diff --git a/lib/dereference.ts b/lib/dereference.ts
index 63a42ab1..b56b58bb 100644
--- a/lib/dereference.ts
+++ b/lib/dereference.ts
@@ -190,7 +190,7 @@ function dereference$Ref<S extends object = JSONSchema, O extends ParserOptions<
   const $refPath = url.resolve(shouldResolveOnCwd ? url.cwd() : path, $ref.$ref);
 
   const cache = dereferencedCache.get($refPath);
-  if (cache) {
+  if (cache && !cache.circular) {
     const refKeys = Object.keys($ref);
     if (refKeys.length > 1) {
       const extraKeys = {};
diff --git a/test/specs/dereference-callback/dereference-callback.spec.ts b/test/specs/dereference-callback/dereference-callback.spec.ts
index 4f4979c9..03d26522 100644
--- a/test/specs/dereference-callback/dereference-callback.spec.ts
+++ b/test/specs/dereference-callback/dereference-callback.spec.ts
@@ -22,26 +22,26 @@ describe("Schema with a $ref", () => {
     expect(calls).to.deep.equal([
       {
         path: "#/definitions/b",
-        value: { $ref: "#/definitions/a" },
+        value: { $ref: "#/definitions/b" },
         parent: {
           a: {
-            $ref: "#/definitions/a",
+            $ref: "#/definitions/b",
           },
           b: {
-            $ref: "#/definitions/a",
+            $ref: "#/definitions/b",
           },
         },
         parentPropName: "a",
       },
       {
         path: "#/definitions/a",
-        value: { $ref: "#/definitions/a" },
+        value: { $ref: "#/definitions/b" },
         parent: {
           c: {
             type: "string",
           },
           d: {
-            $ref: "#/definitions/a",
+            $ref: "#/definitions/b",
           },
         },
         parentPropName: "d",