diff --git a/.changeset/little-boxes-shave.md b/.changeset/little-boxes-shave.md
new file mode 100644
index 000000000..c80027861
--- /dev/null
+++ b/.changeset/little-boxes-shave.md
@@ -0,0 +1,5 @@
+---
+'@shopify/theme-check-common': patch
+---
+
+Allow Liquid in "liquid" input type
diff --git a/packages/theme-check-common/src/checks/liquid-free-settings/index.spec.ts b/packages/theme-check-common/src/checks/liquid-free-settings/index.spec.ts
index e58352523..c4d27b11c 100644
--- a/packages/theme-check-common/src/checks/liquid-free-settings/index.spec.ts
+++ b/packages/theme-check-common/src/checks/liquid-free-settings/index.spec.ts
@@ -51,6 +51,29 @@ describe('LiquidFreeSettings validation', () => {
       expect(offenses).to.have.length(0);
     });
 
+    it(`should not report errors for valid settings with liquid type field in ${path} bucket`, async () => {
+      const theme: MockTheme = {
+        [`${path}/test-section.liquid`]: `
+        {% schema %}
+        {
+          "name": "Section name",
+          "settings": [
+            {
+              "id": "text_value",
+              "type": "liquid",
+              "label": "Text Value",
+              "default": "{% render 'block' %}"
+            }
+          ]
+        }
+        {% endschema %}
+      `,
+      };
+
+      const offenses = await check(theme, [LiquidFreeSettings]);
+      expect(offenses).to.have.length(0);
+    });
+
     it(`should report an error when settings value contains Liquid logic in ${path} bucket`, async () => {
       const theme: MockTheme = {
         [`${path}/test-section.liquid`]: `
diff --git a/packages/theme-check-common/src/checks/liquid-free-settings/index.ts b/packages/theme-check-common/src/checks/liquid-free-settings/index.ts
index 592da62ae..ff74e6e1b 100644
--- a/packages/theme-check-common/src/checks/liquid-free-settings/index.ts
+++ b/packages/theme-check-common/src/checks/liquid-free-settings/index.ts
@@ -40,21 +40,27 @@ export const LiquidFreeSettings: LiquidCheckDefinition = {
 
         visit<SourceCodeType.JSON, void>(jsonFile, {
           Property(schemaNode, ancestors) {
-            if (isInArrayWithParentKey(ancestors, 'settings') && isLiteralNode(schemaNode.value)) {
-              const { value, loc } = schemaNode.value;
-              const propertyValue = schemaNode.key.value;
-              if (
-                typeof value === 'string' &&
-                propertyValue !== 'visible_if' &&
-                value.includes('{%') &&
-                value.includes('%}')
-              ) {
-                context.report({
-                  message: 'Settings values cannot contain liquid logic.',
-                  startIndex: node.blockStartPosition.end + loc!.start.offset,
-                  endIndex: node.blockStartPosition.end + loc!.end.offset,
-                });
-              }
+            if (
+              !isInArrayWithParentKey(ancestors, 'settings') ||
+              !isLiteralNode(schemaNode.value) ||
+              isLiquidType(ancestors)
+            ) {
+              return;
+            }
+
+            const { value, loc } = schemaNode.value;
+            const propertyValue = schemaNode.key.value;
+            if (
+              typeof value === 'string' &&
+              propertyValue !== 'visible_if' &&
+              value.includes('{%') &&
+              value.includes('%}')
+            ) {
+              context.report({
+                message: 'Settings values cannot contain liquid logic.',
+                startIndex: node.blockStartPosition.end + loc!.start.offset,
+                endIndex: node.blockStartPosition.end + loc!.end.offset,
+              });
             }
           },
         });
@@ -67,6 +73,22 @@ function isLiteralNode(node: JSONNode): node is LiteralNode {
   return node.type === 'Literal';
 }
 
+function isLiquidType(ancestors: JSONNode[]): boolean {
+  return ancestors.some((ancestor) => {
+    if (ancestor.type !== 'Object') {
+      return false;
+    }
+
+    return ancestor.children.some(({ key, value }) => {
+      if (key.value !== 'type' || !isLiteralNode(value)) {
+        return false;
+      }
+
+      return value.value === 'liquid';
+    });
+  });
+}
+
 function isInArrayWithParentKey(ancestors: JSONNode[], parentKey: string): boolean {
   return ancestors.some((ancestor, index) => {
     const parent = ancestors[index - 1];