diff --git a/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/JavaTypeTransformer.java b/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/JavaTypeTransformer.java
index 4de241c95f0..5bd5219e9d9 100644
--- a/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/JavaTypeTransformer.java
+++ b/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/JavaTypeTransformer.java
@@ -166,14 +166,18 @@ public class JavaTypeTransformer {
                     List<TypeParameterDescriptor> parameters = classData.getTypeConstructor().getParameters();
                     if (isRaw(classType, !parameters.isEmpty())) {
                         for (TypeParameterDescriptor parameter : parameters) {
-                            TypeProjection starProjection = SubstitutionUtils.makeStarProjection(parameter);
-                            if (howThisTypeIsUsed == SUPERTYPE) {
-                                // projections are not allowed in immediate arguments of supertypes
-                                arguments.add(new TypeProjection(starProjection.getType()));
-                            }
-                            else {
-                                arguments.add(starProjection);
-                            }
+                            // not making a star projection because of this case:
+                            // Java:
+                            // class C<T extends C> {}
+                            // The upper bound is raw here, and we can't compute the projection: it would be infinite:
+                            // C<*> = C<out C<out C<...>>>
+                            // this way we loose some type information, even when the case is not so bad, but it doesn't seem to matter
+
+                            // projections are not allowed in immediate arguments of supertypes
+                            Variance projectionKind = parameter.getVariance() == OUT_VARIANCE || howThisTypeIsUsed == SUPERTYPE
+                                                      ? INVARIANT
+                                                      : OUT_VARIANCE;
+                            arguments.add(new TypeProjection(projectionKind, KotlinBuiltIns.getInstance().getNullableAnyType()));
                         }
                     }
                     else {
diff --git a/compiler/testData/diagnostics/tests/j+k/recursiveRawUpperBound.kt b/compiler/testData/diagnostics/tests/j+k/recursiveRawUpperBound.kt
new file mode 100644
index 00000000000..afc8fc1e2eb
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/j+k/recursiveRawUpperBound.kt
@@ -0,0 +1,13 @@
+// FILE: Bad.java
+
+class Bad<T extends Bad> {}
+
+// FILE: X.java
+
+class X {
+  Bad foo() {return null;}
+}
+
+// FILE: Usage.kt
+
+fun foo(p: X) = p.foo()
diff --git a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
index abb5951ef74..23b4bdc5a39 100644
--- a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
@@ -3314,6 +3314,11 @@ public class JetDiagnosticsTestGenerated extends AbstractDiagnosticsTestWithEage
                 doTest("compiler/testData/diagnostics/tests/j+k/packageVisibility.kt");
             }
             
+            @TestMetadata("recursiveRawUpperBound.kt")
+            public void testRecursiveRawUpperBound() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/j+k/recursiveRawUpperBound.kt");
+            }
+            
             @TestMetadata("Simple.kt")
             public void testSimple() throws Exception {
                 doTest("compiler/testData/diagnostics/tests/j+k/Simple.kt");