diff --git a/modules/openapi-generator/src/main/java/org/openapitools/codegen/DefaultCodegen.java b/modules/openapi-generator/src/main/java/org/openapitools/codegen/DefaultCodegen.java
index 0b4cee1b87eb..a9bb1318147f 100644
--- a/modules/openapi-generator/src/main/java/org/openapitools/codegen/DefaultCodegen.java
+++ b/modules/openapi-generator/src/main/java/org/openapitools/codegen/DefaultCodegen.java
@@ -2826,9 +2826,8 @@ protected List<MappedModel> getAllOfDescendants(String thisSchemaName, OpenAPI o
                             if (ref == null) {
                                 // for schemas with no ref, it is not possible to build the discriminator map
                                 // because ref is how we get the model name
-                                // we only hit this use case for a schema with inline composed schemas, and one of those
-                                // schemas also has inline composed schemas
-                                throw new RuntimeException("Invalid inline schema defined in allOf in '" + childName + "'. Per the OpenApi spec, for this case when a composed schema defines a discriminator, the allOf schemas must use $ref. Change this inline definition to a $ref definition");
+                                // we hit this use case when an allOf composed schema contains an inline schema
+                                continue;
                             }
                             String parentName = ModelUtils.getSimpleRef(ref);
                             if (parentName.equals(currentSchemaName)) {
diff --git a/modules/openapi-generator/src/test/java/org/openapitools/codegen/DefaultCodegenTest.java b/modules/openapi-generator/src/test/java/org/openapitools/codegen/DefaultCodegenTest.java
index 472ee64f586a..4dec1cb34417 100644
--- a/modules/openapi-generator/src/test/java/org/openapitools/codegen/DefaultCodegenTest.java
+++ b/modules/openapi-generator/src/test/java/org/openapitools/codegen/DefaultCodegenTest.java
@@ -33,7 +33,6 @@
 import io.swagger.v3.oas.models.responses.ApiResponses;
 import io.swagger.v3.parser.core.models.ParseOptions;
 
-import org.openapitools.codegen.languages.JavaClientCodegen;
 import org.openapitools.codegen.templating.mustache.CamelCaseLambda;
 import org.openapitools.codegen.templating.mustache.IndentedLambda;
 import org.openapitools.codegen.templating.mustache.LowercaseLambda;
@@ -2231,4 +2230,27 @@ public void testFormComposedSchema() {
         assertTrue(names.contains("passwordConfirmation"));
         assertTrue(names.contains("oldPassword"));
     }
+
+    @Test
+    public void inlineAllOfSchemaDoesNotThrowException() {
+        final OpenAPI openAPI = TestUtils.parseFlattenSpec("src/test/resources/3_0/issue7262.yaml");
+        final DefaultCodegen codegen = new DefaultCodegen();
+        codegen.setOpenAPI(openAPI);
+
+        String modelName = "UserTimeBase";
+        Schema sc = openAPI.getComponents().getSchemas().get(modelName);
+        CodegenModel cm = codegen.fromModel(modelName, sc);
+
+        final Set<CodegenDiscriminator.MappedModel> expectedMappedModels = new HashSet<>(Arrays.asList(new CodegenDiscriminator.MappedModel("UserSleep", "UserSleep")));
+        final Set<CodegenDiscriminator.MappedModel> mappedModels = cm.getDiscriminator().getMappedModels();
+        assertEquals(mappedModels, expectedMappedModels);
+
+        modelName = "UserSleep";
+        sc = openAPI.getComponents().getSchemas().get(modelName);
+        cm = codegen.fromModel(modelName, sc);
+        final Set<String> expectedAllOf = new HashSet<>(Arrays.asList("UserTimeBase"));
+        assertEquals(cm.allOf, expectedAllOf);
+        assertEquals(openAPI.getComponents().getSchemas().size(), 2);
+        assertNull(cm.getDiscriminator());
+    }
 }
diff --git a/modules/openapi-generator/src/test/resources/3_0/issue7262.yaml b/modules/openapi-generator/src/test/resources/3_0/issue7262.yaml
new file mode 100644
index 000000000000..6c5ea413fa6e
--- /dev/null
+++ b/modules/openapi-generator/src/test/resources/3_0/issue7262.yaml
@@ -0,0 +1,38 @@
+openapi: "3.0.1"
+info:
+  version: 1.0.0
+  title: allOf discriminator issue
+paths:
+  /sleep:
+    patch:
+      requestBody:
+        content:
+          application/json:
+            schema:
+              $ref: '#/components/schemas/UserSleep'
+      responses:
+        '200':
+          description: Updated
+components:
+  schemas:
+    UserSleep:
+      allOf:
+        - $ref: '#/components/schemas/UserTimeBase'
+        - type: object
+          additionalProperties: true
+    UserTimeBase:
+      required:
+        - "$type"
+      type: object
+      properties:
+        "$type":
+          type: string
+        start:
+          type: string
+          nullable: true
+        end:
+          type: string
+          nullable: true
+      additionalProperties: true
+      discriminator:
+        propertyName: "$type"
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