints(type_hint) == expected
+
+
 def test_get_kwargs():
     kwargs = get_kwargs(DummyConfig)
     print(kwargs)
diff --git a/vllm/engine/arg_utils.py b/vllm/engine/arg_utils.py
index 587a23134fe9..2197d44ca825 100644
--- a/vllm/engine/arg_utils.py
+++ b/vllm/engine/arg_utils.py
@@ -15,7 +15,7 @@ from typing import (Annotated, Any, Callable, Dict, List, Literal, Optional,
 
 import regex as re
 import torch
-from pydantic import SkipValidation, TypeAdapter, ValidationError
+from pydantic import TypeAdapter, ValidationError
 from typing_extensions import TypeIs, deprecated
 
 import vllm.envs as envs
@@ -151,17 +151,29 @@ def is_not_builtin(type_hint: TypeHint) -> bool:
     return type_hint.__module__ != "builtins"
 
 
+def get_type_hints(type_hint: TypeHint) -> set[TypeHint]:
+    """Extract type hints from Annotated or Union type hints."""
+    type_hints: set[TypeHint] = set()
+    origin = get_origin(type_hint)
+    args = get_args(type_hint)
+
+    if origin is Annotated:
+        type_hints.update(get_type_hints(args[0]))
+    elif origin is Union:
+        for arg in args:
+            type_hints.update(get_type_hints(arg))
+    else:
+        type_hints.add(type_hint)
+
+    return type_hints
+
+
 def get_kwargs(cls: ConfigType) -> dict[str, Any]:
     cls_docs = get_attr_docs(cls)
     kwargs = {}
     for field in fields(cls):
         # Get the set of possible types for the field
-        type_hints: set[TypeHint] = set()
-        if get_origin(field.type) in {Union, Annotated}:
-            predicate = lambda arg: not isinstance(arg, SkipValidation)
-            type_hints.update(filter(predicate, get_args(field.type)))
-        else:
-            type_hints.add(field.type)
+        type_hints: set[TypeHint] = get_type_hints(field.type)
 
         # If the field is a dataclass, we can use the model_validate_json
         generator = (th for th in type_hints if is_dataclass(th))