diff --git a/beanie/odm/utils/init.py b/beanie/odm/utils/init.py
index 18aa6dd3..54c2b802 100644
--- a/beanie/odm/utils/init.py
+++ b/beanie/odm/utils/init.py
@@ -175,9 +175,15 @@ def init_settings(
         :return: None
         """
         settings_class = getattr(cls, "Settings", None)
-        settings_vars = (
-            {} if settings_class is None else dict(vars(settings_class))
-        )
+        settings_vars = {}
+        if settings_class is not None:
+            # get all attributes of the Settings subclass (including inherited ones)
+            # without magic dunder methods
+            settings_vars = {
+                attr: getattr(settings_class, attr)
+                for attr in dir(settings_class)
+                if not attr.startswith("__")
+            }
         if issubclass(cls, Document):
             cls._document_settings = parse_model(
                 DocumentSettings, settings_vars
diff --git a/tests/odm/documents/test_init.py b/tests/odm/documents/test_init.py
index b8d30d15..b87a62fd 100644
--- a/tests/odm/documents/test_init.py
+++ b/tests/odm/documents/test_init.py
@@ -360,3 +360,22 @@ async def test_init_document_with_union_type_expression_optional_back_link(db):
             "back_link",
         }
     )
+
+
+async def test_init_document_can_inhert_and_extend_settings(db):
+    class Sample1(Document):
+        class Settings:
+            name = "sample1"
+            bson_encoders = {Color: lambda x: x.value}
+
+    class Sample2(Sample1):
+        class Settings(Sample1.Settings):
+            name = "sample2"
+
+    await init_beanie(
+        database=db,
+        document_models=[Sample2],
+    )
+
+    assert Sample2.get_settings().bson_encoders != {}
+    assert Sample2.get_settings().name == "sample2"