diff --git a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt
index f569d4857f4..2d498d16188 100644
--- a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt
+++ b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt
@@ -61,7 +61,7 @@ abstract class AbstractConeSubstitutor(private val typeContext: ConeTypeContext)
                 if (it.lowerBound == it.upperBound) it.lowerBound
                 else it
             }
-            is ConeCapturedType -> return null
+            is ConeCapturedType -> return substituteCapturedType()
             is ConeDefinitelyNotNullType -> this.substituteOriginal()
             is ConeIntersectionType -> this.substituteIntersectedTypes()
             is ConeStubType -> return null
@@ -69,6 +69,24 @@ abstract class AbstractConeSubstitutor(private val typeContext: ConeTypeContext)
         }
     }
 
+    private fun ConeCapturedType.substituteCapturedType(): ConeCapturedType? {
+        val innerType = this.lowerType ?: this.constructor.projection.type
+        val substitutedInnerType = substituteOrNull(innerType) ?: return null
+        if (substitutedInnerType is ConeCapturedType) return substitutedInnerType
+        val substitutedSuperTypes =
+            this.constructor.supertypes?.map { substituteOrSelf(it) }
+
+        return ConeCapturedType(
+            captureStatus,
+            constructor = ConeCapturedTypeConstructor(
+                wrapProjection(constructor.projection, substitutedInnerType),
+                substitutedSuperTypes,
+                typeParameterMarker = constructor.typeParameterMarker
+            ),
+            lowerType = if (lowerType != null) substitutedInnerType else null
+        )
+    }
+
     private fun ConeIntersectionType.substituteIntersectedTypes(): ConeIntersectionType? {
         val substitutedTypes = ArrayList<ConeKotlinType>(intersectedTypes.size)
         var somethingIsSubstituted = false
diff --git a/compiler/testData/diagnostics/tests/inference/capturedTypes/substituteCapturedTypesWithTypeVariables.fir.kt b/compiler/testData/diagnostics/tests/inference/capturedTypes/substituteCapturedTypesWithTypeVariables.fir.kt
deleted file mode 100644
index 7c70827d81c..00000000000
--- a/compiler/testData/diagnostics/tests/inference/capturedTypes/substituteCapturedTypesWithTypeVariables.fir.kt
+++ /dev/null
@@ -1,12 +0,0 @@
-// !DIAGNOSTICS: -CAST_NEVER_SUCCEEDS -UNUSED_PARAMETER
-
-class Foo<K>
-
-fun <T> getFoo(value: T) = null as Foo<out Foo<T>>
-fun <R> takeLambda(block: () -> R) {}
-
-fun main(x: Int) {
-    <!NEW_INFERENCE_NO_INFORMATION_FOR_PARAMETER!>takeLambda<!> {
-        getFoo(x)
-    }
-}
diff --git a/compiler/testData/diagnostics/tests/inference/capturedTypes/substituteCapturedTypesWithTypeVariables.kt b/compiler/testData/diagnostics/tests/inference/capturedTypes/substituteCapturedTypesWithTypeVariables.kt
index 3a60cb6c7e9..5a0f12a76c1 100644
--- a/compiler/testData/diagnostics/tests/inference/capturedTypes/substituteCapturedTypesWithTypeVariables.kt
+++ b/compiler/testData/diagnostics/tests/inference/capturedTypes/substituteCapturedTypesWithTypeVariables.kt
@@ -1,3 +1,4 @@
+// FIR_IDENTICAL
 // !DIAGNOSTICS: -CAST_NEVER_SUCCEEDS -UNUSED_PARAMETER
 
 class Foo<K>
diff --git a/compiler/testData/diagnostics/tests/inference/commonSystem/cstWithTypeContainingNonFixedVariable.fir.kt b/compiler/testData/diagnostics/tests/inference/commonSystem/cstWithTypeContainingNonFixedVariable.fir.kt
index fe7e2881fc8..4c23598c1e7 100644
--- a/compiler/testData/diagnostics/tests/inference/commonSystem/cstWithTypeContainingNonFixedVariable.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/commonSystem/cstWithTypeContainingNonFixedVariable.fir.kt
@@ -82,7 +82,7 @@ fun testCapturedVariable() {
 
     c2
 
-    val c3 = select(SubInv<Number>(), createInvIn())
+    val c3 = <!NEW_INFERENCE_ERROR!>select(SubInv<Number>(), createInvIn())<!>
 
     c3
 }
diff --git a/compiler/testData/diagnostics/tests/inference/completion/basic.fir.kt b/compiler/testData/diagnostics/tests/inference/completion/basic.fir.kt
index 3fd3d3be002..9a6e6faf539 100644
--- a/compiler/testData/diagnostics/tests/inference/completion/basic.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/completion/basic.fir.kt
@@ -57,7 +57,7 @@ fun test7(cls: Cls) {
 }
 
 fun test8(cls: Cls) {
-    <!NEW_INFERENCE_NO_INFORMATION_FOR_PARAMETER!>id<!>(
+    id(
         wrapIn(cls)
     )
 }
diff --git a/compiler/testData/diagnostics/tests/typealias/typeAliasConstructorCrazyProjections.fir.kt b/compiler/testData/diagnostics/tests/typealias/typeAliasConstructorCrazyProjections.fir.kt
index 69efab98b49..1556957f654 100644
--- a/compiler/testData/diagnostics/tests/typealias/typeAliasConstructorCrazyProjections.fir.kt
+++ b/compiler/testData/diagnostics/tests/typealias/typeAliasConstructorCrazyProjections.fir.kt
@@ -12,4 +12,4 @@ fun <T> listOf(): List<T> = null!!
 // since it has 'out' type projection in 'in' position.
 val test1 = BOutIn(<!ARGUMENT_TYPE_MISMATCH!>listOf()<!>, null!!)
 
-val test2 = <!NEW_INFERENCE_NO_INFORMATION_FOR_PARAMETER!>BInIn<!>(listOf(), null!!)
+val test2 = BInIn(listOf(), null!!)