diff --git a/packages/kit/src/module/define.ts b/packages/kit/src/module/define.ts
index 061362370f..ff2a56d2d4 100644
--- a/packages/kit/src/module/define.ts
+++ b/packages/kit/src/module/define.ts
@@ -3,7 +3,7 @@ import { performance } from 'node:perf_hooks'
 import { defu } from 'defu'
 import { applyDefaults } from 'untyped'
 import { dirname } from 'pathe'
-import type { ModuleDefinition, ModuleOptions, ModuleSetupInstallResult, ModuleSetupReturn, Nuxt, NuxtModule, NuxtOptions, ResolvedModuleOptions, ResolvedNuxtTemplate } from '@nuxt/schema'
+import type { ModuleDefinition, ModuleOptions, ModuleSetupReturn, Nuxt, NuxtModule, NuxtOptions, ResolvedNuxtTemplate } from '@nuxt/schema'
 import { logger } from '../logger'
 import { nuxtCtx, tryUseNuxt, useNuxt } from '../context'
 import { checkNuxtCompatibility, isNuxt2 } from '../compatibility'
@@ -13,53 +13,28 @@ import { compileTemplate, templateUtils } from '../internal/template'
  * Define a Nuxt module, automatically merging defaults with user provided options, installing
  * any hooks that are provided, and calling an optional setup function for full control.
  */
-export function defineNuxtModule<TOptions extends ModuleOptions> (definition: ModuleDefinition<TOptions> | NuxtModule<TOptions>): NuxtModule<TOptions>
-
-export function defineNuxtModule<TOptions extends ModuleOptions> (): {
-  with: <TOptionsDefaults extends Partial<TOptions>> (
-    definition: ModuleDefinition<TOptions, TOptionsDefaults> | NuxtModule<TOptions, TOptionsDefaults>
-  ) => NuxtModule<TOptions, TOptionsDefaults>
-}
-
-export function defineNuxtModule<TOptions extends ModuleOptions> (definition?: ModuleDefinition<TOptions> | NuxtModule<TOptions>) {
-  if (definition) {
-    return _defineNuxtModule(definition)
-  }
-
-  return {
-    with: <TOptionsDefaults extends Partial<TOptions>>(
-      definition: ModuleDefinition<TOptions, TOptionsDefaults> | NuxtModule<TOptions, TOptionsDefaults>,
-    ) => _defineNuxtModule(definition),
-  }
-}
-
-function _defineNuxtModule<TOptions extends ModuleOptions, TOptionsDefaults extends Partial<TOptions>> (definition: ModuleDefinition<TOptions, TOptionsDefaults> | NuxtModule<TOptions, TOptionsDefaults>): NuxtModule<TOptions, TOptionsDefaults> {
-  if (typeof definition === 'function') { return _defineNuxtModule<TOptions, TOptionsDefaults>({ setup: definition }) }
+export function defineNuxtModule<OptionsT extends ModuleOptions> (definition: ModuleDefinition<OptionsT> | NuxtModule<OptionsT>): NuxtModule<OptionsT> {
+  if (typeof definition === 'function') { return defineNuxtModule({ setup: definition }) }
 
   // Normalize definition and meta
-  const module: ModuleDefinition<TOptions, TOptionsDefaults> & Required<Pick<ModuleDefinition<TOptions, TOptionsDefaults>, 'meta'>> = defu(definition, { meta: {} })
-
-  module.meta.configKey ||= module.meta.name
+  const module: ModuleDefinition<OptionsT> & Required<Pick<ModuleDefinition<OptionsT>, 'meta'>> = defu(definition, { meta: {} })
+  if (module.meta.configKey === undefined) {
+    module.meta.configKey = module.meta.name
+  }
 
