diff --git a/pydantic_settings/sources.py b/pydantic_settings/sources.py
index 66966e6f..9fe3f039 100644
--- a/pydantic_settings/sources.py
+++ b/pydantic_settings/sources.py
@@ -1434,8 +1434,8 @@ def _get_sub_models(self, model: type[BaseModel], field_name: str, field_info: F
                 raise SettingsError(f'CliSubCommand is not outermost annotation for {model.__name__}.{field_name}')
             elif _annotation_contains_types(type_, (_CliPositionalArg,), is_include_origin=False):
                 raise SettingsError(f'CliPositionalArg is not outermost annotation for {model.__name__}.{field_name}')
-            if is_model_class(type_) or is_pydantic_dataclass(type_):
-                sub_models.append(type_)  # type: ignore
+            if is_model_class(_strip_annotated(type_)) or is_pydantic_dataclass(_strip_annotated(type_)):
+                sub_models.append(_strip_annotated(type_))
         return sub_models
 
     def _verify_cli_flag_annotations(self, model: type[BaseModel], field_name: str, field_info: FieldInfo) -> None:
diff --git a/tests/test_source_cli.py b/tests/test_source_cli.py
index fa623fc3..da332b0a 100644
--- a/tests/test_source_cli.py
+++ b/tests/test_source_cli.py
@@ -15,7 +15,9 @@
     BaseModel,
     ConfigDict,
     DirectoryPath,
+    Discriminator,
     Field,
+    Tag,
     ValidationError,
 )
 from pydantic import (
@@ -2268,3 +2270,25 @@ class MySettings(BaseSettings):
         CliApp.run(
             MySettings, cli_args=['--bac', 'cli abbrev are invalid for internal parser'], cli_exit_on_error=False
         )
+
+
+def test_cli_submodels_strip_annotated():
+    class PolyA(BaseModel):
+        a: int = 1
+        type: Literal['a'] = 'a'
+
+    class PolyB(BaseModel):
+        b: str = '2'
+        type: Literal['b'] = 'b'
+
+    def _get_type(model: Union[BaseModel, Dict]) -> str:
+        if isinstance(model, dict):
+            return model.get('type', 'a')
+        return model.type  # type: ignore
+
+    Poly = Annotated[Union[Annotated[PolyA, Tag('a')], Annotated[PolyB, Tag('b')]], Discriminator(_get_type)]
+
+    class WithUnion(BaseSettings):
+        poly: Poly
+
+    assert CliApp.run(WithUnion, ['--poly.type=a']).model_dump() == {'poly': {'a': 1, 'type': 'a'}}