diff --git a/pydantic_settings/sources/providers/cli.py b/pydantic_settings/sources/providers/cli.py
index 775a7cea..0275320d 100644
--- a/pydantic_settings/sources/providers/cli.py
+++ b/pydantic_settings/sources/providers/cli.py
@@ -52,6 +52,7 @@
     _annotation_contains_types,
     _annotation_enum_val_to_name,
     _get_alias_names,
+    _get_class_types,
     _get_model_fields,
     _is_function,
     _strip_annotated,
@@ -497,8 +498,9 @@ 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(_strip_annotated(type_)) or is_pydantic_dataclass(_strip_annotated(type_)):
-                sub_models.append(_strip_annotated(type_))
+            for type_ in _get_class_types(type_):
+                if is_model_class(type_) or is_pydantic_dataclass(type_):
+                    sub_models.append(cast(type[BaseModel], type_))
         return sub_models
 
     def _verify_cli_flag_annotations(self, model: type[BaseModel], field_name: str, field_info: FieldInfo) -> None:
@@ -523,7 +525,9 @@ def _sort_arg_fields(self, model: type[BaseModel]) -> list[tuple[str, FieldInfo]
                     alias_names, *_ = _get_alias_names(field_name, field_info)
                     if len(alias_names) > 1:
                         raise SettingsError(f'subcommand argument {model.__name__}.{field_name} has multiple aliases')
-                    field_types = [type_ for type_ in get_args(field_info.annotation) if type_ is not type(None)]
+                    field_types = [
+                        type_ for type_ in _get_class_types(field_info.annotation) if type_ is not type(None)
+                    ]
                     for field_type in field_types:
                         if not (is_model_class(field_type) or is_pydantic_dataclass(field_type)):
                             raise SettingsError(
diff --git a/pydantic_settings/sources/utils.py b/pydantic_settings/sources/utils.py
index 41c856fc..7b4e6297 100644
--- a/pydantic_settings/sources/utils.py
+++ b/pydantic_settings/sources/utils.py
@@ -54,6 +54,10 @@ def _annotation_is_complex(annotation: type[Any] | None, metadata: list[Any]) ->
 
     origin = get_origin(annotation)
 
+    # Check if annotation is of the form Union[type, ...].
+    if typing_objects.is_union(origin):
+        return _union_is_complex(annotation, metadata)
+
     # Check if annotation is of the form Annotated[type, metadata].
     if typing_objects.is_annotated(origin):
         # Return result of recursive call on inner type.
@@ -102,6 +106,19 @@ def _annotation_contains_types(
     return annotation in types
 
 
+def _get_class_types(annotation: type[Any]) -> list[type[Any]]:
+    origin = get_origin(annotation)
+    if typing_objects.is_union(origin):
+        types = []
+        for arg in get_args(annotation):
+            types.extend(_get_class_types(arg))
+        return types
+    elif typing_objects.is_annotated(origin):
+        return _get_class_types(get_args(annotation)[0])
+    else:
+        return [annotation]
+
+
 def _strip_annotated(annotation: Any) -> Any:
     if typing_objects.is_annotated(get_origin(annotation)):
         return annotation.__origin__
@@ -188,6 +205,7 @@ def _is_function(obj: Any) -> bool:
     '_annotation_is_complex',
     '_annotation_is_complex_inner',
     '_get_alias_names',
+    '_get_class_types',
     '_get_env_var_key',
     '_get_model_fields',
     '_is_function',
diff --git a/tests/test_settings.py b/tests/test_settings.py
index 5ca14d85..f37c3822 100644
--- a/tests/test_settings.py
+++ b/tests/test_settings.py
@@ -474,6 +474,21 @@ class AnnotatedComplexSettings(BaseSettings):
     ]
 
 
+def test_cli_nested_annotated_unions(env):
+    class Cat(BaseModel):
+        meow: str
+
+    class Dog(BaseModel):
+        woof: str
+
+    class Settings(BaseSettings):
+        model_config = SettingsConfigDict(env_nested_delimiter='__')
+        animals: Annotated[Union[Annotated[Union[Cat, Dog], 'my_nested_annotation'], None], 'my_annotation']
+
+    env.set('ANIMALS__MEOW', 'hiss')
+    assert Settings().model_dump() == {'animals': {'meow': 'hiss'}}
+
+
 def test_set_dict_model(env):
     env.set('bananas', '[1, 2, 3, 3]')
     env.set('CARROTS', '{"a": null, "b": 4}')
diff --git a/tests/test_source_cli.py b/tests/test_source_cli.py
index 681e9743..9c772ef1 100644
--- a/tests/test_source_cli.py
+++ b/tests/test_source_cli.py
@@ -1275,6 +1275,20 @@ class NotSettingsConfigDict(BaseModel):
         get_subcommand(NotSettingsConfigDict(), cli_exit_on_error=False)
 
 
+def test_cli_subcommand_with_annotated_union():
+    class Cat(BaseModel):
+        meow: str
+
+    class Dog(BaseModel):
+        woof: str
+
+    class Settings(BaseSettings):
+        animals: CliSubCommand[Annotated[Union[Cat, Dog], 'my_annotation']]
+
+    assert CliApp.run(Settings, cli_args=['Cat', '--meow=purr']).model_dump() == {'animals': {'meow': 'purr'}}
+    assert CliApp.run(Settings, cli_args=['Dog', '--woof=bark']).model_dump() == {'animals': {'woof': 'bark'}}
+
+
 def test_cli_union_similar_sub_models():
     class ChildA(BaseModel):
         name: str = 'child a'