diff --git a/.changeset/quiet-moons-sparkle.md b/.changeset/quiet-moons-sparkle.md
new file mode 100644
index 0000000000..11aefdf7e0
--- /dev/null
+++ b/.changeset/quiet-moons-sparkle.md
@@ -0,0 +1,7 @@
+---
+"@pnpm/real-hoist": patch
+"@pnpm/headless": patch
+"pnpm": patch
+---
+
+Peer dependencies of subdependencies should be installed, when `node-linker` is set to `hoisted` [#6680](https://github.com/pnpm/pnpm/pull/6680).
diff --git a/pkg-manager/core/test/hoistedNodeLinker/install.ts b/pkg-manager/core/test/hoistedNodeLinker/install.ts
index b32f222c08..6cebca34a6 100644
--- a/pkg-manager/core/test/hoistedNodeLinker/install.ts
+++ b/pkg-manager/core/test/hoistedNodeLinker/install.ts
@@ -316,3 +316,17 @@ test('linking bins of local projects when node-linker is set to hoisted', async
 
   expect(fs.existsSync('project-1/node_modules/.bin/project-2')).toBeTruthy()
 })
+
+test('peerDependencies should be installed when autoInstallPeers is set to true and nodeLinker is set to hoisted', async () => {
+  prepareEmpty()
+  await install({
+    dependencies: {
+      'react-dom': '18.2.0',
+    },
+  }, await testDefaults({
+    nodeLinker: 'hoisted',
+    autoInstallPeers: true,
+  }))
+
+  expect(fs.existsSync('node_modules/react')).toBeTruthy()
+})
diff --git a/pkg-manager/headless/src/lockfileToDepGraph.ts b/pkg-manager/headless/src/lockfileToDepGraph.ts
index 49a9466b21..fff008ec7d 100644
--- a/pkg-manager/headless/src/lockfileToDepGraph.ts
+++ b/pkg-manager/headless/src/lockfileToDepGraph.ts
@@ -53,6 +53,7 @@ export interface DependenciesGraph {
 }
 
 export interface LockfileToDepGraphOptions {
+  autoInstallPeers: boolean
   engineStrict: boolean
   force: boolean
   importerIds: string[]
diff --git a/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts b/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts
index 7fe3e067bc..54523ebbfc 100644
--- a/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts
+++ b/pkg-manager/headless/src/lockfileToHoistedDepGraph.ts
@@ -27,6 +27,7 @@ import {
 } from './lockfileToDepGraph'
 
 export interface LockfileToHoistedDepGraphOptions {
+  autoInstallPeers: boolean
   engineStrict: boolean
   force: boolean
   hoistingLimits?: HoistingLimits
@@ -68,7 +69,11 @@ async function _lockfileToHoistedDepGraph (
   lockfile: Lockfile,
   opts: LockfileToHoistedDepGraphOptions
 ): Promise<Omit<LockfileToDepGraphResult, 'prevGraph'>> {
-  const tree = hoist(lockfile, { hoistingLimits: opts.hoistingLimits, externalDependencies: opts.externalDependencies })
+  const tree = hoist(lockfile, {
+    hoistingLimits: opts.hoistingLimits,
+    externalDependencies: opts.externalDependencies,
+    autoInstallPeers: opts.autoInstallPeers,
+  })
   const graph: DependenciesGraph = {}
   const modulesDir = path.join(opts.lockfileDir, 'node_modules')
   const fetchDepsOpts = {
diff --git a/pkg-manager/real-hoist/src/index.ts b/pkg-manager/real-hoist/src/index.ts
index 919fd180f3..8554dc46ce 100644
--- a/pkg-manager/real-hoist/src/index.ts
+++ b/pkg-manager/real-hoist/src/index.ts
@@ -17,6 +17,7 @@ export function hoist (
     // This option was added for Bit CLI in order to prevent pnpm from overwriting dependencies linked by Bit.
     // However, in the future it might be useful to use it in pnpm for skipping any dependencies added by external tools.
     externalDependencies?: Set<string>
+    autoInstallPeers?: boolean
   }
 ): HoisterResult {
   const nodes = new Map<string, HoisterTree>()
@@ -37,7 +38,7 @@ export function hoist (
         acc[dep] = 'link:'
         return acc
       }, {} as Record<string, string>),
-    }),
+    }, opts?.autoInstallPeers),
   }
   for (const [importerId, importer] of Object.entries(lockfile.importers)) {
     if (importerId === '.') continue
@@ -51,7 +52,7 @@ export function hoist (
         ...importer.dependencies,
         ...importer.devDependencies,
         ...importer.optionalDependencies,
-      }),
+      }, opts?.autoInstallPeers),
     }
     node.dependencies.add(importerNode)
   }
@@ -67,7 +68,12 @@ export function hoist (
   return hoisterResult
 }
 
-function toTree (nodes: Map<string, HoisterTree>, lockfile: Lockfile, deps: Record<string, string>): Set<HoisterTree> {
+function toTree (
+  nodes: Map<string, HoisterTree>,
+  lockfile: Lockfile,
+  deps: Record<string, string>,
+  autoInstallPeers?: boolean
+): Set<HoisterTree> {
   return new Set(Object.entries(deps).map(([alias, ref]) => {
     const depPath = dp.refToRelative(ref, alias)!
     if (!depPath) {
@@ -100,10 +106,12 @@ function toTree (nodes: Map<string, HoisterTree>, lockfile: Lockfile, deps: Reco
         reference: depPath,
         dependencyKind: HoisterDependencyKind.REGULAR,
         dependencies: new Set(),
-        peerNames: new Set([
-          ...Object.keys(pkgSnapshot.peerDependencies ?? {}),
-          ...(pkgSnapshot.transitivePeerDependencies ?? []),
-        ]),
+        peerNames: new Set(autoInstallPeers
+          ? []
+          : [
+            ...Object.keys(pkgSnapshot.peerDependencies ?? {}),
+            ...(pkgSnapshot.transitivePeerDependencies ?? []),
+          ]),
       }
       nodes.set(key, node)
       node.dependencies = toTree(nodes, lockfile, { ...pkgSnapshot.dependencies, ...pkgSnapshot.optionalDependencies })