diff --git a/compiler/frontend/src/org/jetbrains/kotlin/resolve/DeclarationsChecker.kt b/compiler/frontend/src/org/jetbrains/kotlin/resolve/DeclarationsChecker.kt
index 80c81233046..6502ab025bf 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/resolve/DeclarationsChecker.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/resolve/DeclarationsChecker.kt
@@ -191,7 +191,7 @@ class DeclarationsChecker(
 
         override fun boundsViolationInSubstitution(bound: KotlinType, unsubstitutedArgument: KotlinType, argument: KotlinType, typeParameter: TypeParameterDescriptor) {
             // TODO more precise diagnostics
-            if (!argument.dependsOnTypeAliasParameters() && !bound.dependsOnTypeAliasParameters()) {
+            if (!argument.containsTypeAliasParameters() && !bound.containsTypeAliasParameters()) {
                 trace.report(UPPER_BOUND_VIOLATED_IN_TYPEALIAS_EXPANSION.on(typeReference, bound, argument, typeParameter))
             }
         }
diff --git a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpander.kt b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpander.kt
index 48e1d48d605..dba1cf04169 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpander.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpander.kt
@@ -163,7 +163,7 @@ class TypeAliasExpander(
         val typeSubstitutor = TypeSubstitutor.create(substitutedType)
 
         substitutedType.arguments.forEachIndexed { i, substitutedArgument ->
-            if (!substitutedArgument.type.dependsOnTypeAliasParameters()) {
+            if (!substitutedArgument.type.containsTypeAliasParameters()) {
                 val unsubstitutedArgument = unsubstitutedType.arguments[i]
                 val typeParameter = unsubstitutedType.constructor.parameters[i]
                 DescriptorResolver.checkBoundsInTypeAlias(reportStrategy, unsubstitutedArgument.type, substitutedArgument.type, typeParameter, typeSubstitutor)
diff --git a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpansion.kt b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpansion.kt
index a58ca27c061..1f28b291879 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpansion.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeAliasExpansion.kt
@@ -57,11 +57,16 @@ class TypeAliasExpansion private constructor(
     }
 }
 
-fun KotlinType.dependsOnTypeAliasParameters(): Boolean =
+fun KotlinType.containsTypeAliasParameters(): Boolean =
         TypeUtils.contains(this) {
             it.constructor.declarationDescriptor?.isTypeAliasParameter() ?: false
         }
 
+fun KotlinType.containsTypeAliases(): Boolean =
+        TypeUtils.contains(this) {
+            it.constructor.declarationDescriptor is TypeAliasDescriptor
+        }
+
 fun ClassifierDescriptor.isTypeAliasParameter(): Boolean =
         this is TypeParameterDescriptor && containingDeclaration is TypeAliasDescriptor
 
diff --git a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt
index dc9cf622874..84f09123f33 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt
@@ -47,6 +47,7 @@ import org.jetbrains.kotlin.storage.StorageManager
 import org.jetbrains.kotlin.storage.getValue
 import org.jetbrains.kotlin.types.*
 import org.jetbrains.kotlin.types.Variance.*
+import org.jetbrains.kotlin.types.typeUtil.contains
 import org.jetbrains.kotlin.types.typeUtil.isArrayOfNothing
 
 class TypeResolver(
@@ -402,7 +403,7 @@ class TypeResolver(
         // This is not intended to be used in normal users' environments, only for tests and debugger etc
         typeTransformerForTests.transformType(resultingType)?.let { return type(it) }
 
-        if (c.checkBounds && !resultingType.dependsOnTypeAliasParameters()) {
+        if (shouldCheckBounds(c, resultingType)) {
             val substitutor = TypeSubstitutor.create(resultingType)
             for (i in parameters.indices) {
                 val parameter = parameters[i]
@@ -423,6 +424,14 @@ class TypeResolver(
         return type(resultingType)
     }
 
+    private fun shouldCheckBounds(c: TypeResolutionContext, inType: KotlinType): Boolean {
+        if (!c.checkBounds) return false
+        if (inType.containsTypeAliasParameters()) return false
+        if (c.abbreviated && inType.containsTypeAliases()) return false
+
+        return true
+    }
+
     private fun resolveTypeForTypeAlias(
             c: TypeResolutionContext,
             annotations: Annotations,
diff --git a/compiler/testData/diagnostics/tests/typealias/recursive.kt b/compiler/testData/diagnostics/tests/typealias/recursive.kt
index 97ea09f10ee..485491f1dac 100644
--- a/compiler/testData/diagnostics/tests/typealias/recursive.kt
+++ b/compiler/testData/diagnostics/tests/typealias/recursive.kt
@@ -1,4 +1,11 @@
+typealias R = <!RECURSIVE_TYPEALIAS_EXPANSION!>R<!>
+
+typealias L = <!RECURSIVE_TYPEALIAS_EXPANSION!>List<L><!>
+
 typealias A = <!RECURSIVE_TYPEALIAS_EXPANSION!>B<!>
 typealias B = <!RECURSIVE_TYPEALIAS_EXPANSION!>A<!>
 
+typealias F1 = <!RECURSIVE_TYPEALIAS_EXPANSION!>(Int) -> F2<!>
+typealias F2 = <!RECURSIVE_TYPEALIAS_EXPANSION!>(F1) -> Int<!>
+
 val x: <!RECURSIVE_TYPEALIAS_EXPANSION!>A<!> = TODO()
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/typealias/recursive.txt b/compiler/testData/diagnostics/tests/typealias/recursive.txt
index f2d84f0bba0..61c8e999fc0 100644
--- a/compiler/testData/diagnostics/tests/typealias/recursive.txt
+++ b/compiler/testData/diagnostics/tests/typealias/recursive.txt
@@ -2,4 +2,8 @@ package
 
 public typealias A = B
 public typealias B = A
+public typealias F1 = (kotlin.Int) -> F2
+public typealias F2 = (F1) -> kotlin.Int
+public typealias L = kotlin.collections.List<L>
+public typealias R = R
 public val x: [ERROR : Recursive type alias: A]