diff --git a/compiler/testData/constraintSystem/severalVariables/recursive/simpleRecursive.bounds b/compiler/testData/constraintSystem/severalVariables/recursive/simpleRecursive.bounds
index ec71b874753..884500e81a7 100644
--- a/compiler/testData/constraintSystem/severalVariables/recursive/simpleRecursive.bounds
+++ b/compiler/testData/constraintSystem/severalVariables/recursive/simpleRecursive.bounds
@@ -4,11 +4,11 @@ EQUAL T Int
 EQUAL T My<T>
 
 type parameter bounds:
-T := Int, := My<T>*
+T := Int, := My<T>*, := My<Int>
 
 status:
 -hasCannotCaptureTypesError: false
--hasConflictingConstraints: false
+-hasConflictingConstraints: true
 -hasContradiction: true
 -hasErrorInConstrainingTypes: false
 -hasTypeConstructorMismatch: false
@@ -18,4 +18,4 @@ status:
 -isSuccessful: false
 
 result:
-T=Int
+T=???
\ No newline at end of file
diff --git a/core/descriptors/src/org/jetbrains/kotlin/resolve/calls/inference/constraintIncorporation.kt b/core/descriptors/src/org/jetbrains/kotlin/resolve/calls/inference/constraintIncorporation.kt
index a8ee4f0d69f..669b32d7c83 100644
--- a/core/descriptors/src/org/jetbrains/kotlin/resolve/calls/inference/constraintIncorporation.kt
+++ b/core/descriptors/src/org/jetbrains/kotlin/resolve/calls/inference/constraintIncorporation.kt
@@ -75,9 +75,6 @@ private fun ConstraintSystemImpl.generateNewBound(bound: Bound, substitution: Bo
     // Here <=> means lower_bound, upper_bound or exact_bound constraint.
     // Then a new bound 'T <=> My<_/in/out Type>' can be generated.
 
-    // We don't substitute anything into recursive constraints
-    if (substitution.typeVariable == bound.typeVariable) return
-
     val substitutedType = when (substitution.kind) {
         EXACT_BOUND -> substitution.constrainingType
         UPPER_BOUND -> CapturedType(TypeProjectionImpl(Variance.OUT_VARIANCE, substitution.constrainingType))