diff --git a/changelog/12790.bugfix.md b/changelog/12790.bugfix.md
new file mode 100644
index 000000000000..4715d8ac618a
--- /dev/null
+++ b/changelog/12790.bugfix.md
@@ -0,0 +1 @@
+Fixed `KeyError` which resulted when `domain_responses` doesn't exist as a keyword argument while using a custom action dispatcher with nlg server. 
\ No newline at end of file
diff --git a/rasa/core/nlg/callback.py b/rasa/core/nlg/callback.py
index a8d0e681e055..d997f6ace092 100644
--- a/rasa/core/nlg/callback.py
+++ b/rasa/core/nlg/callback.py
@@ -73,7 +73,7 @@ async def generate(
         **kwargs: Any,
     ) -> Dict[Text, Any]:
         """Retrieve a named response from the domain using an endpoint."""
-        domain_responses = kwargs.pop("domain_responses")
+        domain_responses = kwargs.pop("domain_responses", None)
         response_id = self.fetch_response_id(
             utter_action, tracker, output_channel, domain_responses
         )