diff --git a/docs/2.guide/4.recipes/3.custom-usefetch.md b/docs/2.guide/4.recipes/3.custom-usefetch.md
index 45d9651237..9b09997915 100644
--- a/docs/2.guide/4.recipes/3.custom-usefetch.md
+++ b/docs/2.guide/4.recipes/3.custom-usefetch.md
@@ -90,28 +90,6 @@ const { data: modules } = await useAPI('/modules')
 </script>
 ```
 
-If you want to customize the type of any error returned, you can also do so:
-
-```ts
-import type { FetchError } from 'ofetch'
-import type { UseFetchOptions } from 'nuxt/app'
-
-interface CustomError {
-  message: string
-  statusCode: number
-}
-
-export function useAPI<T>(
-  url: string | (() => string),
-  options?: UseFetchOptions<T>,
-) {
-  return useFetch<T, FetchError<CustomError>>(url, {
-    ...options,
-    $fetch: useNuxtApp().$api
-  })
-}
-```
-
 ::note
 This example demonstrates how to use a custom `useFetch`, but the same structure is identical for a custom `useAsyncData`.
 ::
diff --git a/packages/nuxt/src/app/composables/asyncData.ts b/packages/nuxt/src/app/composables/asyncData.ts
index 29193a0616..27399fc96b 100644
--- a/packages/nuxt/src/app/composables/asyncData.ts
+++ b/packages/nuxt/src/app/composables/asyncData.ts
@@ -42,7 +42,7 @@ export interface AsyncDataOptions<
   ResT,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > {
   /**
    * Whether to fetch on the server side.
@@ -131,7 +131,7 @@ export function useAsyncData<
   NuxtErrorDataT = unknown,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   handler: (ctx?: NuxtApp) => Promise<ResT>,
   options?: AsyncDataOptions<ResT, DataT, PickKeys, DefaultT>
@@ -164,7 +164,7 @@ export function useAsyncData<
   NuxtErrorDataT = unknown,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   key: string,
   handler: (ctx?: NuxtApp) => Promise<ResT>,
@@ -193,7 +193,7 @@ export function useAsyncData<
   NuxtErrorDataT = unknown,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (...args: any[]): AsyncData<PickFrom<DataT, PickKeys>, (NuxtErrorDataT extends Error | NuxtError ? NuxtErrorDataT : NuxtError<NuxtErrorDataT>) | undefined> {
   const autoKey = typeof args[args.length - 1] === 'string' ? args.pop() : undefined
   if (typeof args[0] !== 'string') { args.unshift(autoKey) }
@@ -405,7 +405,7 @@ export function useLazyAsyncData<
   DataE = Error,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   handler: (ctx?: NuxtApp) => Promise<ResT>,
   options?: Omit<AsyncDataOptions<ResT, DataT, PickKeys, DefaultT>, 'lazy'>
@@ -425,7 +425,7 @@ export function useLazyAsyncData<
   DataE = Error,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   key: string,
   handler: (ctx?: NuxtApp) => Promise<ResT>,
@@ -448,7 +448,7 @@ export function useLazyAsyncData<
   DataE = Error,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (...args: any[]): AsyncData<PickFrom<DataT, PickKeys> | DefaultT, DataE | undefined> {
   const autoKey = typeof args[args.length - 1] === 'string' ? args.pop() : undefined
   if (typeof args[0] !== 'string') { args.unshift(autoKey) }
diff --git a/packages/nuxt/src/app/composables/fetch.ts b/packages/nuxt/src/app/composables/fetch.ts
index 5ce5a87d1f..3ffa4709b2 100644
--- a/packages/nuxt/src/app/composables/fetch.ts
+++ b/packages/nuxt/src/app/composables/fetch.ts
@@ -31,7 +31,7 @@ export interface UseFetchOptions<
   ResT,
   DataT = ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
   R extends NitroFetchRequest = string & {},
   M extends AvailableRouterMethod<R> = AvailableRouterMethod<R>,
 > extends Omit<AsyncDataOptions<ResT, DataT, PickKeys, DefaultT>, 'watch'>, ComputedFetchOptions<R, M> {
@@ -55,7 +55,7 @@ export function useFetch<
   _ResT = ResT extends void ? FetchResult<ReqT, Method> : ResT,
   DataT = _ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   request: Ref<ReqT> | ReqT | (() => ReqT),
   opts?: UseFetchOptions<_ResT, DataT, PickKeys, DefaultT, ReqT, Method>
@@ -87,7 +87,7 @@ export function useFetch<
   _ResT = ResT extends void ? FetchResult<ReqT, Method> : ResT,
   DataT = _ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   request: Ref<ReqT> | ReqT | (() => ReqT),
   arg1?: string | UseFetchOptions<_ResT, DataT, PickKeys, DefaultT, ReqT, Method>,
@@ -193,7 +193,7 @@ export function useLazyFetch<
   _ResT = ResT extends void ? FetchResult<ReqT, Method> : ResT,
   DataT = _ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   request: Ref<ReqT> | ReqT | (() => ReqT),
   opts?: Omit<UseFetchOptions<_ResT, DataT, PickKeys, DefaultT, ReqT, Method>, 'lazy'>
@@ -219,7 +219,7 @@ export function useLazyFetch<
   _ResT = ResT extends void ? FetchResult<ReqT, Method> : ResT,
   DataT = _ResT,
   PickKeys extends KeysOf<DataT> = KeysOf<DataT>,
-  DefaultT = undefined,
+  DefaultT = DataT | undefined,
 > (
   request: Ref<ReqT> | ReqT | (() => ReqT),
   arg1?: string | Omit<UseFetchOptions<_ResT, DataT, PickKeys, DefaultT, ReqT, Method>, 'lazy'>,
diff --git a/playground/composables/test.ts b/playground/composables/test.ts
new file mode 100644
index 0000000000..cf920f9f3c
--- /dev/null
+++ b/playground/composables/test.ts
@@ -0,0 +1,14 @@
+interface ResT {
+  foo: string[]
+  bar: string[]
+}
+
+const { data } = await useFetchCustom<ResT>('/some/endpoint', {
+  default: () => ({
+    foo: [],
+    bar: [],
+  }),
+})
+if (data.value) {
+  const a = data.value
+}
diff --git a/playground/composables/useFetchCustom.ts b/playground/composables/useFetchCustom.ts
new file mode 100644
index 0000000000..7add2deca0
--- /dev/null
+++ b/playground/composables/useFetchCustom.ts
@@ -0,0 +1,11 @@
+import type { UseFetchOptions } from 'nuxt/app'
+
+export function useFetchCustom<T> (
+  url: string | (() => string),
+  options?: UseFetchOptions<T>,
+) {
+  return useFetch(url, {
+    ...options,
+    $fetch: useNuxtApp().$customFetch as typeof $fetch,
+  })
+}
diff --git a/playground/plugins/fetchCustom.ts b/playground/plugins/fetchCustom.ts
new file mode 100644
index 0000000000..2e208c1a62
--- /dev/null
+++ b/playground/plugins/fetchCustom.ts
@@ -0,0 +1,11 @@
+export default defineNuxtPlugin(() => {
+  const fetchCustom = $fetch.create({
+    baseURL: 'https://this-doesnt-matter.com',
+  })
+
+  return {
+    provide: {
+      fetchCustom,
+    },
+  }
+})