diff --git a/.changeset/deep-towns-attend.md b/.changeset/deep-towns-attend.md
new file mode 100644
index 00000000..91977490
--- /dev/null
+++ b/.changeset/deep-towns-attend.md
@@ -0,0 +1,5 @@
+---
+'@playcanvas/react': patch
+---
+
+Fix useAppEvent dropping arguments for custom events
diff --git a/packages/lib/src/hooks/use-app-event.test.tsx b/packages/lib/src/hooks/use-app-event.test.tsx
index a2ef761b..9b1ca3d5 100644
--- a/packages/lib/src/hooks/use-app-event.test.tsx
+++ b/packages/lib/src/hooks/use-app-event.test.tsx
@@ -1,14 +1,16 @@
-import { renderHook } from '@testing-library/react';
+import { renderHook, waitFor } from '@testing-library/react';
 import React from 'react';
 import { describe, it, expect, vi, beforeEach, afterEach } from 'vitest';
 
 import { Application } from '../Application.tsx';
 
 import { useAppEvent } from './use-app-event.ts';
+import { useApp } from './use-app.tsx';
 
 /**
- * Note that we can't test the actual firing of the callbacks in tests,
- * because these events are not fire in the Null device type.
+ * Note that we can't test the actual firing of the built-in frame events in tests,
+ * because these events are not fired in the Null device type. Custom events can be
+ * fired directly with `app.fire(...)`.
  *
  * It's possible that we can run headless once we have a node-wgpu environment.
  */
@@ -113,4 +115,32 @@ describe('useAppEvent', () => {
         // Should not throw during cleanup
         unmount();
     });
+
+    it('should forward all arguments to the callback for custom events', async () => {
+        // eslint-disable-next-line @typescript-eslint/consistent-type-definitions -- preserve the interface generic coverage
+        interface CustomEventMap {
+            levelComplete: (level: number, score: number) => void;
+        }
+
+        const levelCompleteCallback = vi.fn();
+        let capturedApp: ReturnType<typeof useApp> | undefined;
+
+        renderHook(
+            () => {
+                capturedApp = useApp();
+                useAppEvent<CustomEventMap>('levelComplete', levelCompleteCallback);
+            },
+            {
+                wrapper: ({ children }) => <Application deviceTypes={['null']}>{children}</Application>
+            }
+        );
+
+        await waitFor(() => expect(capturedApp).toBeDefined());
+
+        capturedApp!.fire('levelComplete', 3, 1000);
+
+        // PlayCanvas pads unused fire() arguments with undefined, so compare the leading ones
+        expect(levelCompleteCallback).toHaveBeenCalledTimes(1);
+        expect(levelCompleteCallback.mock.calls[0].slice(0, 2)).toEqual([3, 1000]);
+    });
 });
diff --git a/packages/lib/src/hooks/use-app-event.ts b/packages/lib/src/hooks/use-app-event.ts
index ff2c61e8..53216c53 100644
--- a/packages/lib/src/hooks/use-app-event.ts
+++ b/packages/lib/src/hooks/use-app-event.ts
@@ -81,14 +81,9 @@ export function useAppEvent<TEventMap = BaseEventCallbackMap, TEventName extends
 
     const handler = useCallback(
         (...args: unknown[]) => {
-            if (event === 'update') {
-                // update event always receives delta time as first argument
-                (callback as (dt: number) => void)(args[0] as number);
-            } else {
-                (callback as () => void)();
-            }
+            (callback as (...args: unknown[]) => void)(...args);
         },
-        [callback, event]
+        [callback]
     );
 
     useEffect(() => {