diff --git a/compiler/fir/analysis-tests/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java b/compiler/fir/analysis-tests/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java
index dd05f944457..6b0b4a3913d 100644
--- a/compiler/fir/analysis-tests/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java
+++ b/compiler/fir/analysis-tests/tests/org/jetbrains/kotlin/fir/FirOldFrontendDiagnosticsTestGenerated.java
@@ -11473,6 +11473,11 @@ public class FirOldFrontendDiagnosticsTestGenerated extends AbstractFirOldFronte
                 runTest("compiler/testData/diagnostics/tests/inference/regressions/kt37043_2.kt");
             }
 
+            @TestMetadata("kt37650.kt")
+            public void testKt37650() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/inference/regressions/kt37650.kt");
+            }
+
             @TestMetadata("kt4420.kt")
             public void testKt4420() throws Exception {
                 runTest("compiler/testData/diagnostics/tests/inference/regressions/kt4420.kt");
diff --git a/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/ConstraintIncorporator.kt b/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/ConstraintIncorporator.kt
index 58d654fe9c9..0bdcf7e2b6a 100644
--- a/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/ConstraintIncorporator.kt
+++ b/compiler/resolution/src/org/jetbrains/kotlin/resolve/calls/inference/components/ConstraintIncorporator.kt
@@ -209,8 +209,14 @@ class ConstraintIncorporator(
 
         val isUsefulForNullabilityConstraint =
             isPotentialUsefulNullabilityConstraint(newConstraint, otherConstraint.type, otherConstraint.kind)
+        val isFromVariableFixation = baseConstraint.position.from is FixVariableConstraintPosition
+                || otherConstraint.position.from is FixVariableConstraintPosition
+
+        if (!containsConstrainingTypeWithoutProjection(newConstraint, otherConstraint)
+            && !isUsefulForNullabilityConstraint
+            && !isFromVariableFixation
+        ) return
 
-        if (!isUsefulForNullabilityConstraint && !containsConstrainingTypeWithoutProjection(newConstraint, otherConstraint)) return
         if (trivialConstraintTypeInferenceOracle.isGeneratedConstraintTrivial(
                 baseConstraint, otherConstraint, newConstraint, isSubtype
             )
diff --git a/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.fir.kt b/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.fir.kt
index ab93e7dad9b..b11d5abb53d 100644
--- a/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.fir.kt
@@ -52,7 +52,6 @@ fun <L> main(x: L?, y: L) {
     foo3(x, Foo(Bar()))
     foo3(y, Foo(Bar()))
 
-    // Change after fix KT-37380
     foo4(x, Foo(Bar()))
     foo4(y, Foo(Bar()))
 
@@ -124,11 +123,9 @@ fun <L> main(x: L?, y: L) {
     foo22(x, Foo(Foo(InBar())))
     foo22(y, Foo(Foo(InBar())))
 
-    // Change after fix KT-37380
     foo23(x, Foo(Foo(Bar())))
     foo23(y, Foo(Foo(Bar())))
 
-    // Change after fix KT-37380
     foo24(x, Foo(Foo(Bar())))
     foo24(y, Foo(Foo(Bar())))
 }
diff --git a/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.kt b/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.kt
index 4ff53d982e3..bde686d5303 100644
--- a/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.kt
+++ b/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInArguments.kt
@@ -52,9 +52,8 @@ fun <L> main(x: L?, y: L) {
     foo3(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Bar<L!!>>")!>Foo(Bar())<!>)
     foo3(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Bar<L!!>>")!>Foo(Bar())<!>)
 
-    // Change after fix KT-37380
-    foo4(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Bar<L!!>>"), TYPE_MISMATCH!>Foo(Bar())<!>)
-    foo4(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Bar<L!!>>"), TYPE_MISMATCH!>Foo(Bar())<!>)
+    foo4(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Bar<out L!!>>")!>Foo(Bar())<!>)
+    foo4(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Bar<out L!!>>")!>Foo(Bar())<!>)
 
     foo5(x, <!DEBUG_INFO_EXPRESSION_TYPE("Bar<L!!>")!>Bar()<!>)
     foo5(y, <!DEBUG_INFO_EXPRESSION_TYPE("Bar<L!!>")!>Bar()<!>)
@@ -124,11 +123,9 @@ fun <L> main(x: L?, y: L) {
     foo22(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<InBar<L!!>>>")!>Foo(Foo(InBar()))<!>)
     foo22(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<InBar<L!!>>>")!>Foo(Foo(InBar()))<!>)
 
-    // Change after fix KT-37380
-    foo23(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<L!!>>>"), TYPE_MISMATCH!>Foo(Foo(Bar()))<!>)
-    foo23(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<L!!>>>"), TYPE_MISMATCH!>Foo(Foo(Bar()))<!>)
+    foo23(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<out L!!>>>")!>Foo(Foo(Bar()))<!>)
+    foo23(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<out L!!>>>")!>Foo(Foo(Bar()))<!>)
 
-    // Change after fix KT-37380
-    foo24(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<L!!>>>"), TYPE_MISMATCH!>Foo(Foo(Bar()))<!>)
-    foo24(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<L!!>>>"), TYPE_MISMATCH!>Foo(Foo(Bar()))<!>)
+    foo24(x, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<in L!!>>>")!>Foo(Foo(Bar()))<!>)
+    foo24(y, <!DEBUG_INFO_EXPRESSION_TYPE("Foo<Foo<Bar<in L!!>>>")!>Foo(Foo(Bar()))<!>)
 }
diff --git a/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInReturnPosition.kt b/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInReturnPosition.kt
index e04b0b41713..088cc29d558 100644
--- a/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInReturnPosition.kt
+++ b/compiler/testData/diagnostics/tests/inference/constraints/definitelyNotNullTypeInReturnPosition.kt
@@ -245,8 +245,8 @@ class Main<L>(x: L?, y: L) {
     val x420 = <!DEBUG_INFO_EXPRESSION_TYPE("IFoo<L>")!>foo42(x)<!>
     val x421 = <!DEBUG_INFO_EXPRESSION_TYPE("IFoo<L>")!>foo42(y)<!>
 
-    val x430 = <!DEBUG_INFO_EXPRESSION_TYPE("{IBar<L> & IFoo<L>}")!>foo43(x)<!>
-    val x431 = <!DEBUG_INFO_EXPRESSION_TYPE("{IBar<L> & IFoo<L>}")!>foo43(y)<!>
+    val x430 = <!DEBUG_INFO_EXPRESSION_TYPE("{IBar<L> & IBar<out L> & IFoo<L> & IFoo<out L>}")!>foo43(x)<!>
+    val x431 = <!DEBUG_INFO_EXPRESSION_TYPE("{IBar<L> & IBar<out L> & IFoo<L> & IFoo<out L>}")!>foo43(y)<!>
 
     // Change after fix KT-37380
     val x440 = <!DEBUG_INFO_EXPRESSION_TYPE("{IBar<L> & IFoo<String>}")!>foo44(x)<!>
diff --git a/compiler/testData/diagnostics/tests/inference/regressions/kt37650.kt b/compiler/testData/diagnostics/tests/inference/regressions/kt37650.kt
new file mode 100644
index 00000000000..a9c74ce6434
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/regressions/kt37650.kt
@@ -0,0 +1,14 @@
+// FIR_IDENTICAL
+// !LANGUAGE: +NewInference
+// !DIAGNOSTICS: -UNUSED_PARAMETER -UNUSED_VARIABLE
+
+class Inv<T>
+
+fun <T> materialize(): T = TODO()
+
+fun <A> foo(x: Inv<A>) {}
+fun <B> bar(y: Inv<out B>): Inv<Inv<out B>> = materialize()
+
+fun <K> test(plant: Inv<out K>) {
+    val x = foo(bar(plant)) // OK in OI, NI: "Not enough information to infer type variable A"
+}
diff --git a/compiler/testData/diagnostics/tests/inference/regressions/kt37650.txt b/compiler/testData/diagnostics/tests/inference/regressions/kt37650.txt
new file mode 100644
index 00000000000..f9a92ac3f33
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/regressions/kt37650.txt
@@ -0,0 +1,13 @@
+package
+
+public fun </*0*/ B> bar(/*0*/ y: Inv<out B>): Inv<Inv<out B>>
+public fun </*0*/ A> foo(/*0*/ x: Inv<A>): kotlin.Unit
+public fun </*0*/ T> materialize(): T
+public fun </*0*/ K> test(/*0*/ plant: Inv<out K>): kotlin.Unit
+
+public final class Inv</*0*/ T> {
+    public constructor Inv</*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
+}
diff --git a/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.kt b/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.kt
index 218fb33e0e4..ba3299f2b20 100644
--- a/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.kt
+++ b/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.kt
@@ -1,4 +1,4 @@
 // !WITH_NEW_INFERENCE
 // NI_EXPECTED_FILE
 
-fun foo(first: Array<Any?>, second: Array<Any?>) = <!NI;NEW_INFERENCE_NO_INFORMATION_FOR_PARAMETER!>Pair<!>(first.<!NI;NEW_INFERENCE_NO_INFORMATION_FOR_PARAMETER!>toCollection<!>(<!NO_VALUE_FOR_PARAMETER!>)<!>, second.<!NI;NEW_INFERENCE_NO_INFORMATION_FOR_PARAMETER!>toCollection<!>(<!NO_VALUE_FOR_PARAMETER!>)<!>)
\ No newline at end of file
+fun foo(first: Array<Any?>, second: Array<Any?>) = Pair(first.toCollection(<!NO_VALUE_FOR_PARAMETER!>)<!>, second.toCollection(<!NO_VALUE_FOR_PARAMETER!>)<!>)
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.ni.txt b/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.ni.txt
index e1f0a5b5c7b..71d97fe0ee3 100644
--- a/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.ni.txt
+++ b/compiler/testData/diagnostics/testsWithStdLib/inference/kt11266.ni.txt
@@ -1,3 +1,3 @@
 package
 
-public fun foo(/*0*/ first: kotlin.Array<kotlin.Any?>, /*1*/ second: kotlin.Array<kotlin.Any?>): [ERROR : Error function type]
+public fun foo(/*0*/ first: kotlin.Array<kotlin.Any?>, /*1*/ second: kotlin.Array<kotlin.Any?>): kotlin.Pair<kotlin.collections.MutableCollection<in kotlin.Any?>, kotlin.collections.MutableCollection<in kotlin.Any?>>
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
index 71029936cd7..b3871a4fef4 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
@@ -11480,6 +11480,11 @@ public class DiagnosticsTestGenerated extends AbstractDiagnosticsTestWithFirVali
                     runTest("compiler/testData/diagnostics/tests/inference/regressions/kt37043_2.kt");
                 }
 
+                @TestMetadata("kt37650.kt")
+                public void testKt37650() throws Exception {
+                    runTest("compiler/testData/diagnostics/tests/inference/regressions/kt37650.kt");
+                }
+
                 @TestMetadata("kt4420.kt")
                 public void testKt4420() throws Exception {
                     runTest("compiler/testData/diagnostics/tests/inference/regressions/kt4420.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
index 52ee095b111..001d6ecc926 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
@@ -11475,6 +11475,11 @@ public class DiagnosticsUsingJavacTestGenerated extends AbstractDiagnosticsUsing
                     runTest("compiler/testData/diagnostics/tests/inference/regressions/kt37043_2.kt");
                 }
 
+                @TestMetadata("kt37650.kt")
+                public void testKt37650() throws Exception {
+                    runTest("compiler/testData/diagnostics/tests/inference/regressions/kt37650.kt");
+                }
+
                 @TestMetadata("kt4420.kt")
                 public void testKt4420() throws Exception {
                     runTest("compiler/testData/diagnostics/tests/inference/regressions/kt4420.kt");