diff --git a/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/ClosureAnnotator.kt b/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/ClosureAnnotator.kt
index 0186962c0c8..4dd4d399813 100644
--- a/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/ClosureAnnotator.kt
+++ b/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/ClosureAnnotator.kt
@@ -55,7 +55,7 @@ class ClosureAnnotator(irFile: IrFile) {
     }
 
     private class ClosureBuilder(val owner: IrDeclaration) {
-        val capturedValues = mutableSetOf<IrValueSymbol>()
+        private val capturedValues = mutableSetOf<IrValueSymbol>()
         private val declaredValues = mutableSetOf<IrValueDeclaration>()
         private val includes = mutableSetOf<ClosureBuilder>()
 
@@ -70,15 +70,16 @@ class ClosureAnnotator(irFile: IrFile) {
          *                  variables declared in the node.
          */
         fun buildClosure(): Closure {
-            val result = mutableSetOf<IrValueSymbol>().apply { addAll(capturedValues) }
             includes.forEach { builder ->
                 if (!builder.processed) {
                     builder.processed = true
-                    builder.buildClosure().capturedValues.filterTo(result) { isExternal(it.owner) }
+                    val subClosure = builder.buildClosure()
+                    subClosure.capturedValues.filterTo(capturedValues) { isExternal(it.owner) }
+                    subClosure.capturedTypeParameters.filterTo(capturedTypeParameters) { isExternal(it) }
                 }
             }
             // TODO: We can save the closure and reuse it.
-            return Closure(result.toList(), capturedTypeParameters.toList())
+            return Closure(capturedValues.toList(), capturedTypeParameters.toList())
         }
 
 
@@ -110,18 +111,14 @@ class ClosureAnnotator(irFile: IrFile) {
 
         fun seeType(type: IrType) {
             if (type !is IrSimpleType) return
-            (type.classifier as? IrTypeParameterSymbol)?.let { typeParameterSymbol ->
-                val typeParameter = typeParameterSymbol.owner
-                if (isExternal(typeParameter))
-                    capturedTypeParameters.add(typeParameter)
+            val classifier = type.classifier
+            if (classifier is IrTypeParameterSymbol && isExternal(classifier.owner) && capturedTypeParameters.add(classifier.owner))
+                classifier.owner.superTypes.forEach(::seeType)
+            type.arguments.forEach {
+                (it as? IrTypeProjection)?.type?.let(::seeType)
             }
-            for (arg in type.arguments) {
-                (arg as? IrTypeProjection)?.let { seeType(arg.type) }
-            }
-            type.abbreviation?.let { abbreviation ->
-                for (arg in abbreviation.arguments) {
-                    (arg as? IrTypeProjection)?.let { seeType(arg.type) }
-                }
+            type.abbreviation?.arguments?.forEach {
+                (it as? IrTypeProjection)?.type?.let(::seeType)
             }
         }
     }
diff --git a/compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt b/compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt
new file mode 100644
index 00000000000..98dadda9421
--- /dev/null
+++ b/compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt
@@ -0,0 +1,7 @@
+// IGNORE_BACKEND_FIR: JVM_IR
+fun <T, V : T> f(x: V): V {
+    fun g(y: V) = y
+    return g(x)
+}
+
+fun box() = f<Any, String>("OK")
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
index a5659d25810..688de975dbb 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
@@ -12023,6 +12023,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/callInlineLocalInLambda.kt");
             }
 
+            @TestMetadata("captureUpperBoundedTypeParameter.kt")
+            public void testCaptureUpperBoundedTypeParameter() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt");
+            }
+
             @TestMetadata("definedWithinLambda.kt")
             public void testDefinedWithinLambda() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/definedWithinLambda.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
index 4eb805e115b..e73244c73a4 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
@@ -12023,6 +12023,11 @@ public class LightAnalysisModeTestGenerated extends AbstractLightAnalysisModeTes
                 runTest("compiler/testData/codegen/box/functions/localFunctions/callInlineLocalInLambda.kt");
             }
 
+            @TestMetadata("captureUpperBoundedTypeParameter.kt")
+            public void testCaptureUpperBoundedTypeParameter() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt");
+            }
+
             @TestMetadata("definedWithinLambda.kt")
             public void testDefinedWithinLambda() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/definedWithinLambda.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
index 3462893016c..c94a189cddc 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
@@ -10873,6 +10873,11 @@ public class FirBlackBoxCodegenTestGenerated extends AbstractFirBlackBoxCodegenT
                 runTest("compiler/testData/codegen/box/functions/localFunctions/callInlineLocalInLambda.kt");
             }
 
+            @TestMetadata("captureUpperBoundedTypeParameter.kt")
+            public void testCaptureUpperBoundedTypeParameter() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt");
+            }
+
             @TestMetadata("definedWithinLambda.kt")
             public void testDefinedWithinLambda() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/definedWithinLambda.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
index 85cd454a3a9..b6d30a8b6cc 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
@@ -10873,6 +10873,11 @@ public class IrBlackBoxCodegenTestGenerated extends AbstractIrBlackBoxCodegenTes
                 runTest("compiler/testData/codegen/box/functions/localFunctions/callInlineLocalInLambda.kt");
             }
 
+            @TestMetadata("captureUpperBoundedTypeParameter.kt")
+            public void testCaptureUpperBoundedTypeParameter() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt");
+            }
+
             @TestMetadata("definedWithinLambda.kt")
             public void testDefinedWithinLambda() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/definedWithinLambda.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
index 2a3553d1f31..f33f0780e42 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
@@ -9383,6 +9383,11 @@ public class IrJsCodegenBoxTestGenerated extends AbstractIrJsCodegenBoxTest {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/callInlineLocalInLambda.kt");
             }
 
+            @TestMetadata("captureUpperBoundedTypeParameter.kt")
+            public void testCaptureUpperBoundedTypeParameter() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt");
+            }
+
             @TestMetadata("definedWithinLambda.kt")
             public void testDefinedWithinLambda() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/definedWithinLambda.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
index d94246b0ec6..9abe1c4fc8b 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
@@ -10458,6 +10458,11 @@ public class JsCodegenBoxTestGenerated extends AbstractJsCodegenBoxTest {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/callInlineLocalInLambda.kt");
             }
 
+            @TestMetadata("captureUpperBoundedTypeParameter.kt")
+            public void testCaptureUpperBoundedTypeParameter() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/localFunctions/captureUpperBoundedTypeParameter.kt");
+            }
+
             @TestMetadata("definedWithinLambda.kt")
             public void testDefinedWithinLambda() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/localFunctions/definedWithinLambda.kt");