   // Resolves module options from inline options, [configKey] in nuxt.config, defaults and schema
-  async function getOptions (inlineOptions?: Partial<TOptions>, nuxt: Nuxt = useNuxt()): Promise<ResolvedModuleOptions<TOptions, TOptionsDefaults>> {
-    const nuxtConfigOptionsKey = module.meta.configKey || module.meta.name
-
-    const nuxtConfigOptions: Partial<TOptions> = nuxtConfigOptionsKey && nuxtConfigOptionsKey in nuxt.options ? nuxt.options[<keyof NuxtOptions> nuxtConfigOptionsKey] : {}
-
-    const optionsDefaults: TOptionsDefaults = module.defaults instanceof Function ? module.defaults(nuxt) : module.defaults ?? <TOptionsDefaults> {}
-
-    let options: ResolvedModuleOptions<TOptions, TOptionsDefaults> = defu(inlineOptions, nuxtConfigOptions, optionsDefaults)
-
+  async function getOptions (inlineOptions?: OptionsT, nuxt: Nuxt = useNuxt()) {
+    const configKey = module.meta.configKey || module.meta.name!
+    const _defaults = module.defaults instanceof Function ? module.defaults(nuxt) : module.defaults
+    let _options = defu(inlineOptions, nuxt.options[configKey as keyof NuxtOptions], _defaults) as OptionsT
     if (module.schema) {
-      options = await applyDefaults(module.schema, options) as any
+      _options = await applyDefaults(module.schema, _options) as OptionsT
     }
-
-    return Promise.resolve(options)
+    return Promise.resolve(_options)
   }
 
   // Module format is always a simple function
-  async function normalizedModule (this: any, inlineOptions: Partial<TOptions>, nuxt: Nuxt): Promise<ModuleSetupReturn> {
+  async function normalizedModule (this: any, inlineOptions: OptionsT, nuxt: Nuxt) {
     if (!nuxt) {
       nuxt = tryUseNuxt() || this.nuxt /* invoked by nuxt 2 */
     }
@@ -112,7 +87,7 @@ function _defineNuxtModule<TOptions extends ModuleOptions, TOptionsDefaults exte
     if (res === false) { return false }
 
     // Return module install result
-    return defu(res, <ModuleSetupInstallResult> {
+    return defu(res, <ModuleSetupReturn> {
       timings: {
         setup: setupTime,
       },
@@ -123,7 +98,7 @@ function _defineNuxtModule<TOptions extends ModuleOptions, TOptionsDefaults exte
   normalizedModule.getMeta = () => Promise.resolve(module.meta)
   normalizedModule.getOptions = getOptions
 
-  return <NuxtModule<TOptions, TOptionsDefaults>> normalizedModule
+  return normalizedModule as NuxtModule<OptionsT>
 }
 
 // -- Nuxt 2 compatibility shims --
diff --git a/packages/kit/src/module/install.ts b/packages/kit/src/module/install.ts
index 153aab0bd8..beecd62aef 100644
--- a/packages/kit/src/module/install.ts
+++ b/packages/kit/src/module/install.ts
@@ -31,7 +31,7 @@ export async function installModule<
     isNuxt2()
       // @ts-expect-error Nuxt 2 `moduleContainer` is not typed
       ? await nuxtModule.call(nuxt.moduleContainer, inlineOptions, nuxt)
-      : await nuxtModule(inlineOptions || {}, nuxt)
+      : await nuxtModule(inlineOptions, nuxt)
   ) ?? {}
   if (res === false /* setup aborted */) {
     return
diff --git a/packages/schema/src/types/module.ts b/packages/schema/src/types/module.ts
index 13b42365aa..9b92d6a93e 100644
--- a/packages/schema/src/types/module.ts
+++ b/packages/schema/src/types/module.ts
@@ -1,4 +1,3 @@
-import type { Defu } from 'defu'
 import type { NuxtHooks } from './hooks'
 import type { Nuxt } from './nuxt'
 import type { NuxtCompatibility } from './compatibility'
@@ -27,7 +26,8 @@ export interface ModuleMeta {
 /** The options received.  */
 export type ModuleOptions = Record<string, any>
 
-export type ModuleSetupInstallResult = {
+/** Optional result for nuxt modules */
+export interface ModuleSetupReturn {
   /**
    * Timing information for the initial setup
    */
@@ -39,37 +39,19 @@ export type ModuleSetupInstallResult = {
 }
 
 type Awaitable<T> = T | Promise<T>
+type _ModuleSetupReturn = Awaitable<void | false | ModuleSetupReturn>
 
