diff --git a/src/systems/diffeqs/odesystem.jl b/src/systems/diffeqs/odesystem.jl
index 34312563e2..a1fb333092 100644
--- a/src/systems/diffeqs/odesystem.jl
+++ b/src/systems/diffeqs/odesystem.jl
@@ -487,14 +487,14 @@ function build_explicit_observed_function(sys, ts;
     end
     _ps = ps
     if ps isa Tuple
-        ps = DestructuredArgs.(ps, inbounds = !checkbounds)
+        ps = DestructuredArgs.(unwrap.(ps), inbounds = !checkbounds)
     elseif has_index_cache(sys) && get_index_cache(sys) !== nothing
-        ps = DestructuredArgs.(reorder_parameters(get_index_cache(sys), ps))
+        ps = DestructuredArgs.(reorder_parameters(get_index_cache(sys), unwrap.(ps)))
         if isempty(ps) && inputs !== nothing
             ps = (:EMPTY,)
         end
     else
-        ps = (DestructuredArgs(ps, inbounds = !checkbounds),)
+        ps = (DestructuredArgs(unwrap.(ps), inbounds = !checkbounds),)
     end
     dvs = DestructuredArgs(unknowns(sys), inbounds = !checkbounds)
     if inputs === nothing
diff --git a/test/odesystem.jl b/test/odesystem.jl
index 58d22367a0..e39649c1c2 100644
--- a/test/odesystem.jl
+++ b/test/odesystem.jl
@@ -1367,3 +1367,23 @@ end
     @test length(ModelingToolkit.guesses(sys2)) == 3
     @test ModelingToolkit.guesses(sys2)[p5] == 10.0
 end
+
+@testset "Observed with inputs" begin
+    @variables u(t)[1:2] x(t)[1:2] o(t)[1:2]
+    @parameters p[1:4]
+
+    eqs = [D(u[1]) ~ p[1] * u[1] - p[2] * u[1] * u[2] + x[1] + 0.1
+           D(u[2]) ~ p[4] * u[1] * u[2] - p[3] * u[2] - x[2]
+           o[1] ~ sum(p) * sum(u)
+           o[2] ~ sum(p) * sum(x)]
+
+    @named sys = ODESystem(eqs, t, [u..., x..., o], [p...])
+    sys1, = structural_simplify(sys, ([x...], [o...]), split = false)
+
+    @test_nowarn ModelingToolkit.build_explicit_observed_function(sys1, u; inputs = [x...])
+
+    obsfn = ModelingToolkit.build_explicit_observed_function(
+        sys1, u + x + p[1:2]; inputs = [x...])
+
+    @test obsfn(ones(2), 2ones(2), 3ones(4), 4.0) == 6ones(2)
+end