diff --git a/analysis/analysis-api/testData/symbols/symbolByPsi/outerAndInnerTypeAlias.txt b/analysis/analysis-api/testData/symbols/symbolByPsi/outerAndInnerTypeAlias.txt
index efb455c1fed..acb5200d37b 100644
--- a/analysis/analysis-api/testData/symbols/symbolByPsi/outerAndInnerTypeAlias.txt
+++ b/analysis/analysis-api/testData/symbols/symbolByPsi/outerAndInnerTypeAlias.txt
@@ -102,7 +102,7 @@ KtTypeAliasSymbol:
   origin: SOURCE
   symbolKind: LOCAL
   typeParameters: []
-  visibility: Public
+  visibility: Local
   getContainingModule: KtSourceModule "Sources of main"
   deprecationStatus: null
 
@@ -124,7 +124,7 @@ KtTypeAliasSymbol:
   origin: SOURCE
   symbolKind: CLASS_MEMBER
   typeParameters: []
-  visibility: Public
+  visibility: Local
   getContainingModule: KtSourceModule "Sources of main"
   deprecationStatus: null
 
@@ -146,7 +146,7 @@ KtTypeAliasSymbol:
   origin: SOURCE
   symbolKind: LOCAL
   typeParameters: []
-  visibility: Public
+  visibility: Local
   getContainingModule: KtSourceModule "Sources of main"
   deprecationStatus: null
 
@@ -168,7 +168,7 @@ KtTypeAliasSymbol:
   origin: SOURCE
   symbolKind: CLASS_MEMBER
   typeParameters: []
-  visibility: Public
+  visibility: Local
   getContainingModule: KtSourceModule "Sources of main"
   deprecationStatus: null
 
diff --git a/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/LightTreeRawFirDeclarationBuilder.kt b/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/LightTreeRawFirDeclarationBuilder.kt
index 8fbf5b7c6c9..f5f917ac40b 100644
--- a/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/LightTreeRawFirDeclarationBuilder.kt
+++ b/compiler/fir/raw-fir/light-tree2fir/src/org/jetbrains/kotlin/fir/lightTree/converter/LightTreeRawFirDeclarationBuilder.kt
@@ -1164,7 +1164,8 @@ class LightTreeRawFirDeclarationBuilder(
                 moduleData = baseModuleData
                 origin = FirDeclarationOrigin.Source
                 name = typeAliasName
-                status = FirDeclarationStatusImpl(modifiers.getVisibility(), Modality.FINAL).apply {
+                val isLocal = context.inLocalContext
+                status = FirDeclarationStatusImpl(if (isLocal) Visibilities.Local else modifiers.getVisibility(), Modality.FINAL).apply {
                     isExpect = typeAliasIsExpect
                     isActual = modifiers.hasActual()
                 }
diff --git a/compiler/fir/raw-fir/psi2fir/src/org/jetbrains/kotlin/fir/builder/PsiRawFirBuilder.kt b/compiler/fir/raw-fir/psi2fir/src/org/jetbrains/kotlin/fir/builder/PsiRawFirBuilder.kt
index c4ceccb29aa..8b3de307ec5 100644
--- a/compiler/fir/raw-fir/psi2fir/src/org/jetbrains/kotlin/fir/builder/PsiRawFirBuilder.kt
+++ b/compiler/fir/raw-fir/psi2fir/src/org/jetbrains/kotlin/fir/builder/PsiRawFirBuilder.kt
@@ -1601,7 +1601,8 @@ open class PsiRawFirBuilder(
                     moduleData = baseModuleData
                     origin = FirDeclarationOrigin.Source
                     name = typeAlias.nameAsSafeName
-                    status = FirDeclarationStatusImpl(typeAlias.visibility, Modality.FINAL).apply {
+                    val isLocal = context.inLocalContext
+                    status = FirDeclarationStatusImpl(if (isLocal) Visibilities.Local else typeAlias.visibility, Modality.FINAL).apply {
                         isExpect = typeAliasIsExpect
                         isActual = typeAlias.hasActualModifier()
                     }
diff --git a/compiler/testData/diagnostics/tests/typealias/typeAliasAsBareType.fir.kt b/compiler/testData/diagnostics/tests/typealias/typeAliasAsBareType.fir.kt
index ce0dceabb07..4a8494415b0 100644
--- a/compiler/testData/diagnostics/tests/typealias/typeAliasAsBareType.fir.kt
+++ b/compiler/testData/diagnostics/tests/typealias/typeAliasAsBareType.fir.kt
@@ -29,7 +29,7 @@ fun testWrong4(x: List<Any>) = x is <!NO_TYPE_ARGUMENTS_ON_RHS!>ReadableList<!>
 
 fun <T> testLocal(x: Any) {
     class C
-    typealias <!EXPOSED_TYPEALIAS_EXPANDED_TYPE!>CA<!> = C
+    typealias CA = C
     if (x is <!NO_TYPE_ARGUMENTS_ON_RHS!>C<!>) {}
     if (x is <!UNRESOLVED_REFERENCE!>CA<!>) {}
 }