diff --git a/hydra/_internal/instantiate/_instantiate2.py b/hydra/_internal/instantiate/_instantiate2.py
index 2f09ece868b..5d6823b445c 100644
--- a/hydra/_internal/instantiate/_instantiate2.py
+++ b/hydra/_internal/instantiate/_instantiate2.py
@@ -354,18 +354,24 @@ def instantiate_node(
             ):
                 dict_items = {}
                 for key, value in node.items():
-                    # list items inherits recursive flag from the containing dict.
-                    dict_items[key] = instantiate_node(
-                        value, convert=convert, recursive=recursive
-                    )
+                    if recursive:
+                        # list items inherits recursive flag from the containing dict.
+                        dict_items[key] = instantiate_node(
+                            value, convert=convert, recursive=recursive
+                        )
+                    else:
+                        dict_items[key] = value
                 return dict_items
             else:
                 # Otherwise use DictConfig and resolve interpolations lazily.
                 cfg = OmegaConf.create({}, flags={"allow_objects": True})
                 for key, value in node.items():
-                    cfg[key] = instantiate_node(
-                        value, convert=convert, recursive=recursive
-                    )
+                    if recursive:
+                        cfg[key] = instantiate_node(
+                            value, convert=convert, recursive=recursive
+                        )
+                    else:
+                        cfg[key] = value
                 cfg._set_parent(node)
                 cfg._metadata.object_type = node._metadata.object_type
                 if convert == ConvertMode.OBJECT:
diff --git a/tests/instantiate/__init__.py b/tests/instantiate/__init__.py
index 257d117d711..a73c30f5b37 100644
--- a/tests/instantiate/__init__.py
+++ b/tests/instantiate/__init__.py
@@ -420,6 +420,11 @@ class NestedConf:
     b: Any = field(default_factory=lambda: User(name="b", age=2))
 
 
+@dataclass
+class NestedConfNoTarget:
+    a: Any = field(default_factory=lambda: SimpleClassDefaultPrimitiveConf)
+
+
 def recisinstance(got: Any, expected: Any) -> bool:
     """Compare got with expected type, recursively on dict and list."""
     if not isinstance(got, type(expected)):
diff --git a/tests/instantiate/test_instantiate.py b/tests/instantiate/test_instantiate.py
index cde77d8af78..87a32fa9df9 100644
--- a/tests/instantiate/test_instantiate.py
+++ b/tests/instantiate/test_instantiate.py
@@ -33,6 +33,7 @@
     Mapping,
     MappingConf,
     NestedConf,
+    NestedConfNoTarget,
     NestingClass,
     OuterClass,
     Parameters,
@@ -2096,3 +2097,13 @@ class DictValuesConf:
     cfg = OmegaConf.structured(DictValuesConf)
     obj = instantiate_func(config=cfg)
     assert obj.d is None
+
+
+
+def test_non_target_recursive(instantiate_func: Any) -> None:
+    cfg = OmegaConf.structured(NestedConfNoTarget)
+    obj = instantiate_func(config=cfg, _recursive_=False)
+    assert isinstance(obj.a, DictConfig)
+
+    obj = instantiate_func(config=cfg, _recursive_=True)
+    assert isinstance(obj.a, SimpleClass)