diff --git a/CHANGELOG.md b/CHANGELOG.md
index 942c85a..a6fd78d 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,3 +1,9 @@
+# Changes in 7.1.3
+- Fixed: `$ref` replaced with inline schema copy when using `SetValidator` with nested object types (Issue #198)
+  - `ResolveRefProperty` (introduced in 7.1.2 for BigInteger isolation) replaced all `$ref` properties with copies, destroying reference structure in the OpenAPI document
+  - Fix: snapshot `$ref` properties before rule application, restore them afterwards if no validation constraints were added by rules
+  - BigInteger per-model constraints (Issue #146) continue to work correctly
+
 # Changes in 7.1.2
 - Added: `BigInteger` support for min/max validation constraints in OpenAPI schema generation (Issue #146)
   - `IsNumeric()` and `NumericToDecimal()` now handle `BigInteger` values
diff --git a/src/MicroElements.Swashbuckle.FluentValidation/OpenApi/OpenApiSchemaCompatibility.cs b/src/MicroElements.Swashbuckle.FluentValidation/OpenApi/OpenApiSchemaCompatibility.cs
index 0c82b5c..d6aead7 100644
--- a/src/MicroElements.Swashbuckle.FluentValidation/OpenApi/OpenApiSchemaCompatibility.cs
+++ b/src/MicroElements.Swashbuckle.FluentValidation/OpenApi/OpenApiSchemaCompatibility.cs
@@ -253,6 +253,8 @@ public static bool TryGetProperty(OpenApiSchema schema, string key, out OpenApiS
         /// Resolves a $ref property, replaces it with an isolated shallow copy in the parent schema,
         /// and returns the copy. If the property is already a concrete OpenApiSchema, returns it as-is.
         /// This prevents validation rules from mutating the shared schema in SchemaRepository.
+        /// After rule application, call <see cref="RestoreUnmodifiedRefs"/> to restore $refs
+        /// for properties that were not modified by rules (Issue #198).
         /// </summary>
         public static OpenApiSchema? ResolveRefProperty(OpenApiSchema schema, string key, SchemaRepository? repository)
         {
@@ -275,6 +277,98 @@ public static bool TryGetProperty(OpenApiSchema schema, string key, out OpenApiS
 
             return null;
         }
+
+        /// <summary>
+        /// Snapshots all $ref properties in the schema before rule application.
+        /// Returns a dictionary of property key to original OpenApiSchemaReference.
+        /// </summary>
+        public static Dictionary<string, OpenApiSchemaReference>? SnapshotRefs(OpenApiSchema schema)
+        {
+            if (schema.Properties == null)
+                return null;
+
+            Dictionary<string, OpenApiSchemaReference>? snapshot = null;
+            foreach (var kvp in schema.Properties)
+            {
+                if (kvp.Value is OpenApiSchemaReference schemaRef)
+                {
+                    snapshot ??= new Dictionary<string, OpenApiSchemaReference>();
+                    snapshot[kvp.Key] = schemaRef;
+                }
+            }
+
+            return snapshot;
+        }
+
+        /// <summary>
+        /// Restores $ref properties that were replaced by ResolveRefProperty but not meaningfully
+        /// modified by validation rules. Compares the inline copy against the original component
+        /// schema to detect changes. Issue #198.
+        /// </summary>
+        public static void RestoreUnmodifiedRefs(
+            OpenApiSchema schema,
+            Dictionary<string, OpenApiSchemaReference>? snapshot,
+            SchemaRepository? repository)
+        {
+            if (snapshot == null || repository == null || schema.Properties == null)
+                return;
+
+            foreach (var kvp in snapshot)
+            {
+                var key = kvp.Key;
+                var originalRef = kvp.Value;
+
+                if (!schema.Properties.TryGetValue(key, out var currentProp))
+                    continue;
+
+                // If still a ref, nothing was replaced
+                if (currentProp is OpenApiSchemaReference)
+                    continue;
+
+                if (currentProp is OpenApiSchema inlineCopy)
+                {
+                    var refId = originalRef.Reference?.Id;
+                    if (refId != null && repository.Schemas.TryGetValue(refId, out var resolved) && resolved is OpenApiSchema componentSchema)
+                    {
+                        if (!HasValidationConstraintChanges(inlineCopy, componentSchema))
+                        {
+                            schema.Properties[key] = originalRef;
+                        }
+                    }
+                }
+            }
+        }
+
+        /// <summary>
+        /// Checks if the inline copy has any validation constraint differences compared to the component schema.
