diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.cpp
index 4dd31814b7..e0834ed53b 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.cpp
@@ -108,11 +108,9 @@ namespace AzToolsFramework
             m_targetTemplateId = id;
         }
 
-        void Link::SetTemplatePatches(const PrefabDomValue& patches)
+        void Link::SetLinkDom(const PrefabDomValue& linkDom)
         {
-            PrefabDom newPatches;
-            newPatches.CopyFrom(patches, newPatches.GetAllocator());
-            m_linkDom.Swap(newPatches);
+            m_linkDom.CopyFrom(linkDom, m_linkDom.GetAllocator());
         }
 
         void Link::SetInstanceName(const char* instanceName)
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.h b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.h
index c36dd75b1b..073e619f20 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.h
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/Link/Link.h
@@ -47,7 +47,7 @@ namespace AzToolsFramework
 
             void SetSourceTemplateId(TemplateId id);
             void SetTargetTemplateId(TemplateId id);
-            void SetTemplatePatches(const PrefabDomValue& patches);
+            void SetLinkDom(const PrefabDomValue& linkDom);
             void SetInstanceName(const char* instanceName);
 
             bool IsValid() const;
diff --git a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/PrefabSystemComponent.cpp b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/PrefabSystemComponent.cpp
index 40c8b3bc6a..3f660bb73b 100644
--- a/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/PrefabSystemComponent.cpp
+++ b/Code/Framework/AzToolsFramework/AzToolsFramework/Prefab/PrefabSystemComponent.cpp
@@ -782,22 +782,21 @@ namespace AzToolsFramework
             link.SetInstanceName(instanceName.data());
 
             PrefabDomValue& instance = instanceIterator->value;
+            AZ_Assert(instance.IsObject(), "Nested instance DOM provided is not a valid JSON object.");
+            PrefabDomValueReference sourceTemplateName = PrefabDomUtils::FindPrefabDomValue(instance, PrefabDomUtils::SourceName);
+            AZ_Assert(sourceTemplateName, "Couldn't find source template name in the DOM of the nested instance while creating a link.");
+            AZ_Assert(
+                sourceTemplateName->get() == sourceTemplate.GetFilePath().c_str(),
+                "The name of the source template in the nested instance DOM does not match the name of the source template already loaded");
 
             PrefabDomValueReference patchesReference = PrefabDomUtils::FindPrefabDomValue(instance, PrefabDomUtils::PatchesName);
-            if (!patchesReference.has_value())
+            if (patchesReference.has_value())
             {
-                PrefabDom& newLinkDom = link.GetLinkDom();
-
-                newLinkDom.SetObject();
-
-                newLinkDom.AddMember(rapidjson::StringRef(PrefabDomUtils::SourceName),
-                    rapidjson::StringRef(sourceTemplate.GetFilePath().c_str()), newLinkDom.GetAllocator());
-            }
-            else
-            {
-                link.SetTemplatePatches(patchesReference->get());
+                AZ_Assert(patchesReference->get().IsArray(), "Patches in the nested instance DOM are not represented as an array.");
             }
 
+            link.SetLinkDom(instance);
+
             if (!link.UpdateTarget())
             {
                 AZ_Error("Prefab", false,