diff --git a/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/NewTypeSubstitutor.kt b/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/NewTypeSubstitutor.kt
index effb55bab55..f00da01b565 100644
--- a/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/NewTypeSubstitutor.kt
+++ b/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/NewTypeSubstitutor.kt
@@ -46,13 +46,14 @@ interface NewTypeSubstitutor {
         if (type is AbbreviatedType) {
             val substitutedExpandedType = substitute(type.expandedType, keepAnnotation, runCapturedChecks)
             val substitutedAbbreviation = substitute(type.abbreviation, keepAnnotation, runCapturedChecks)
-            if (substitutedExpandedType is SimpleType? && substitutedAbbreviation is SimpleType?) {
-                return AbbreviatedType(
-                    substitutedExpandedType ?: type.expandedType,
-                    substitutedAbbreviation ?: type.abbreviation
-                )
-            } else {
-                return substitutedExpandedType
+            return when {
+                substitutedExpandedType == null && substitutedAbbreviation == null -> null
+                substitutedExpandedType is SimpleType? && substitutedAbbreviation is SimpleType? ->
+                    AbbreviatedType(
+                        substitutedExpandedType ?: type.expandedType,
+                        substitutedAbbreviation ?: type.abbreviation
+                    )
+                else -> substitutedExpandedType
             }
         }
 
diff --git a/compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.kt b/compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.kt
new file mode 100644
index 00000000000..f5a9613e048
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.kt
@@ -0,0 +1,12 @@
+// !LANGUAGE: +NewInference
+
+import kotlin.reflect.KClass
+
+typealias MyString = String
+
+fun test(k: KClass<out MyString>) {
+    k::class.java
+}
+
+@Suppress("UPPER_BOUND_VIOLATED")
+public val <T> KClass<T>.java: Class<T> get() = TODO()
diff --git a/compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.txt b/compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.txt
new file mode 100644
index 00000000000..0547236928d
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.txt
@@ -0,0 +1,5 @@
+package
+
+@kotlin.Suppress(names = {"UPPER_BOUND_VIOLATED"}) public val </*0*/ T> kotlin.reflect.KClass<T>.java: java.lang.Class<T>
+public fun test(/*0*/ k: kotlin.reflect.KClass<out MyString /* = kotlin.String */>): kotlin.Unit
+public typealias MyString = kotlin.String
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
index 153e0f01c29..f4f3126903b 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
@@ -9396,6 +9396,11 @@ public class DiagnosticsTestGenerated extends AbstractDiagnosticsTest {
                     runTest("compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeSubstitutedIntoOppositeProjection.kt");
                 }
 
+                @TestMetadata("capturedTypeWithInnerTypealias.kt")
+                public void testCapturedTypeWithInnerTypealias() throws Exception {
+                    runTest("compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.kt");
+                }
+
                 @TestMetadata("capturedTypeWithTypeVariableSubtyping.kt")
                 public void testCapturedTypeWithTypeVariableSubtyping() throws Exception {
                     runTest("compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithTypeVariableSubtyping.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
index 8ba970a92e7..c073d06c620 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
@@ -9396,6 +9396,11 @@ public class DiagnosticsUsingJavacTestGenerated extends AbstractDiagnosticsUsing
                     runTest("compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeSubstitutedIntoOppositeProjection.kt");
                 }
 
+                @TestMetadata("capturedTypeWithInnerTypealias.kt")
+                public void testCapturedTypeWithInnerTypealias() throws Exception {
+                    runTest("compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithInnerTypealias.kt");
+                }
+
                 @TestMetadata("capturedTypeWithTypeVariableSubtyping.kt")
                 public void testCapturedTypeWithTypeVariableSubtyping() throws Exception {
                     runTest("compiler/testData/diagnostics/tests/inference/capturedTypes/capturedTypeWithTypeVariableSubtyping.kt");