diff --git a/crates/oxc_isolated_declarations/src/return_type.rs b/crates/oxc_isolated_declarations/src/return_type.rs
index 9af88c9f5b30f..e785245fb7fd4 100644
--- a/crates/oxc_isolated_declarations/src/return_type.rs
+++ b/crates/oxc_isolated_declarations/src/return_type.rs
@@ -104,8 +104,13 @@ impl<'a> FunctionReturnType<'a> {
             }
         }
 
-        //
+        // If there are multiple return statements, which means there must be a union with `undefined`
         if visitor.return_statement_count > 1 {
+            // Here is a union type, if the return type is a function type, we need to wrap it in parentheses
+            if matches!(expr_type, TSType::TSFunctionType(_)) {
+                expr_type = transformer.ast.ts_type_parenthesized_type(SPAN, expr_type);
+            }
+
             let types = transformer
                 .ast
                 .vec_from_iter([expr_type, transformer.ast.ts_type_undefined_keyword(SPAN)]);
diff --git a/crates/oxc_isolated_declarations/tests/fixtures/infer-return-type.ts b/crates/oxc_isolated_declarations/tests/fixtures/infer-return-type.ts
index 4f0730d59b832..bf409a20e7e20 100644
--- a/crates/oxc_isolated_declarations/tests/fixtures/infer-return-type.ts
+++ b/crates/oxc_isolated_declarations/tests/fixtures/infer-return-type.ts
@@ -30,3 +30,11 @@ function quux() {
   return `${''}`
 }
 // Inferred type is string
+
+function returnFunctionOrNothing() {
+  if (process.env.NODE_ENV === 'development') {
+    return
+  }
+
+  return () => 0;
+}
\ No newline at end of file
diff --git a/crates/oxc_isolated_declarations/tests/snapshots/infer-return-type.snap b/crates/oxc_isolated_declarations/tests/snapshots/infer-return-type.snap
index 36224eaade242..4c3bec1334d98 100644
--- a/crates/oxc_isolated_declarations/tests/snapshots/infer-return-type.snap
+++ b/crates/oxc_isolated_declarations/tests/snapshots/infer-return-type.snap
@@ -10,6 +10,7 @@ declare function bar(): number | undefined;
 declare function baz();
 declare function qux(): string;
 declare function quux(): string;
+declare function returnFunctionOrNothing(): (() => number) | undefined;
 
 
 ==================== Errors ====================