diff --git a/compiler/testData/diagnostics/tests/typealias/inheritedNestedTypeAlias.kt b/compiler/testData/diagnostics/tests/typealias/inheritedNestedTypeAlias.kt
new file mode 100644
index 00000000000..25a5802e858
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/typealias/inheritedNestedTypeAlias.kt
@@ -0,0 +1,20 @@
+interface ICell<T> {
+    val x: T
+}
+
+class Cell<T>(override val x: T): ICell<T>
+
+open class Base<T> {
+    typealias CT = Cell<T>
+    inner class InnerCell(override val x: T): ICell<T>
+}
+
+class Derived : Base<Int>() {
+    // TODO KT-11123
+
+    val x1: <!WRONG_NUMBER_OF_TYPE_ARGUMENTS!>InnerCell<!> = InnerCell(42)
+    val x2: Base<Int>.InnerCell = InnerCell(42)
+
+    val test1: <!WRONG_NUMBER_OF_TYPE_ARGUMENTS!>CT<!> = Cell(42)
+    val test2: Base<Int>.CT = Cell(42)
+}
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/typealias/inheritedNestedTypeAlias.txt b/compiler/testData/diagnostics/tests/typealias/inheritedNestedTypeAlias.txt
new file mode 100644
index 00000000000..2f82081dc3b
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/typealias/inheritedNestedTypeAlias.txt
@@ -0,0 +1,43 @@
+package
+
+public open class Base</*0*/ T> {
+    public typealias CT /*captured type parameters: /*0*/ T*/ = Cell<T>
+    public constructor Base</*0*/ T>()
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+
+    public final inner class InnerCell /*captured type parameters: /*0*/ T*/ : ICell<T> {
+        public constructor InnerCell(/*0*/ x: T)
+        public open override /*1*/ val x: T
+        public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+        public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+        public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+    }
+}
+
+public final class Cell</*0*/ T> : ICell<T> {
+    public constructor Cell</*0*/ T>(/*0*/ x: T)
+    public open override /*1*/ val x: T
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
+
+public final class Derived : Base<kotlin.Int> {
+    public constructor Derived()
+    public final val test1: [ERROR : CT]
+    public final val test2: Base<kotlin.Int>.CT [= Cell<kotlin.Int>]
+    public final val x1: [ERROR : InnerCell]
+    public final val x2: Base<kotlin.Int>.InnerCell
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
+
+public interface ICell</*0*/ T> {
+    public abstract val x: T
+    public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+    public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
index 73785271f9d..b25a92d7b02 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
@@ -19533,6 +19533,12 @@ public class DiagnosticsTestGenerated extends AbstractDiagnosticsTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("inheritedNestedTypeAlias.kt")
+            public void testInheritedNestedTypeAlias() throws Exception {
+                String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/typealias/inheritedNestedTypeAlias.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("isAsWithTypeAlias.kt")
             public void testIsAsWithTypeAlias() throws Exception {
                 String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/typealias/isAsWithTypeAlias.kt");