-type Prettify<T> = {
-  [K in keyof T]: T[K];
-} & {}
-
-export type ModuleSetupReturn = Awaitable<false | void | ModuleSetupInstallResult>
-
-export type ResolvedModuleOptions<TOptions extends ModuleOptions, TOptionsDefaults extends Partial<TOptions>> = Prettify<
-    Defu<
-        Partial<TOptions>,
-        [Partial<TOptions>, TOptionsDefaults]
-    >
->
-
-/** Module definition passed to 'defineNuxtModule(...)' or 'defineNuxtModule().with(...)'. */
-export interface ModuleDefinition<
-  TOptions extends ModuleOptions,
-  TOptionsDefaults extends Partial<TOptions> = Partial<TOptions>,
-> {
+/** Input module passed to defineNuxtModule. */
+export interface ModuleDefinition<T extends ModuleOptions = ModuleOptions> {
   meta?: ModuleMeta
-  defaults?: TOptionsDefaults | ((nuxt: Nuxt) => TOptionsDefaults)
-  schema?: TOptions
+  defaults?: T | ((nuxt: Nuxt) => T)
+  schema?: T
   hooks?: Partial<NuxtHooks>
-  setup?: (this: void, resolvedOptions: ResolvedModuleOptions<TOptions, TOptionsDefaults>, nuxt: Nuxt) => ModuleSetupReturn
+  setup?: (this: void, resolvedOptions: T, nuxt: Nuxt) => _ModuleSetupReturn
 }
 
-export interface NuxtModule<
-  TOptions extends ModuleOptions = ModuleOptions,
-  TOptionsDefaults extends Partial<TOptions> = Partial<TOptions>,
-> {
-  (this: void, resolvedOptions: ResolvedModuleOptions<TOptions, TOptionsDefaults>, nuxt: Nuxt): ModuleSetupReturn
-  getOptions?: (inlineOptions?: Partial<TOptions>, nuxt?: Nuxt) => Promise<ResolvedModuleOptions<TOptions, TOptionsDefaults>>
+export interface NuxtModule<T extends ModuleOptions = ModuleOptions> {
+  (this: void, inlineOptions: T, nuxt: Nuxt): _ModuleSetupReturn
+  getOptions?: (inlineOptions?: T, nuxt?: Nuxt) => Promise<T>
   getMeta?: () => Promise<ModuleMeta>
 }
diff --git a/test/fixtures/basic-types/types.ts b/test/fixtures/basic-types/types.ts
index 343ecb1a88..dad52b4f6a 100644
--- a/test/fixtures/basic-types/types.ts
+++ b/test/fixtures/basic-types/types.ts
@@ -5,7 +5,6 @@ import type { NavigationFailure, RouteLocationNormalized, RouteLocationRaw, Rout
 
 import type { AppConfig, RuntimeValue, UpperSnakeCase } from 'nuxt/schema'
 import { defineNuxtConfig } from 'nuxt/config'
-import { defineNuxtModule } from 'nuxt/kit'
 import { callWithNuxt, isVue3 } from '#app'
 import type { NuxtError } from '#app'
 import type { NavigateToOptions } from '#app/composables/router'
@@ -243,23 +242,6 @@ describe('modules', () => {
     // @ts-expect-error we want to ensure we throw type error on invalid key
     defineNuxtConfig({ undeclaredKey: { other: false } })
   })
-
-  it('correctly typed resolved options in defineNuxtModule setup using `.with()`', () => {
-    defineNuxtModule<{
-      foo?: string
-      baz: number
-    }>().with({
-      defaults: {
-        foo: 'bar',
-      },
-      setup: (resolvedOptions) => {
-        expectTypeOf(resolvedOptions).toEqualTypeOf<{
-          foo: string
-          baz?: number | undefined
-        }>()
-      },
-    })
-  })
 })
 
 describe('nuxtApp', () => {