diff --git a/packages/repository-json-schema/src/__tests__/integration/build-schema.integration.ts b/packages/repository-json-schema/src/__tests__/integration/build-schema.integration.ts
index af512eb78d83..06788f13e837 100644
--- a/packages/repository-json-schema/src/__tests__/integration/build-schema.integration.ts
+++ b/packages/repository-json-schema/src/__tests__/integration/build-schema.integration.ts
@@ -1121,19 +1121,12 @@ describe('build-schema', () => {
 
       const expectedSchema: JsonSchema = {
         definitions: {
-          ProductWithRelations: {
-            title: 'ProductWithRelations',
+          Product: {
+            title: 'Product',
             type: 'object',
-            description:
-              `(tsType: ProductWithRelations, ` +
-              `schemaOptions: { includeRelations: true })`,
             properties: {
               id: {type: 'number'},
               categoryId: {type: 'number'},
-              category: {
-                $ref: '#/definitions/CategoryWithRelations',
-              },
-              foreignKey: 'categoryId' as JsonSchema,
             },
             additionalProperties: false,
           },
@@ -1143,7 +1136,7 @@ describe('build-schema', () => {
           products: {
             type: 'array',
             items: {
-              $ref: '#/definitions/ProductWithRelations',
+              $ref: '#/definitions/Product',
             },
           },
         },
@@ -1175,19 +1168,12 @@ describe('build-schema', () => {
       }
       const expectedSchema: JsonSchema = {
         definitions: {
-          ProductWithRelations: {
-            title: 'ProductWithRelations',
+          Product: {
+            title: 'Product',
             type: 'object',
-            description:
-              `(tsType: ProductWithRelations, ` +
-              `schemaOptions: { includeRelations: true })`,
             properties: {
               id: {type: 'number'},
               categoryId: {type: 'number'},
-              category: {
-                $ref: '#/definitions/CategoryWithoutPropWithRelations',
-              },
-              foreignKey: 'categoryId' as JsonSchema,
             },
             additionalProperties: false,
           },
@@ -1195,7 +1181,7 @@ describe('build-schema', () => {
         properties: {
           products: {
             type: 'array',
-            items: {$ref: '#/definitions/ProductWithRelations'},
+            items: {$ref: '#/definitions/Product'},
           },
         },
         additionalProperties: false,
@@ -1213,6 +1199,52 @@ describe('build-schema', () => {
       expect(jsonSchemaWithoutProp).to.deepEqual(expectedSchema);
     });
 
+    it('does not produce circular $ref chains for bidirectional relations', () => {
+      @model()
+      class Order extends Entity {
+        @property({id: true})
+        id: number;
+
+        @belongsTo(() => Customer)
+        customerId: number;
+      }
+
+      @model()
+      class Customer extends Entity {
+        @property({id: true})
+        id: number;
+
+        @hasMany(() => Order)
+        orders?: Order[];
+      }
+
+      const schema = getJsonSchema(Customer, {includeRelations: true});
+
+      // orders items should reference plain Order, not OrderWithRelations
+      expect(schema.properties).to.containDeep({
+        orders: {
+          type: 'array',
+          items: {$ref: '#/definitions/Order'},
+        },
+      });
+
+      // The Order definition should be plain — no nested definitions,
+      // no customer navigational property
+      const orderDef = schema.definitions?.Order as JsonSchema;
+      expect(orderDef).to.be.ok();
+      expect(orderDef.definitions).to.be.undefined();
+      expect(orderDef.properties).to.not.have.property('customer');
+
+      // No WithRelations keys should appear in definitions
+      const defKeys = Object.keys(schema.definitions ?? {});
+      for (const key of defKeys) {
+        expect(key).to.not.match(
+          /WithRelations/,
+          `definitions should not contain WithRelations keys, found: ${key}`,
+        );
+      }
+    });
+
     it('gets cached JSON schema with relation links if one exists', () => {
       @model()
       class Product extends Entity {
diff --git a/packages/repository-json-schema/src/__tests__/unit/build-schema.unit.ts b/packages/repository-json-schema/src/__tests__/unit/build-schema.unit.ts
index 29493866baf2..2c5068c69e91 100644
--- a/packages/repository-json-schema/src/__tests__/unit/build-schema.unit.ts
+++ b/packages/repository-json-schema/src/__tests__/unit/build-schema.unit.ts
@@ -325,30 +325,27 @@ describe('build-schema', () => {
       expect(schema.properties).to.containEql({
         children: {
           type: 'array',
-          // The reference here should be `ChildWithRelations`,
-          // instead of `ParentWithItsChildren`
-          items: {$ref: '#/definitions/ChildWithRelations'},
+          // The reference here should be `Child` (not `ParentWithItsChildren`)
+          // because includeRelations is not cascaded to relation targets.
+          items: {$ref: '#/definitions/Child'},
         },
         benchmarkId: {type: 'string'},
         color: {type: 'string'},
       });
-      // The recursive calls should NOT inherit
-      // `title` from the previous call's `options`.
-      // So the `title` here is `ChildWithRelations`
-      // instead of `ParentWithItsChildren`.
+      // The recursive calls should NOT inherit `title` from the previous
+      // call's `options`, and `includeRelations` is not propagated to
+      // relation targets. So the definition is plain `Child`.
       expect(schema.definitions).to.containEql({
-        ChildWithRelations: {
-          title: 'ChildWithRelations',
+        Child: {
+          title: 'Child',
           type: 'object',
-          description:
-            '(tsType: ChildWithRelations, schemaOptions: { includeRelations: true })',
           properties: {name: {type: 'string'}},
           additionalProperties: false,
         },
       });
     });
 
-    it('includeRelations is not propagated to properties decorated with @property()', () => {
+    it('includeRelations is not propagated to nested properties or relation targets', () => {
       @model()
       class FooModel extends Entity {
         @property({
@@ -379,14 +376,14 @@ describe('build-schema', () => {
         name: {
           type: 'string',
         },
-        // Decorated with @property() Model should NOT be 'WithRelations'
+        // Decorated with @property() — no includeRelations propagation
         foo: {
           $ref: '#/definitions/FooModel',
         },
-        // Decorated with @hasMany() Model should be 'WithRelations'
+        // Decorated with @hasMany() — also no includeRelations propagation
         relatedFoo: {
           type: 'array',
-          items: {$ref: '#/definitions/FooModelWithRelations'},
+          items: {$ref: '#/definitions/FooModel'},
         },
       });
     });
diff --git a/packages/repository-json-schema/src/build-schema.ts b/packages/repository-json-schema/src/build-schema.ts
index e945000973e8..733a4a538f6d 100644
--- a/packages/repository-json-schema/src/build-schema.ts
+++ b/packages/repository-json-schema/src/build-schema.ts
@@ -570,6 +570,7 @@ export function modelToJsonSchema<T extends object>(
       // when generating the relation or property schemas
       const targetOptions = {...options};
       delete targetOptions.title;
+      delete targetOptions.includeRelations;
 
       const targetSchema = getJsonSchema(targetType, targetOptions);
       const targetRef = {$ref: `#/definitions/${targetSchema.title}`};