diff --git a/Packages/com.unity.inputsystem/CHANGELOG.md b/Packages/com.unity.inputsystem/CHANGELOG.md
index 751d997e06..7570433300 100644
--- a/Packages/com.unity.inputsystem/CHANGELOG.md
+++ b/Packages/com.unity.inputsystem/CHANGELOG.md
@@ -18,6 +18,7 @@ however, it has to be formatted properly to pass verification tests.
 
 - Fixed warnings being generated on Unity 6.4 and 6.5. (ISX-2395).
 - Fixed extra empty lines being displayed in the control binding list when mouse buttons are pressed [ISXB-1677](https://issuetracker.unity3d.com/product/unity/issues/guid/ISXB-1677)
+- Fixed InputActionReference not being set when attempting to set it on a Prefab or ScriptableObject [ISXB-1787](https://issuetracker.unity3d.com/product/unity/issues/guid/ISXB-1787)
 
 ### Changed
 
diff --git a/Packages/com.unity.inputsystem/InputSystem/Editor/PropertyDrawers/InputActionReferencePropertyDrawer.cs b/Packages/com.unity.inputsystem/InputSystem/Editor/PropertyDrawers/InputActionReferencePropertyDrawer.cs
index b660547db6..540422e27a 100644
--- a/Packages/com.unity.inputsystem/InputSystem/Editor/PropertyDrawers/InputActionReferencePropertyDrawer.cs
+++ b/Packages/com.unity.inputsystem/InputSystem/Editor/PropertyDrawers/InputActionReferencePropertyDrawer.cs
@@ -48,9 +48,7 @@ public void OnGUI(Rect position, SerializedProperty property, GUIContent label,
             // Only assign the value was actually changed by the user.
             if (EditorGUI.EndChangeCheck() && !Equals(candidate, current))
             {
-                var reference = candidate as InputActionReference;
-                property.objectReferenceValue = reference ?
-                    InputActionReference.Create(reference.action) : null;
+                property.objectReferenceValue = candidate as InputActionReference; // set to either the reference or null.
             }
 
             EditorGUI.EndProperty();