diff --git a/.changeset/breezy-results-travel.md b/.changeset/breezy-results-travel.md
new file mode 100644
index 00000000..5c7bc8b8
--- /dev/null
+++ b/.changeset/breezy-results-travel.md
@@ -0,0 +1,5 @@
+---
+"@theguild/federation-composition": patch
+---
+
+Set external to true for external fields that are not in the key, but are used in keys for other graphs
diff --git a/__tests__/composition.spec.ts b/__tests__/composition.spec.ts
index 83c55100..ff054def 100644
--- a/__tests__/composition.spec.ts
+++ b/__tests__/composition.spec.ts
@@ -4182,6 +4182,86 @@ testImplementations((api) => {
       `);
     });
 
+    test("@external and not a @key in its graph, but is @key in other graph", () => {
+      const result = composeServices([
+        {
+          name: "a",
+          typeDefs: parse(/* GraphQL */ `
+            extend schema @link(url: "https://specs.apollo.dev/federation/${version}", import: ["@key", "@shareable"])
+
+            type Product @key(fields: "id") @shareable{
+              id: ID!
+              productId: String!
+            }
+
+            type Query {
+              products: [Product]
+            }
+          `),
+        },
+        {
+          name: "b",
+          typeDefs: parse(/* GraphQL */ `
+            extend schema @link(url: "https://specs.apollo.dev/federation/${version}", import: ["@key"])
+
+            type Product @key(fields: "id", resolvable: false) {
+              id: ID!
+            }
+          `),
+        },
+        {
+          name: "d",
+          typeDefs: parse(/* GraphQL */ `
+            extend schema @link(url: "https://specs.apollo.dev/federation/${version}", import: ["@shareable", "@external", "@key", "@requires"])
+
+            extend type Product @shareable @key(fields: "id productId") {
+              id: ID! @external
+              productId: String! @external
+              bField: Boolean
+            }
+          `),
+        },
+        {
+          name: "e",
+          typeDefs: parse(/* GraphQL */ `
+            extend schema
+              @link(
+                url: "https://specs.apollo.dev/federation/v2.3"
+                import: ["@key", "@shareable", "@external", "@requires"]
+              )
+
+            extend type Product @shareable @key(fields: "id") {
+              id: ID! @external
+              productId: String! @external
+              bField: Boolean @requires(fields: "productId")
+            }
+          `),
+        },
+      ]);
+
+      assertCompositionSuccess(
+        result,
+        `Composition failures:\n${result.errors?.map((e) => `- ${e.message}`).join("\n")}`,
+      );
+
+      expect(result.supergraphSdl).toContainGraphQL(/* GraphQL */ `
+        type Product
+          @join__type(graph: A, key: "id")
+          @join__type(graph: B, key: "id", resolvable: false)
+          @join__type(graph: D, key: "id productId", extension: true)
+          @join__type(graph: E, key: "id", extension: true) {
+          id: ID!
+          productId: String!
+            @join__field(external: true, graph: E)
+            @join__field(graph: A)
+            @join__field(graph: D)
+          bField: Boolean
+            @join__field(graph: D)
+            @join__field(graph: E, requires: "productId")
+        }
+      `);
+    });
+
     test("@external + @tag", () => {
       const subgraphs = [
         {
diff --git a/src/supergraph/composition/object-type.ts b/src/supergraph/composition/object-type.ts
index bddc11ea..9bd8397e 100644
--- a/src/supergraph/composition/object-type.ts
+++ b/src/supergraph/composition/object-type.ts
@@ -534,7 +534,7 @@ export function objectTypeBuilder(): TypeBuilder<ObjectType, ObjectTypeState> {
 
         // mark field as external if it's annotated with @external, but it's not used as a key on the extension type
         if (
-          fieldState.usedAsKey &&
+          fieldStateInGraph.usedAsKey &&
           objectType.byGraph.get(graphId)!.extension === true
         ) {
           return false;