+        /// </summary>
+        private static bool HasValidationConstraintChanges(OpenApiSchema copy, OpenApiSchema original)
+        {
+            if (copy.MinLength != original.MinLength) return true;
+            if (copy.MaxLength != original.MaxLength) return true;
+            if (copy.MinItems != original.MinItems) return true;
+            if (copy.MaxItems != original.MaxItems) return true;
+            if (copy.Pattern != original.Pattern) return true;
+            if (copy.Minimum != original.Minimum) return true;
+            if (copy.Maximum != original.Maximum) return true;
+            if (copy.ExclusiveMinimum != original.ExclusiveMinimum) return true;
+            if (copy.ExclusiveMaximum != original.ExclusiveMaximum) return true;
+            if (copy.Type != original.Type) return true;
+            if (copy.Format != original.Format) return true;
+
+            // Check Required collection changes
+            var copyReq = copy.Required;
+            var origReq = original.Required;
+            if (copyReq?.Count != origReq?.Count) return true;
+            if (copyReq != null && origReq != null && !copyReq.SetEquals(origReq)) return true;
+
+            // Check AllOf collection changes (Pattern rule with UseAllOfForMultipleRules)
+            var copyAllOfCount = copy.AllOf?.Count ?? 0;
+            var origAllOfCount = original.AllOf?.Count ?? 0;
+            if (copyAllOfCount != origAllOfCount) return true;
+
+            return false;
+        }
 #endif
 
         /// <summary>
diff --git a/src/MicroElements.Swashbuckle.FluentValidation/Swashbuckle/FluentValidationRules.cs b/src/MicroElements.Swashbuckle.FluentValidation/Swashbuckle/FluentValidationRules.cs
index 02bb407..5c4200e 100644
--- a/src/MicroElements.Swashbuckle.FluentValidation/Swashbuckle/FluentValidationRules.cs
+++ b/src/MicroElements.Swashbuckle.FluentValidation/Swashbuckle/FluentValidationRules.cs
@@ -107,6 +107,13 @@ public void Apply(OpenApiSchema? schema, SchemaFilterContext context)
             {
                 foreach (var oneOfSchemas in allSchemas)
                 {
+#if OPENAPI_V2
+                    // Issue #198: Snapshot $ref properties before rule application.
+                    // ResolveRefProperty replaces $refs with copies for mutation isolation (Issue #146),
+                    // but we restore unmodified refs afterwards to preserve $ref structure.
+                    var refSnapshot = OpenApiSchemaCompatibility.SnapshotRefs(oneOfSchemas);
+#endif
+
                     var validatorContext = new ValidatorContext(typeContext, validator);
                     var schemaContext = new SchemaGenerationContext(
                         schemaRepository: context.SchemaRepository,
@@ -126,6 +133,11 @@ public void Apply(OpenApiSchema? schema, SchemaFilterContext context)
                     {
                         _logger.LogWarning(0, e, "Applying IncludeRules for type '{ModelType}' failed", context.Type);
                     }
+
+#if OPENAPI_V2
+                    // Issue #198: Restore $refs for properties that were not meaningfully modified by rules.
+                    OpenApiSchemaCompatibility.RestoreUnmodifiedRefs(oneOfSchemas, refSnapshot, context.SchemaRepository);
+#endif
                 }
             }
         }
diff --git a/test/MicroElements.Swashbuckle.FluentValidation.Tests/SchemaReferenceResolutionTests.cs b/test/MicroElements.Swashbuckle.FluentValidation.Tests/SchemaReferenceResolutionTests.cs
index c5b3973..d9ae91d 100644
--- a/test/MicroElements.Swashbuckle.FluentValidation.Tests/SchemaReferenceResolutionTests.cs
+++ b/test/MicroElements.Swashbuckle.FluentValidation.Tests/SchemaReferenceResolutionTests.cs
@@ -123,6 +123,101 @@ public ModelBValidator()
             }
         }
 
+        /// <summary>
+        /// Issue #198: SetValidator with nested object type should preserve $ref in parent schema.
