diff --git a/simple_parsing/helpers/serialization/serializable.py b/simple_parsing/helpers/serialization/serializable.py
index e935ed89..6fa39f17 100644
--- a/simple_parsing/helpers/serialization/serializable.py
+++ b/simple_parsing/helpers/serialization/serializable.py
@@ -204,7 +204,7 @@ def __init_subclass__(
         register_decoding_fn(cls, cls.from_dict)
 
     def to_dict(
-        self, dict_factory: type[dict] = dict, recurse: bool = True, save_dc_types: bool = False
+        self, dict_factory: type[dict] = dict, recurse: bool = True, save_dc_types: int | bool = False
     ) -> dict:
         """Serializes this dataclass to a dict.
 
@@ -597,7 +597,7 @@ def save(
     obj: Any,
     path: str | Path,
     format: FormatExtension | None = None,
-    save_dc_types: bool = False,
+    save_dc_types: int | bool = False,
     **kwargs,
 ) -> None:
     """Save the given dataclass or dictionary to the given file."""
@@ -688,7 +688,7 @@ def to_dict(
     dc: DataclassT,
     dict_factory: type[dict] = dict,
     recurse: bool = True,
-    save_dc_types: bool = False,
+    save_dc_types: int | bool = False,
 ) -> dict:
     """Serializes this dataclass to a dict.
 
@@ -720,6 +720,10 @@ def to_dict(
         else:
             d[DC_TYPE_KEY] = module + "." + class_name
 
+    # Decrement save_dc_types if it is an int
+    if save_dc_types is not True and save_dc_types > 0:
+        save_dc_types -= 1
+
     for f in fields(dc):
         name = f.name
         value = getattr(dc, name)
diff --git a/simple_parsing/helpers/subgroups.py b/simple_parsing/helpers/subgroups.py
index d9487998..79754370 100644
--- a/simple_parsing/helpers/subgroups.py
+++ b/simple_parsing/helpers/subgroups.py
@@ -10,6 +10,7 @@
 
 from typing_extensions import TypeAlias
 
+from simple_parsing.helpers.serialization.serializable import to_dict
 from simple_parsing.utils import DataclassT, is_dataclass_instance, is_dataclass_type
 
 logger = get_logger(__name__)
@@ -112,6 +113,14 @@ def subgroups(
     metadata["subgroup_default"] = default
     metadata["subgroup_dataclass_types"] = {}
 
+    def _encoding_fn(value: Any) -> dict:
+        """Custom encoding function that will simply represent the value as the
+        the key in the dict rather than the value itself.
+        """
+        return to_dict(value, save_dc_types=1)
+
+    kwargs.setdefault("encoding_fn", _encoding_fn)
+
     subgroup_dataclass_types: dict[Key, type[DataclassT]] = {}
     choices = subgroups.keys()
 
diff --git a/simple_parsing/parsing.py b/simple_parsing/parsing.py
index ec81bdd1..940357b1 100644
--- a/simple_parsing/parsing.py
+++ b/simple_parsing/parsing.py
@@ -14,7 +14,7 @@
 from collections import defaultdict
 from logging import getLogger
 from pathlib import Path
-from typing import Any, Callable, Sequence, Type, overload
+from typing import Any, Callable, Sequence, Type, cast, overload
 
 from simple_parsing.helpers.subgroups import SubgroupKey
 from simple_parsing.wrappers.dataclass_wrapper import DataclassWrapperType
@@ -22,7 +22,7 @@
 from . import utils
 from .conflicts import ConflictResolution, ConflictResolver
 from .help_formatter import SimpleHelpFormatter
-from .helpers.serialization.serializable import read_file
+from .helpers.serialization.serializable import DC_TYPE_KEY, from_dict, read_file
 from .utils import (
     Dataclass,
     DataclassT,
@@ -646,7 +646,6 @@ def _resolve_subgroups(
                 if subgroup_field.subgroup_default is dataclasses.MISSING:
                     assert argument_options["required"]
                 else:
-                    assert argument_options["default"] is subgroup_field.subgroup_default
                     assert not is_dataclass_instance(argument_options["default"])
 
                 # TODO: Do we really need to care about this "SUPPRESS" stuff here?
@@ -674,7 +673,7 @@ def _resolve_subgroups(
                 # here.
                 subgroup_dict = subgroup_field.subgroup_choices
                 chosen_subgroup_key: SubgroupKey = getattr(parsed_args, dest)
-                assert chosen_subgroup_key in subgroup_dict
+                assert isinstance(chosen_subgroup_key, dict) or chosen_subgroup_key in subgroup_dict
 
                 # Changing the default value of the (now parsed) field for the subgroup choice,
                 # just so it shows (default: {chosen_subgroup_key}) on the command-line.
@@ -687,7 +686,11 @@ def _resolve_subgroups(
                     f"{chosen_subgroup_key!r}"
                 )
 
-                default_or_dataclass_fn = subgroup_dict[chosen_subgroup_key]
+                if isinstance(chosen_subgroup_key, dict):
+                    default_or_dataclass_fn = from_dict(cast(Type[Dataclass], None), chosen_subgroup_key)
+                else:
+                    default_or_dataclass_fn = subgroup_dict[chosen_subgroup_key]
+
                 if is_dataclass_instance(default_or_dataclass_fn):
                     # The chosen value in the subgroup dict is a frozen dataclass instance.
                     default = default_or_dataclass_fn
@@ -1124,6 +1127,11 @@ def _create_dataclass_instance(
     # None.
     # TODO: (BUG!) This doesn't distinguish the case where the defaults are passed via the
     # command-line from the case where no arguments are passed at all!
+    dc_type = constructor_args.pop(DC_TYPE_KEY, None)
+    if dc_type is not None:
+        from simple_parsing.helpers.serialization.serializable import _locate
+        constructor = _locate(dc_type)
+
     if wrapper.optional and wrapper.default is None:
         for field_wrapper in wrapper.fields: