diff --git a/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSubstitutor.kt b/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSubstitutor.kt
index 795946150b4..29d5c1ad670 100644
--- a/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSubstitutor.kt
+++ b/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSubstitutor.kt
@@ -7,41 +7,29 @@ package org.jetbrains.kotlin.ir.types
 
 import org.jetbrains.kotlin.ir.descriptors.IrBuiltIns
 import org.jetbrains.kotlin.ir.symbols.IrTypeParameterSymbol
+import org.jetbrains.kotlin.ir.types.impl.IrCapturedType
 import org.jetbrains.kotlin.ir.types.impl.buildSimpleType
 import org.jetbrains.kotlin.ir.types.impl.makeTypeProjection
 import org.jetbrains.kotlin.ir.types.impl.toBuilder
 import org.jetbrains.kotlin.ir.util.render
+import org.jetbrains.kotlin.types.Variance
 import org.jetbrains.kotlin.types.model.TypeSubstitutorMarker
 
 
-class IrTypeSubstitutor(
-    typeParameters: List<IrTypeParameterSymbol>,
-    typeArguments: List<IrTypeArgument>,
-    private val irBuiltIns: IrBuiltIns
-): TypeSubstitutorMarker {
-    init {
-        assert(typeParameters.size == typeArguments.size) {
-            "Unexpected number of type arguments: ${typeArguments.size}\n" +
-                    "Type parameters are:\n" +
-                    typeParameters.joinToString(separator = "\n") { it.owner.render() } +
-                    "Type arguments are:\n" +
-                    typeArguments.joinToString(separator = "\n") { it.render() }
-        }
-    }
+abstract class AbstractIrTypeSubstitutor(private val irBuiltIns: IrBuiltIns) : TypeSubstitutorMarker {
 
-    private val substitution = typeParameters.zip(typeArguments).toMap()
 
     private fun IrType.typeParameterConstructor(): IrTypeParameterSymbol? {
         return if (this is IrSimpleType) classifier as? IrTypeParameterSymbol
         else null
     }
 
-    private fun getSubstitutionArgument(typeParameter: IrTypeParameterSymbol): IrTypeArgument =
-        substitution[typeParameter]
-            ?: throw AssertionError("Unsubstituted type parameter: ${typeParameter.owner.render()}")
+    abstract fun getSubstitutionArgument(typeParameter: IrTypeParameterSymbol): IrTypeArgument
+
+    abstract fun isEmptySubstitution(): Boolean
 
     fun substitute(type: IrType): IrType {
-        if (substitution.isEmpty()) return type
+        if (isEmptySubstitution()) return type
 
         return type.typeParameterConstructor()?.let {
             when (val typeArgument = getSubstitutionArgument(it)) {
@@ -84,3 +72,53 @@ class IrTypeSubstitutor(
         return makeTypeProjection(substituteType(typeArgument.type), typeArgument.variance)
     }
 }
+
+
+class IrTypeSubstitutor(
+    typeParameters: List<IrTypeParameterSymbol>,
+    typeArguments: List<IrTypeArgument>,
+    irBuiltIns: IrBuiltIns
+) : AbstractIrTypeSubstitutor(irBuiltIns) {
+
+    init {
+        assert(typeParameters.size == typeArguments.size) {
+            "Unexpected number of type arguments: ${typeArguments.size}\n" +
+                    "Type parameters are:\n" +
+                    typeParameters.joinToString(separator = "\n") { it.owner.render() } +
+                    "Type arguments are:\n" +
+                    typeArguments.joinToString(separator = "\n") { it.render() }
+        }
+    }
+
+    private val substitution = typeParameters.zip(typeArguments).toMap()
+
+    override fun getSubstitutionArgument(typeParameter: IrTypeParameterSymbol): IrTypeArgument =
+        substitution[typeParameter]
+            ?: throw AssertionError("Unsubstituted type parameter: ${typeParameter.owner.render()}")
+
+    override fun isEmptySubstitution(): Boolean = substitution.isEmpty()
+}
+
+class IrCapturedTypeSubstitutor(
+    typeParameters: List<IrTypeParameterSymbol>,
+    typeArguments: List<IrTypeArgument>,
+    capturedTypes: List<IrCapturedType?>,
+    irBuiltIns: IrBuiltIns
+) : AbstractIrTypeSubstitutor(irBuiltIns) {
+
+    init {
+        assert(typeArguments.size == typeParameters.size)
+        assert(capturedTypes.size == typeParameters.size)
+    }
+
+    private val oldSubstitution = typeParameters.zip(typeArguments).toMap()
+    private val capturedSubstitution = typeParameters.zip(capturedTypes).toMap()
+
+    override fun getSubstitutionArgument(typeParameter: IrTypeParameterSymbol): IrTypeArgument {
+        return capturedSubstitution[typeParameter]?.let { makeTypeProjection(it, Variance.INVARIANT) }
+            ?: oldSubstitution[typeParameter]
+            ?: throw AssertionError("Unsubstituted type parameter: ${typeParameter.owner.render()}")
+    }
+
+    override fun isEmptySubstitution(): Boolean = oldSubstitution.isEmpty()
+}
\ No newline at end of file
diff --git a/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSystemContext.kt b/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSystemContext.kt
index a832de72003..7eca8a677a8 100644
--- a/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSystemContext.kt
+++ b/compiler/ir/ir.tree/src/org/jetbrains/kotlin/ir/types/IrTypeSystemContext.kt
@@ -184,7 +184,7 @@ interface IrTypeSystemContext : TypeSystemContext, TypeSystemCommonSuperTypesCon
      *
      * In this case Captured Type of `y` would be `Array<CharSequence>`
      *
-     * See https://jetbrains.github.io/kotlin-spec/#type-capturing
+     * See https://kotlinlang.org/spec/type-system.html#type-capturing
      */
 
     override fun captureFromArguments(type: SimpleTypeMarker, status: CaptureStatus): SimpleTypeMarker? {
@@ -204,23 +204,49 @@ interface IrTypeSystemContext : TypeSystemContext, TypeSystemCommonSuperTypesCon
 
         if (typeArguments.all { it is IrTypeProjection && it.variance == Variance.INVARIANT }) return type
 
-        val newArguments = mutableListOf<IrTypeArgument>()
+        val capturedTypes = ArrayList<IrCapturedType?>(typeArguments.size)
+
         for (index in typeArguments.indices) {
-            val argument = typeArguments[index]
             val parameter = typeParameters[index]
+            val argument = typeArguments[index]
 
             if (argument is IrTypeProjection && argument.variance == Variance.INVARIANT) {
-                newArguments += argument
-                continue
+                capturedTypes.add(null)
+            } else {
+                val lowerType = if (argument is IrTypeProjection && argument.variance == Variance.IN_VARIANCE) {
+                    argument.type
+                } else null
+
+                capturedTypes.add(IrCapturedType(status, lowerType, argument, parameter))
             }
+        }
 
-            val additionalBounds =
-                if (argument is IrTypeProjection && argument.variance == Variance.OUT_VARIANCE) listOf(argument.type) else emptyList()
+        val newArguments = ArrayList<IrTypeArgument>(typeArguments.size)
 
-            newArguments += makeTypeProjection(
-                makeTypeIntersection(parameter.superTypes + additionalBounds),
-                Variance.INVARIANT
-            )
+        val typeSubstitutor = IrCapturedTypeSubstitutor(typeParameters.map { it.symbol }, typeArguments, capturedTypes, irBuiltIns)
+
+        for (index in typeArguments.indices) {
+            val oldArgument = typeArguments[index]
+            val parameter = typeParameters[index]
+            val capturedType = capturedTypes[index]
+
+            if (capturedType == null) {
+                assert(oldArgument is IrTypeProjection && oldArgument.variance == Variance.INVARIANT)
+                newArguments.add(oldArgument)
+            } else {
+                val capturedSuperTypes = mutableListOf<IrType>()
+                parameter.superTypes.mapTo(capturedSuperTypes) {
+                    typeSubstitutor.substitute(it)
+                }
+
+                if (oldArgument is IrTypeProjection && oldArgument.variance == Variance.OUT_VARIANCE) {
+                    capturedSuperTypes += oldArgument.type
+                }
+
+                capturedType.constructor.initSuperTypes(capturedSuperTypes)
+
+                newArguments.add(makeTypeProjection(capturedType, Variance.INVARIANT))
+            }
         }
 
         return IrSimpleTypeImpl(type.classifier, type.hasQuestionMark, newArguments, type.annotations)