diff --git a/hydra/_internal/instantiate/_instantiate2.py b/hydra/_internal/instantiate/_instantiate2.py
index e98b9854a3..aee06438d1 100644
--- a/hydra/_internal/instantiate/_instantiate2.py
+++ b/hydra/_internal/instantiate/_instantiate2.py
@@ -151,7 +151,7 @@ def _deep_copy_full_config(subconfig: Any) -> Any:
         return copy.deepcopy(subconfig)
 
     full_key = subconfig._get_full_key(None)
-    if not full_key:
+    if full_key == '' or full_key is None:
         return copy.deepcopy(subconfig)
 
     if OmegaConf.is_list(subconfig._get_parent()):
diff --git a/tests/instantiate/test_instantiate.py b/tests/instantiate/test_instantiate.py
index 6a89979074..8c64678343 100644
--- a/tests/instantiate/test_instantiate.py
+++ b/tests/instantiate/test_instantiate.py
@@ -650,6 +650,22 @@ def test_class_instantiate_omegaconf_node(instantiate_func: Any, config: Any) ->
     assert obj == AClass(a=10, b=200, c={"x": 10, "y": 200}, d=AnotherClass(99))
     assert OmegaConf.is_config(obj.c)
 
+@mark.parametrize(
+    "src",
+    [
+        (
+            ListConfig([{
+                "_target_": "tests.instantiate.AClass",
+                "b": 200,
+                "c": {"x": 10, "y": "${b}"},
+            }])
+        )
+    ],
+)
+def test_class_instantiate_list_item(instantiate_func: Any, config: Any) -> Any:
+    obj = instantiate_func(config[0], a=10, d=AnotherClass(99))[0]
+    assert obj == AClass(a=10, b=200, c={"x": 10, "y": 200}, d=AnotherClass(99))
+    assert OmegaConf.is_config(obj.c)
 
 @mark.parametrize("src", [{"_target_": "tests.instantiate.Adam"}])
 def test_instantiate_adam(instantiate_func: Any, config: Any) -> None: