diff --git a/changelogs/fragments/7874-incus_connection_treats_inventory_hostname_as_literal_in_remotes.yml b/changelogs/fragments/7874-incus_connection_treats_inventory_hostname_as_literal_in_remotes.yml
new file mode 100644
index 0000000000..83d302e9b9
--- /dev/null
+++ b/changelogs/fragments/7874-incus_connection_treats_inventory_hostname_as_literal_in_remotes.yml
@@ -0,0 +1,2 @@
+bugfixes:
+  - "incus connection plugin - treats ``inventory_hostname`` as a variable instead of a literal in remote connections (https://github.com/ansible-collections/community.general/issues/7874)."
diff --git a/plugins/connection/incus.py b/plugins/connection/incus.py
index f346d06170..81d6f971c7 100644
--- a/plugins/connection/incus.py
+++ b/plugins/connection/incus.py
@@ -21,6 +21,7 @@ DOCUMENTATION = """
             - The instance identifier.
         default: inventory_hostname
         vars:
+            - name: inventory_hostname
             - name: ansible_host
             - name: ansible_incus_host
       executable: