diff --git a/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java b/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
index df645ee4e63..edc9c50b4ea 100644
--- a/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
+++ b/compiler/fir/fir2ir/tests/org/jetbrains/kotlin/codegen/ir/FirBlackBoxCodegenTestGenerated.java
@@ -15337,6 +15337,11 @@ public class FirBlackBoxCodegenTestGenerated extends AbstractFirBlackBoxCodegenT
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.kt");
diff --git a/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/InnerClassesLowering.kt b/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/InnerClassesLowering.kt
index 70b0a778377..8b19b60b57f 100644
--- a/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/InnerClassesLowering.kt
+++ b/compiler/ir/backend.common/src/org/jetbrains/kotlin/backend/common/lower/InnerClassesLowering.kt
@@ -97,10 +97,18 @@ private fun InnerClassesSupport.primaryConstructorParameterMap(originalConstruct
 
     val loweredConstructor = getInnerClassConstructorWithOuterThisParameter(originalConstructor)
 
-    originalConstructor.valueParameters.forEach { old ->
-        oldConstructorParameterToNew[old] = loweredConstructor.valueParameters[old.index + 1]
+    var index = 0
+
+    originalConstructor.dispatchReceiverParameter?.let {
+        oldConstructorParameterToNew[it] = loweredConstructor.valueParameters[index++]
     }
 
+    originalConstructor.valueParameters.forEach { old ->
+        oldConstructorParameterToNew[old] = loweredConstructor.valueParameters[index++]
+    }
+
+    assert(loweredConstructor.valueParameters.size == index)
+
     return oldConstructorParameterToNew
 }
 
diff --git a/compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt b/compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt
new file mode 100644
index 00000000000..733e0efbee8
--- /dev/null
+++ b/compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt
@@ -0,0 +1,24 @@
+
+// KT-40686
+
+
+class Outer(val o: String, val oo: String) {
+    inner class InnerArg(val i: String) {
+        val result: String get() = o + i
+    }
+
+    inner class InnerParam(val i: InnerArg = InnerArg("B")) {
+        fun foo() = i.result + oo
+    }
+}
+
+
+fun box(): String {
+    val o = Outer("A", "C")
+    val i = o.InnerParam()
+
+    val rr = i.foo()
+    if (rr != "ABC") return "FAIL: $rr"
+
+    return "OK"
+}
\ No newline at end of file
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
index 79d29e35a14..84627960359 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
@@ -16737,6 +16737,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
index d9ede1125ca..19c32945df6 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
@@ -16737,6 +16737,11 @@ public class LightAnalysisModeTestGenerated extends AbstractLightAnalysisModeTes
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
index 416626a1a36..b7261d7507b 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
@@ -15337,6 +15337,11 @@ public class IrBlackBoxCodegenTestGenerated extends AbstractIrBlackBoxCodegenTes
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
index f912b53c80b..9e7dde16038 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/es6/semantics/IrJsCodegenBoxES6TestGenerated.java
@@ -13302,6 +13302,11 @@ public class IrJsCodegenBoxES6TestGenerated extends AbstractIrJsCodegenBoxES6Tes
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.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 e17a9446dab..1cc3f93e591 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
@@ -13302,6 +13302,11 @@ public class IrJsCodegenBoxTestGenerated extends AbstractIrJsCodegenBoxTest {
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.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 50ca73ff7af..177ca42bf1b 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
@@ -13367,6 +13367,11 @@ public class JsCodegenBoxTestGenerated extends AbstractJsCodegenBoxTest {
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java
index c149ac570e2..ba7392a379a 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/wasm/semantics/IrCodegenBoxWasmTestGenerated.java
@@ -7632,6 +7632,11 @@ public class IrCodegenBoxWasmTestGenerated extends AbstractIrCodegenBoxWasmTest
             runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultArgument.kt");
         }
 
+        @TestMetadata("innerWithDefaultInner.kt")
+        public void testInnerWithDefaultInner() throws Exception {
+            runTest("compiler/testData/codegen/box/innerNested/innerWithDefaultInner.kt");
+        }
+
         @TestMetadata("kt3132.kt")
         public void testKt3132() throws Exception {
             runTest("compiler/testData/codegen/box/innerNested/kt3132.kt");