diff --git a/CHANGES.md b/CHANGES.md
index 21501b1bd5..5ab6e586cf 100644
--- a/CHANGES.md
+++ b/CHANGES.md
@@ -1,3 +1,8 @@
+# Version 1.3.2
+
+## Bugs
+- Fixed auto-setting custom ID on nested documents [#5363](https://github.com/appwrite/appwrite/pull/5363)
+
 # Version 1.3.1
 
 ## Bugs
diff --git a/app/controllers/api/databases.php b/app/controllers/api/databases.php
index b309b74894..5146c945ea 100644
--- a/app/controllers/api/databases.php
+++ b/app/controllers/api/databases.php
@@ -2743,8 +2743,13 @@ App::post('/v1/databases/:databaseId/collections/:collectionId/documents')
                 if (empty($related)) {
                     continue;
                 }
-                if (!\is_array($related)) {
-                    $related = [$related];
+
+                $isList = \is_array($related) && \array_values($related) === $related;
+
+                if ($isList) {
+                    $relations = $related;
+                } else {
+                    $relations = [$related];
                 }
 
                 $relatedCollectionId = $relationship->getAttribute('relatedCollection');
@@ -2752,7 +2757,15 @@ App::post('/v1/databases/:databaseId/collections/:collectionId/documents')
                     fn() => $dbForProject->getDocument('database_' . $database->getInternalId(), $relatedCollectionId)
                 );
 
-                foreach ($related as $relation) {
+                foreach ($relations as &$relation) {
+                    if (
+                        \is_array($related)
+                        && \array_values($related) !== $related
+                        && !isset($relation['$id'])
+                    ) {
+                        $relation['$id'] = ID::unique();
+                        $relation = new Document($relation);
+                    }
                     if ($relation instanceof Document) {
                         $current = Authorization::skip(
                             fn() => $dbForProject->getDocument('database_' . $database->getInternalId() . '_collection_' . $relatedCollection->getInternalId(), $relation->getId())
@@ -2761,7 +2774,7 @@ App::post('/v1/databases/:databaseId/collections/:collectionId/documents')
                         if ($current->isEmpty()) {
                             $type = Database::PERMISSION_CREATE;
 
-                            if (!isset($relation['$id']) || $relation['$id'] === 'unique()') {
+                            if (isset($relation['$id']) && $relation['$id'] === 'unique()') {
                                 $relation['$id'] = ID::unique();
                             }
                         } else {
@@ -2774,6 +2787,12 @@ App::post('/v1/databases/:databaseId/collections/:collectionId/documents')
                         $checkPermissions($relatedCollection, $relation, $type);
                     }
                 }
+
+                if ($isList) {
+                    $document->setAttribute($relationship->getAttribute('key'), \array_values($relations));
+                } else {
+                    $document->setAttribute($relationship->getAttribute('key'), \reset($relations));
+                }
             }
         };
 
@@ -3321,8 +3340,13 @@ App::patch('/v1/databases/:databaseId/collections/:collectionId/documents/:docum
                 if (empty($related)) {
                     continue;
                 }
-                if (!\is_array($related)) {
-                    $related = [$related];
+
+                $isList = \is_array($related) && \array_values($related) === $related;
+
+                if ($isList) {
+                    $relations = $related;
+                } else {
+                    $relations = [$related];
                 }
 
                 $relatedCollectionId = $relationship->getAttribute('relatedCollection');
@@ -3330,7 +3354,15 @@ App::patch('/v1/databases/:databaseId/collections/:collectionId/documents/:docum
                     fn() => $dbForProject->getDocument('database_' . $database->getInternalId(), $relatedCollectionId)
                 );
 
-                foreach ($related as $relation) {
+                foreach ($related as &$relation) {
+                    if (
+                        \is_array($relation)
+                        && \array_values($relation) !== $relation
+                        && !isset($relation['$id'])
+                    ) {
+                        $relation['$id'] = ID::unique();
+                        $relation = new Document($relation);
+                    }
                     if ($relation instanceof Document) {
                         $oldDocument = Authorization::skip(fn() => $dbForProject->getDocument(
                             'database_' . $database->getInternalId() . '_collection_' . $relatedCollection->getInternalId(),
@@ -3340,7 +3372,7 @@ App::patch('/v1/databases/:databaseId/collections/:collectionId/documents/:docum
                         if ($oldDocument->isEmpty()) {
                             $type = Database::PERMISSION_CREATE;
 
-                            if (!isset($relation['$id']) || $relation['$id'] === 'unique()') {
+                            if (isset($relation['$id']) && $relation['$id'] === 'unique()') {
                                 $relation['$id'] = ID::unique();
                             }
                         } else {
@@ -3353,6 +3385,12 @@ App::patch('/v1/databases/:databaseId/collections/:collectionId/documents/:docum
                         $checkPermissions($relatedCollection, $relation, $oldDocument, $type);
                     }
                 }
+
+                if ($isList) {
+                    $document->setAttribute($relationship->getAttribute('key'), \array_values($relations));
+                } else {
+                    $document->setAttribute($relationship->getAttribute('key'), \reset($relations));
+                }
             }
         };
 
diff --git a/tests/e2e/Services/Databases/DatabasesBase.php b/tests/e2e/Services/Databases/DatabasesBase.php
index 42f83ea046..a2cb48cf93 100644
--- a/tests/e2e/Services/Databases/DatabasesBase.php
+++ b/tests/e2e/Services/Databases/DatabasesBase.php
@@ -3339,6 +3339,26 @@ trait DatabasesBase
 
         $this->assertEquals('Library 1', $person1['body']['library']['libraryName']);
 
+        // Create without nested ID
+        $person2 = $this->client->call(Client::METHOD_POST, '/databases/' . $databaseId . '/collections/' . $person['body']['$id'] . '/documents', array_merge([
+            'content-type' => 'application/json',
+            'x-appwrite-project' => $this->getProject()['$id'],
+        ], $this->getHeaders()), [
+            'documentId' => ID::unique(),
+            'data' => [
+                'library' => [
+                    'libraryName' => 'Library 2',
+                ],
+            ],
+            'permissions' => [
+                Permission::read(Role::user($this->getUser()['$id'])),
+                Permission::update(Role::user($this->getUser()['$id'])),
+                Permission::delete(Role::user($this->getUser()['$id'])),
+            ]
+        ]);
+
+        $this->assertEquals('Library 2', $person2['body']['library']['libraryName']);
+
         // Ensure IDs were set and internal IDs removed
         $this->assertEquals($databaseId, $person1['body']['$databaseId']);
         $this->assertEquals($databaseId, $person1['body']['library']['$databaseId']);
@@ -3901,7 +3921,7 @@ trait DatabasesBase
         ]);
 
         $this->assertEquals(200, $response['headers']['status-code']);
-        $this->assertEquals(1, count($response['body']['documents']));
+        $this->assertEquals(2, count($response['body']['documents']));
         $this->assertEquals(null, $response['body']['documents'][0]['fullName']);
         $this->assertArrayNotHasKey("libraries", $response['body']['documents'][0]);
     }