+        /// https://github.com/micro-elements/MicroElements.Swashbuckle.FluentValidation/issues/198
+        /// </summary>
+        public class PersonModel
+        {
+            public AddressModel Address { get; set; }
+        }
+
+        public class AddressModel
+        {
+            public string Street { get; set; }
+        }
+
+        public class AddressModelValidator : AbstractValidator<AddressModel>
+        {
+            public AddressModelValidator()
+            {
+                RuleFor(x => x.Street).NotEmpty();
+            }
+        }
+
+        public class PersonModelValidator : AbstractValidator<PersonModel>
+        {
+            public PersonModelValidator()
+            {
+                RuleFor(x => x.Address)
+                    .NotEmpty()
+                    .SetValidator(new AddressModelValidator());
+            }
+        }
+
+        [Fact]
+        public void SetValidator_Should_Preserve_Ref_For_Nested_Object()
+        {
+            // Arrange
+            var schemaRepository = new SchemaRepository();
+            var schemaGenerator = SchemaGenerator(new PersonModelValidator(), new AddressModelValidator());
+
+            // Act
+            var referenceSchema = schemaGenerator.GenerateSchema(typeof(PersonModel), schemaRepository);
+            var personSchema = schemaRepository.GetSchema(referenceSchema.GetRefId()!);
+
+            // Assert: Person schema should have "Address" in required
+            personSchema.Required.Should().Contain("Address");
+
+            // Assert: Address component schema should exist and have street constraints
+            schemaRepository.Schemas.Should().ContainKey("AddressModel");
+
+            // Assert: Person.properties["Address"] should remain a $ref, not an inline copy
+            var addressProp = personSchema.Properties["Address"];
+#if OPENAPI_V2
+            addressProp.Should().BeOfType<OpenApiSchemaReference>(
+                "Person.properties['address'] should be a $ref, not an inline copy of the Address schema");
+#else
+            addressProp.Reference.Should().NotBeNull(
+                "Person.properties['address'] should be a $ref, not an inline copy of the Address schema");
+#endif
+        }
+
+        /// <summary>
+        /// Issue #198 follow-up: when a $ref property IS modified by a validation rule
+        /// (e.g., Email sets Format), the $ref should NOT be restored — the inline copy
+        /// with constraints must be kept.
+        /// </summary>
+        public class ModelWithEmail
+        {
+            public string ContactEmail { get; set; }
+        }
+
+        public class ModelWithEmailValidator : AbstractValidator<ModelWithEmail>
+        {
+            public ModelWithEmailValidator()
+            {
+                RuleFor(x => x.ContactEmail).NotEmpty().EmailAddress();
+            }
+        }
+
+        [Fact]
+        public void Ref_Property_With_Constraint_Should_Not_Be_Restored()
+        {
+            // Arrange
+            var schemaRepository = new SchemaRepository();
+            var schemaGenerator = SchemaGenerator(new ModelWithEmailValidator());
+
+            // Act
+            var referenceSchema = schemaGenerator.GenerateSchema(typeof(ModelWithEmail), schemaRepository);
+            var schema = schemaRepository.GetSchema(referenceSchema.GetRefId()!);
+
+            // Assert: ContactEmail should have format=email applied (not discarded by ref restore)
+            var emailProp = schema.GetProperty("ContactEmail")!;
+            emailProp.Format.Should().Be("email",
+                "Email rule should set Format on the property, and it must not be discarded by $ref restoration");
+        }
+
         [Fact]
         public void SharedRef_Should_Not_Corrupt_Between_Models()
         {
diff --git a/version.props b/version.props
index f9cd927..9342ff1 100644
--- a/version.props
+++ b/version.props
@@ -1,6 +1,6 @@
 <Project>
   <PropertyGroup>
-    <VersionPrefix>7.1.2</VersionPrefix>
+    <VersionPrefix>7.1.3</VersionPrefix>
     <VersionSuffix></VersionSuffix>
   </PropertyGroup>
 </Project>