diff --git a/pydantic_settings/sources/base.py b/pydantic_settings/sources/base.py
index b2c4d166..4ead04aa 100644
--- a/pydantic_settings/sources/base.py
+++ b/pydantic_settings/sources/base.py
@@ -16,6 +16,7 @@
 from pydantic._internal._utils import is_model_class
 from pydantic.fields import FieldInfo
 from typing_extensions import get_args
+from typing_inspection import typing_objects
 from typing_inspection.introspection import is_union_origin
 
 from ..exceptions import SettingsError
@@ -25,6 +26,7 @@
     _annotation_is_complex,
     _get_alias_names,
     _get_model_fields,
+    _strip_annotated,
     _union_is_complex,
 )
 
@@ -353,7 +355,10 @@ def _extract_field_info(self, field: FieldInfo, field_name: str) -> list[tuple[s
                 field_info.append((v_alias, self._apply_case_sensitive(v_alias), False))
 
         if not v_alias or self.config.get('populate_by_name', False):
-            if is_union_origin(get_origin(field.annotation)) and _union_is_complex(field.annotation, field.metadata):
+            annotation = field.annotation
+            if typing_objects.is_typealiastype(annotation) or typing_objects.is_typealiastype(get_origin(annotation)):
+                annotation = _strip_annotated(annotation.__value__)  # type: ignore[union-attr]
+            if is_union_origin(get_origin(annotation)) and _union_is_complex(annotation, field.metadata):
                 field_info.append((field_name, self._apply_case_sensitive(self.env_prefix + field_name), True))
             else:
                 field_info.append((field_name, self._apply_case_sensitive(self.env_prefix + field_name), False))
diff --git a/pydantic_settings/sources/utils.py b/pydantic_settings/sources/utils.py
index 270a8c17..a8501568 100644
--- a/pydantic_settings/sources/utils.py
+++ b/pydantic_settings/sources/utils.py
@@ -40,9 +40,11 @@ def parse_env_vars(
     }
 
 
-def _annotation_is_complex(annotation: type[Any] | None, metadata: list[Any]) -> bool:
+def _annotation_is_complex(annotation: Any, metadata: list[Any]) -> bool:
     # If the model is a root model, the root annotation should be used to
     # evaluate the complexity.
+    if typing_objects.is_typealiastype(annotation) or typing_objects.is_typealiastype(get_origin(annotation)):
+        annotation = annotation.__value__
     if annotation is not None and _lenient_issubclass(annotation, RootModel) and annotation is not RootModel:
         annotation = cast('type[RootModel[Any]]', annotation)
         root_annotation = annotation.model_fields['root'].annotation
diff --git a/tests/test_settings.py b/tests/test_settings.py
index a7bd86c3..8e845ff1 100644
--- a/tests/test_settings.py
+++ b/tests/test_settings.py
@@ -34,7 +34,7 @@
     dataclasses as pydantic_dataclasses,
 )
 from pydantic.fields import FieldInfo
-from typing_extensions import override
+from typing_extensions import TypeAliasType, override
 
 from pydantic_settings import (
     BaseSettings,
@@ -474,6 +474,30 @@ class AnnotatedComplexSettings(BaseSettings):
     ]
 
 
+def test_annotated_with_type(env):
+    """https://github.com/pydantic/pydantic-settings/issues/536.
+
+    PEP 695 type aliases need to be analyzed when determining if an annotation is complex.
+    """
+    MinLenList = TypeAliasType('MinLenList', Annotated[Union[list[str], list[int]], MinLen(2)])
+
+    class AnnotatedComplexSettings(BaseSettings):
+        apples: MinLenList
+
+    env.set('apples', '["russet", "granny smith"]')
+    s = AnnotatedComplexSettings()
+    assert s.apples == ['russet', 'granny smith']
+
+    T = TypeVar('T')
+    MinLenList = TypeAliasType('MinLenList', Annotated[Union[list[T], tuple[T]], MinLen(2)], type_params=(T,))
+
+    class AnnotatedComplexSettings(BaseSettings):
+        apples: MinLenList[str]
+
+    s = AnnotatedComplexSettings()
+    assert s.apples == ['russet', 'granny smith']
+
+
 def test_set_dict_model(env):
     env.set('bananas', '[1, 2, 3, 3]')
     env.set('CARROTS', '{"a": null, "b": 4}')