diff --git a/python/semantic_kernel/functions/kernel_function.py b/python/semantic_kernel/functions/kernel_function.py
index b8f9a3a5fdbe..3d72783ea9ec 100644
--- a/python/semantic_kernel/functions/kernel_function.py
+++ b/python/semantic_kernel/functions/kernel_function.py
@@ -7,8 +7,8 @@
 from collections.abc import AsyncGenerator, Callable, Mapping, Sequence
 from contextlib import aclosing, closing
 from copy import copy, deepcopy
-from inspect import isasyncgen, isgenerator
-from typing import TYPE_CHECKING, Any
+from inspect import Parameter, isasyncgen, isgenerator, signature
+from typing import TYPE_CHECKING, Annotated, Any
 
 from opentelemetry import metrics, trace
 from opentelemetry.semconv.attributes.error_attributes import ERROR_TYPE
@@ -452,14 +452,39 @@ def as_agent_framework_tool(
         name = name or self.name
         description = description or self.description
         fields = {}
+        # Prefer the underlying callable signature when present so nullable
+        # annotations (str | None) stay distinct from optional defaults (= None),
+        # and so Field annotations remain nullable when None is allowed.
+        method = getattr(self, "method", None)
+        sig_params = signature(method).parameters if callable(method) else {}
         for param in self.parameters:
-            if param.include_in_function_choices:
-                if param.default_value is not None:
+            if not param.include_in_function_choices:
+                continue
+            sp = sig_params.get(param.name) if param.name else None
+            if sp is not None:
+                annotation: Any = (
+                    sp.annotation if sp.annotation is not Parameter.empty else (param.type_object or Any)
+                )
+                origin = getattr(annotation, "__origin__", None)
+                if origin is Annotated:
+                    annotation = annotation.__args__[0]
+                if sp.default is not Parameter.empty:
                     fields[param.name] = (
-                        param.type_,
-                        Field(description=param.description, default=param.default_value),
+                        annotation,
+                        Field(description=param.description, default=sp.default),
                     )
-                fields[param.name] = (param.type_, Field(description=param.description))
+                else:
+                    fields[param.name] = (annotation, Field(description=param.description))
+                continue
+
+            annotation = param.type_object or param.type_ or Any
+            if param.is_required:
+                fields[param.name] = (annotation, Field(description=param.description))
+            else:
+                fields[param.name] = (
+                    annotation,
+                    Field(description=param.description, default=param.default_value),
+                )
         input_model = create_model("InputModel", **fields)  # type: ignore
 
         async def wrapper(*args: Any, **kwargs: Any) -> Any:
diff --git a/python/tests/unit/functions/test_kernel_function_from_method.py b/python/tests/unit/functions/test_kernel_function_from_method.py
index 03b796d4dfef..f8db719487a6 100644
--- a/python/tests/unit/functions/test_kernel_function_from_method.py
+++ b/python/tests/unit/functions/test_kernel_function_from_method.py
@@ -251,6 +251,56 @@ def decorated_function() -> None:
     assert len(native_function.parameters) == 0
 
 
+def test_as_agent_framework_tool_preserves_optional_parameter_default(monkeypatch):
+    class MockAIFunction:
+        def __init__(self, *, input_model: Any, **kwargs: Any):
+            self.input_model = input_model
+
+    monkeypatch.setitem(__import__("sys").modules, "agent_framework", Mock(AIFunction=MockAIFunction))
+
+    @kernel_function()
+    def function(count: int = 5, label: str | None = None) -> int:
+        return count
+
+    native_function = KernelFunction.from_method(method=function, plugin_name="MockPlugin")
+    tool = native_function.as_agent_framework_tool(kernel=Mock())
+    count_field = tool.input_model.model_fields["count"]
+    label_field = tool.input_model.model_fields["label"]
+
+    assert count_field.default == 5
+    assert not count_field.is_required()
+    assert label_field.default is None
+    assert not label_field.is_required()
+    assert tool.input_model().label is None
+    assert tool.input_model(label=None).label is None
+
+
+def test_as_agent_framework_tool_keeps_nullable_without_default_required(monkeypatch):
+    from pydantic import ValidationError
+
+    class MockAIFunction:
+        def __init__(self, *, input_model: Any, **kwargs: Any):
+            self.input_model = input_model
+
+    monkeypatch.setitem(__import__("sys").modules, "agent_framework", Mock(AIFunction=MockAIFunction))
+
+    @kernel_function()
+    def function(x: str | None) -> str | None:
+        return x
+
+    native_function = KernelFunction.from_method(method=function, plugin_name="MockPlugin")
+    tool = native_function.as_agent_framework_tool(kernel=Mock())
+    x_field = tool.input_model.model_fields["x"]
+    assert x_field.is_required()
+    assert tool.input_model(x=None).x is None
+    try:
+        tool.input_model()
+        raised = False
+    except ValidationError:
+        raised = True
+    assert raised, "nullable-without-default must reject a missing argument"
+
+
 def test_init_method_is_none():
     with pytest.raises(FunctionInitializationError):
         KernelFunction.from_method(method=None, plugin_name="MockPlugin")