diff --git a/compiler/fir/resolve/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java b/compiler/fir/resolve/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java
index 5d14a817eaa..d03fb8bf726 100644
--- a/compiler/fir/resolve/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java
+++ b/compiler/fir/resolve/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java
@@ -1869,6 +1869,11 @@ public class FirOldFrontendDiagnosticsTestGenerated extends AbstractFirOldFronte
             runTest("compiler/testData/diagnostics/tests/callableReference/kt34314_lambda.kt");
         }
 
+        @TestMetadata("kt35959.kt")
+        public void testKt35959() throws Exception {
+            runTest("compiler/testData/diagnostics/tests/callableReference/kt35959.kt");
+        }
+
         @TestMetadata("kt7430_wrongClassOnLHS.kt")
         public void testKt7430_wrongClassOnLHS() throws Exception {
             runTest("compiler/testData/diagnostics/tests/callableReference/kt7430_wrongClassOnLHS.kt");
diff --git a/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/KotlinConstraintSystemCompleter.kt b/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/KotlinConstraintSystemCompleter.kt
index 5e7dd8f3b77..a3b8368c7f2 100644
--- a/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/KotlinConstraintSystemCompleter.kt
+++ b/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/KotlinConstraintSystemCompleter.kt
@@ -241,7 +241,10 @@ class KotlinConstraintSystemCompleter(
         fun ResolvedAtom.process(to: LinkedHashSet<TypeConstructor>) {
             val typeVariables = when (this) {
                 is ResolvedCallAtom -> freshVariablesSubstitutor.freshVariables
-                is CallableReferenceWithTypeVariableAsExpectedTypeAtom -> listOfNotNull(typeVariableForReturnType)
+                is CallableReferenceWithTypeVariableAsExpectedTypeAtom -> mutableListOf<NewTypeVariable>().apply {
+                    addIfNotNull(typeVariableForReturnType)
+                    addAll(candidate?.freshSubstitutor?.freshVariables.orEmpty())
+                }
                 is ResolvedCallableReferenceAtom -> candidate?.freshSubstitutor?.freshVariables.orEmpty()
                 is ResolvedLambdaAtom -> listOfNotNull(typeVariableForLambdaReturnType)
                 else -> emptyList()
diff --git a/compiler/testData/diagnostics/tests/callableReference/kt35959.fir.kt b/compiler/testData/diagnostics/tests/callableReference/kt35959.fir.kt
new file mode 100644
index 00000000000..81c3ef8e1eb
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/callableReference/kt35959.fir.kt
@@ -0,0 +1,12 @@
+// !LANGUAGE: +NewInference
+// !DIAGNOSTICS: -UNUSED_PARAMETER
+// ISSUE: KT-35959
+
+interface Expect<T>
+
+inline val <T> Expect<T>.and: Expect<T> get() = this
+infix fun <T> Expect<T>.and(assertionCreator: Expect<T>.() -> Unit): Expect<T> = this
+
+fun <K> id(x: K): K = x
+
+fun test(): Expect<Int>.(Expect<Int>.() -> Unit) -> Expect<Int> = id(Expect<Int>::and)
diff --git a/compiler/testData/diagnostics/tests/callableReference/kt35959.kt b/compiler/testData/diagnostics/tests/callableReference/kt35959.kt
new file mode 100644
index 00000000000..81c3ef8e1eb
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/callableReference/kt35959.kt
@@ -0,0 +1,12 @@
+// !LANGUAGE: +NewInference
+// !DIAGNOSTICS: -UNUSED_PARAMETER
+// ISSUE: KT-35959
+
+interface Expect<T>
+
+inline val <T> Expect<T>.and: Expect<T> get() = this
+infix fun <T> Expect<T>.and(assertionCreator: Expect<T>.() -> Unit): Expect<T> = this
+
+fun <K> id(x: K): K = x
+
+fun test(): Expect<Int>.(Expect<Int>.() -> Unit) -> Expect<Int> = id(Expect<Int>::and)
diff --git a/compiler/testData/diagnostics/tests/callableReference/kt35959.txt b/compiler/testData/diagnostics/tests/callableReference/kt35959.txt
new file mode 100644
index 00000000000..10ed82dc500
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/callableReference/kt35959.txt
@@ -0,0 +1,12 @@
+package
+
+public val </*0*/ T> Expect<T>.and: Expect<T>
+public fun </*0*/ K> id(/*0*/ x: K): K
+public fun test(): Expect<kotlin.Int>.(Expect<kotlin.Int>.() -> kotlin.Unit) -> Expect<kotlin.Int>
+public infix fun </*0*/ T> Expect<T>.and(/*0*/ assertionCreator: Expect<T>.() -> kotlin.Unit): Expect<T>
+
+public interface Expect</*0*/ T> {
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
index 1939d432f3b..cd5fb93e21b 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
@@ -1876,6 +1876,11 @@ public class DiagnosticsTestGenerated extends AbstractDiagnosticsTest {
                 runTest("compiler/testData/diagnostics/tests/callableReference/kt34314_lambda.kt");
             }
 
+            @TestMetadata("kt35959.kt")
+            public void testKt35959() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/callableReference/kt35959.kt");
+            }
+
             @TestMetadata("kt7430_wrongClassOnLHS.kt")
             public void testKt7430_wrongClassOnLHS() throws Exception {
                 runTest("compiler/testData/diagnostics/tests/callableReference/kt7430_wrongClassOnLHS.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
index f30ce340fbd..4dff5eca7c5 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
@@ -1871,6 +1871,11 @@ public class DiagnosticsUsingJavacTestGenerated extends AbstractDiagnosticsUsing
                 runTest("compiler/testData/diagnostics/tests/callableReference/kt34314_lambda.kt");
             }
 
+            @TestMetadata("kt35959.kt")
+            public void testKt35959() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/callableReference/kt35959.kt");
+            }
+
             @TestMetadata("kt7430_wrongClassOnLHS.kt")
             public void testKt7430_wrongClassOnLHS() throws Exception {
                 runTest("compiler/testData/diagnostics/tests/callableReference/kt7430_wrongClassOnLHS.kt");