diff --git a/release-notes/VERSION-2.x b/release-notes/VERSION-2.x
index c019d3103..94ff8213d 100644
--- a/release-notes/VERSION-2.x
+++ b/release-notes/VERSION-2.x
@@ -16,6 +16,8 @@ Project: jackson-dataformat-xml
  (reported by Fabian M)
 #465: ArrayIndexOutOfBoundsException in UTF8Reader (ossfuzz)
  (reported by Fabian M)
+#467: Ignore contents of elements annotated with xsi:nil="true" (when
+  xsi:nil handling enabled)
 #468: Add `FromXmlParser.Feature.PROCESS_XSI_NIL` to allow disabling
   processing of `xsi:nil` attributes on reading
 #474: Empty String ("") parsed as 0 for int even if
diff --git a/src/main/java/com/fasterxml/jackson/dataformat/xml/deser/XmlTokenStream.java b/src/main/java/com/fasterxml/jackson/dataformat/xml/deser/XmlTokenStream.java
index a2bfd4a2b..8cee6ae7f 100644
--- a/src/main/java/com/fasterxml/jackson/dataformat/xml/deser/XmlTokenStream.java
+++ b/src/main/java/com/fasterxml/jackson/dataformat/xml/deser/XmlTokenStream.java
@@ -419,19 +419,13 @@ private final int _next() throws XMLStreamException
             ++_nextAttributeIndex;
             // fall through
         case XML_START_ELEMENT: // attributes to return?
-
             // 06-Sep-2019, tatu: `xsi:nil` to induce "real" null value?
             if (_xsiNilFound) {
                 _xsiNilFound = false;
-                switch (_skipUntilTag()) {
-                case XMLStreamConstants.END_ELEMENT:
-                    return _handleEndElement();
-                case XMLStreamConstants.END_DOCUMENT:
-                    throw new IllegalStateException("Unexpected end-of-input after null token");
-                default:
-                }
-                throw new IllegalStateException(
-"Unexpected START_ELEMENT after null token (inside element with 'xsi:nil' attribute)");
+                // 08-Jul-2021, tatu: as per [dataformat-xml#467] just skip anything
+                //   element might have, no need to ensure it was empty
+                _xmlReader.skipElement();
+                return _handleEndElement();
             }
             if (_nextAttributeIndex < _attributeCount) {
 //System.out.println(" XmlTokenStream._next(): Got attr(s)!");
@@ -564,23 +558,6 @@ private final String _collectUntilTag() throws XMLStreamException
         }
     }
 
-    // Called to simply skip tokens until start/end tag, or end-of-document found
-    private final int _skipUntilTag() throws XMLStreamException
-    {
-        while (_xmlReader.hasNext()) {
-            int type;
-            switch (type = _xmlReader.next()) {
-            case XMLStreamConstants.START_ELEMENT:
-            case XMLStreamConstants.END_ELEMENT:
-            case XMLStreamConstants.END_DOCUMENT:
-                return type;
-            default:
-                // any other type (proc instr, comment etc) is just ignored
-            }
-        }
-        throw new IllegalStateException("Expected to find a tag, instead reached end of input");
-    }
-
     // Called to skip tokens until start/end tag (or end-of-document) found, but
     // also collecting cdata until then, if any found, for possible "mixed content"
     // to report
diff --git a/src/test/java/com/fasterxml/jackson/dataformat/xml/deser/XsiNilBasicTest.java b/src/test/java/com/fasterxml/jackson/dataformat/xml/deser/XsiNilBasicTest.java
index ceeb0c0cf..c6ea26b3a 100644
--- a/src/test/java/com/fasterxml/jackson/dataformat/xml/deser/XsiNilBasicTest.java
+++ b/src/test/java/com/fasterxml/jackson/dataformat/xml/deser/XsiNilBasicTest.java
@@ -103,6 +103,18 @@ public void testRootPojoAsNonNull() throws Exception
         assertNotNull(bean);
     }
 
+    // [dataformat-xml#467]: Ok to have contents within "xsi:nil" element
+    public void testXsiNilWithNonEmptyElement() throws Exception
+    {
+        JsonNode node = MAPPER.readTree(
+"<e>"
++"<h "+XSI_NS_DECL+" xsi:nil='true'><child>stuff</child></h>"
++"</e>"
+                );
+        assertNotNull(node);
+        assertEquals(a2q("{'h':null}"), node.toString());
+    }
+
     // [dataformat-xml#468]: Allow disabling xsi:nil special handling
     public void testDisableXsiNilLeafProcessing() throws Exception
     {
diff --git a/src/test/java/com/fasterxml/jackson/dataformat/xml/failing/XsiNilEnableDisable467Test.java b/src/test/java/com/fasterxml/jackson/dataformat/xml/failing/XsiNilEnableDisable467Test.java
deleted file mode 100644
index e3cc1a807..000000000
--- a/src/test/java/com/fasterxml/jackson/dataformat/xml/failing/XsiNilEnableDisable467Test.java
+++ /dev/null
@@ -1,23 +0,0 @@
-package com.fasterxml.jackson.dataformat.xml.failing;
-
-import com.fasterxml.jackson.databind.JsonNode;
-import com.fasterxml.jackson.dataformat.xml.XmlMapper;
-import com.fasterxml.jackson.dataformat.xml.XmlTestBase;
-
-public class XsiNilEnableDisable467Test extends XmlTestBase
-{
-    private final static String XSI_NS_DECL = "xmlns:xsi='http://www.w3.org/2001/XMLSchema-instance'";
-
-    private final XmlMapper MAPPER = newMapper();
-
-    // [databind#467] / [databind#467]: xsi:nil handling of nested elements etc
-    public void testNilAsNodeLeaf() throws Exception
-    {
-        JsonNode node = MAPPER.readTree(
-"<e>"
-+"<h "+XSI_NS_DECL+" xsi:nil='true'><child /></h>"
-+"</e>"
-                );
-        assertNotNull(node);
-    }
-}