diff --git a/.api-reports/api-report-core.md b/.api-reports/api-report-core.md
index b405231b1df..d73743d3a81 100644
--- a/.api-reports/api-report-core.md
+++ b/.api-reports/api-report-core.md
@@ -1562,7 +1562,10 @@ export interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_batch-http.md b/.api-reports/api-report-link_batch-http.md
index ce5dded3739..cf2e7f161f9 100644
--- a/.api-reports/api-report-link_batch-http.md
+++ b/.api-reports/api-report-link_batch-http.md
@@ -204,7 +204,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_batch.md b/.api-reports/api-report-link_batch.md
index a547973287d..6d830c0cd39 100644
--- a/.api-reports/api-report-link_batch.md
+++ b/.api-reports/api-report-link_batch.md
@@ -178,7 +178,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_context.md b/.api-reports/api-report-link_context.md
index af79db73e52..6c9d037cf78 100644
--- a/.api-reports/api-report-link_context.md
+++ b/.api-reports/api-report-link_context.md
@@ -149,7 +149,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_core.md b/.api-reports/api-report-link_core.md
index f488d284b51..2daef318dd8 100644
--- a/.api-reports/api-report-link_core.md
+++ b/.api-reports/api-report-link_core.md
@@ -149,7 +149,10 @@ export interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_error.md b/.api-reports/api-report-link_error.md
index af048d6fe6b..b5e55399b81 100644
--- a/.api-reports/api-report-link_error.md
+++ b/.api-reports/api-report-link_error.md
@@ -198,7 +198,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_http.md b/.api-reports/api-report-link_http.md
index fbd71df7348..7882b606b13 100644
--- a/.api-reports/api-report-link_http.md
+++ b/.api-reports/api-report-link_http.md
@@ -242,7 +242,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_persisted-queries.md b/.api-reports/api-report-link_persisted-queries.md
index 14e7a0b47db..0d57c040a5f 100644
--- a/.api-reports/api-report-link_persisted-queries.md
+++ b/.api-reports/api-report-link_persisted-queries.md
@@ -204,7 +204,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_remove-typename.md b/.api-reports/api-report-link_remove-typename.md
index f50798f5f02..8b703f577f1 100644
--- a/.api-reports/api-report-link_remove-typename.md
+++ b/.api-reports/api-report-link_remove-typename.md
@@ -155,7 +155,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_retry.md b/.api-reports/api-report-link_retry.md
index a4a61a6ea1d..b852fc904c8 100644
--- a/.api-reports/api-report-link_retry.md
+++ b/.api-reports/api-report-link_retry.md
@@ -159,7 +159,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_schema.md b/.api-reports/api-report-link_schema.md
index fcbee50828b..1fa99953f43 100644
--- a/.api-reports/api-report-link_schema.md
+++ b/.api-reports/api-report-link_schema.md
@@ -147,7 +147,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_subscriptions.md b/.api-reports/api-report-link_subscriptions.md
index 8745a5772cb..038fb43bae0 100644
--- a/.api-reports/api-report-link_subscriptions.md
+++ b/.api-reports/api-report-link_subscriptions.md
@@ -158,7 +158,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_utils.md b/.api-reports/api-report-link_utils.md
index 061cad690e5..7d0cf7eea6b 100644
--- a/.api-reports/api-report-link_utils.md
+++ b/.api-reports/api-report-link_utils.md
@@ -55,7 +55,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-link_ws.md b/.api-reports/api-report-link_ws.md
index 72a8165e4f0..0cb2808f90f 100644
--- a/.api-reports/api-report-link_ws.md
+++ b/.api-reports/api-report-link_ws.md
@@ -148,7 +148,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-react.md b/.api-reports/api-report-react.md
index a12089d47fc..5492231ee81 100644
--- a/.api-reports/api-report-react.md
+++ b/.api-reports/api-report-react.md
@@ -1417,7 +1417,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: Context) => Context;
+    setContext: {
+        (context: Context): void;
+        (updateContext: (previousContext: Context) => Context): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-react_components.md b/.api-reports/api-report-react_components.md
index 75bdf5cdc69..89fc1dcee6e 100644
--- a/.api-reports/api-report-react_components.md
+++ b/.api-reports/api-report-react_components.md
@@ -1181,7 +1181,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-react_context.md b/.api-reports/api-report-react_context.md
index 89bdcc1f98d..f3c996da5a2 100644
--- a/.api-reports/api-report-react_context.md
+++ b/.api-reports/api-report-react_context.md
@@ -1120,7 +1120,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-react_hoc.md b/.api-reports/api-report-react_hoc.md
index 2a2c95db36a..2bae476feb1 100644
--- a/.api-reports/api-report-react_hoc.md
+++ b/.api-reports/api-report-react_hoc.md
@@ -1141,7 +1141,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-react_hooks.md b/.api-reports/api-report-react_hooks.md
index 8e157061ac6..f99bf5ece32 100644
--- a/.api-reports/api-report-react_hooks.md
+++ b/.api-reports/api-report-react_hooks.md
@@ -1364,7 +1364,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-react_internal.md b/.api-reports/api-report-react_internal.md
index 86141628ec6..8409066f7b6 100644
--- a/.api-reports/api-report-react_internal.md
+++ b/.api-reports/api-report-react_internal.md
@@ -1250,7 +1250,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-react_ssr.md b/.api-reports/api-report-react_ssr.md
index 5a8d6bfde63..d4ca3a05cac 100644
--- a/.api-reports/api-report-react_ssr.md
+++ b/.api-reports/api-report-react_ssr.md
@@ -1105,7 +1105,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-testing.md b/.api-reports/api-report-testing.md
index c02d6cfd1ec..2a3ae2f53d2 100644
--- a/.api-reports/api-report-testing.md
+++ b/.api-reports/api-report-testing.md
@@ -1213,7 +1213,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-testing_core.md b/.api-reports/api-report-testing_core.md
index 2a3357aa0e2..142c6fcea49 100644
--- a/.api-reports/api-report-testing_core.md
+++ b/.api-reports/api-report-testing_core.md
@@ -1168,7 +1168,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report-utilities.md b/.api-reports/api-report-utilities.md
index 02656941096..cc7fdb6b7e8 100644
--- a/.api-reports/api-report-utilities.md
+++ b/.api-reports/api-report-utilities.md
@@ -1903,7 +1903,10 @@ interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.api-reports/api-report.md b/.api-reports/api-report.md
index 6d1e721d379..453ad594f9d 100644
--- a/.api-reports/api-report.md
+++ b/.api-reports/api-report.md
@@ -1922,7 +1922,10 @@ export interface Operation {
     // (undocumented)
     query: DocumentNode;
     // (undocumented)
-    setContext: (context: DefaultContext) => DefaultContext;
+    setContext: {
+        (context: DefaultContext): void;
+        (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+    };
     // (undocumented)
     variables: Record<string, any>;
 }
diff --git a/.changeset/strange-needles-suffer.md b/.changeset/strange-needles-suffer.md
new file mode 100644
index 00000000000..23cd112467b
--- /dev/null
+++ b/.changeset/strange-needles-suffer.md
@@ -0,0 +1,5 @@
+---
+"@apollo/client": patch
+---
+
+Fix operation.setContext() type
diff --git a/src/link/core/types.ts b/src/link/core/types.ts
index 37fdae3cb57..57fab27e83c 100644
--- a/src/link/core/types.ts
+++ b/src/link/core/types.ts
@@ -76,7 +76,10 @@ export interface Operation {
   variables: Record<string, any>;
   operationName: string;
   extensions: Record<string, any>;
-  setContext: (context: DefaultContext) => DefaultContext;
+  setContext: {
+    (context: DefaultContext): void;
+    (updateContext: (previousContext: DefaultContext) => DefaultContext): void;
+  };
   getContext: () => DefaultContext;
 }