diff --git a/.changeset/empty-cycles-lay.md b/.changeset/empty-cycles-lay.md
new file mode 100644
index 0000000000..323bf42fa3
--- /dev/null
+++ b/.changeset/empty-cycles-lay.md
@@ -0,0 +1,5 @@
+---
+"@vue-storefront/sdk": patch
+---
+
+- **[FIX]** Fixed type inference for function-based configurations when using the [extend](https://docs.alokai.com/sdk/advanced/extending-module#extend) method. Now the `methods` object is correctly typed.
diff --git a/packages/sdk/src/modules/buildModule.ts b/packages/sdk/src/modules/buildModule.ts
index 5adaa95ab5..0e8458a0a1 100644
--- a/packages/sdk/src/modules/buildModule.ts
+++ b/packages/sdk/src/modules/buildModule.ts
@@ -74,7 +74,7 @@ function buildModule<
 
   const resolvedExtension =
     typeof extension === "function"
-      ? extension(extensionOptions, {
+      ? extension(extensionOptions ?? ({} as ExtensionOptions), {
           methods: resolvedModule.connector,
           context: resolvedModule?.context ?? {},
         })
diff --git a/packages/sdk/src/types/index.ts b/packages/sdk/src/types/index.ts
index 5cbad89df2..f00141bbab 100644
--- a/packages/sdk/src/types/index.ts
+++ b/packages/sdk/src/types/index.ts
@@ -279,10 +279,10 @@ export type ExtensionInitializer<
   InitializedExtension extends Extension<ExtendedModule>,
   Options extends ModuleOptions
 > = (
-  options?: Options,
-  parent?: {
+  options: Options,
+  parent: {
     methods: ExtendedModule["connector"];
-    context?: ExtendedModule["context"];
+    context: ExtendedModule["context"];
   }
 ) => InitializedExtension;