diff --git a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt
index e0198d1087f..5aeb125c6f4 100644
--- a/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt
+++ b/compiler/fir/providers/src/org/jetbrains/kotlin/fir/resolve/substitution/Substitutors.kt
@@ -94,11 +94,23 @@ abstract class AbstractConeSubstitutor(protected val typeContext: ConeTypeContex
 
     private fun ConeCapturedType.substituteCapturedType(): ConeCapturedType? {
         val innerType = this.lowerType ?: this.constructor.projection.type
+        // TODO(KT-64024): This early return looks suspicious.
+        //  In fact, if the inner type wasn't substituted we will ignore potential substitution in
+        //  super types
         val substitutedInnerType = substituteOrNull(innerType) ?: return null
         if (substitutedInnerType is ConeCapturedType) return substitutedInnerType
         val substitutedSuperTypes =
             this.constructor.supertypes?.map { substituteOrSelf(it) }
 
+        // TODO(KT-64027): Creation of new captured types creates unexpected behavior by breaking substitution consistency.
+        //  E.g:
+        //  ```
+        //   substitution = { A => B }
+        //   substituteOrSelf(C<CapturedType(out A)_0>) -> C<CapturedType(out B)_1>
+        //   substituteOrSelf(C<CapturedType(out A)_0>) -> C<CapturedType(out B)_2>
+        //   C<CapturedType(out B)_1> <!:> C<CapturedType(out B)_2>
+        //  ```
+
         return ConeCapturedType(
             captureStatus,
             constructor = ConeCapturedTypeConstructor(
diff --git a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/inference/FirBuilderInferenceSession.kt b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/inference/FirBuilderInferenceSession.kt
index acd8ece6195..25080336122 100644
--- a/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/inference/FirBuilderInferenceSession.kt
+++ b/compiler/fir/resolve/src/org/jetbrains/kotlin/fir/resolve/inference/FirBuilderInferenceSession.kt
@@ -11,8 +11,6 @@ import org.jetbrains.kotlin.fir.FirSession
 import org.jetbrains.kotlin.fir.declarations.FirAnonymousFunction
 import org.jetbrains.kotlin.fir.declarations.FirDeclaration
 import org.jetbrains.kotlin.fir.declarations.hasAnnotation
-import org.jetbrains.kotlin.fir.expressions.FirResolvable
-import org.jetbrains.kotlin.fir.expressions.FirStatement
 import org.jetbrains.kotlin.fir.expressions.*
 import org.jetbrains.kotlin.fir.languageVersionSettings
 import org.jetbrains.kotlin.fir.resolve.calls.Candidate
@@ -20,6 +18,7 @@ import org.jetbrains.kotlin.fir.resolve.calls.ImplicitExtensionReceiverValue
 import org.jetbrains.kotlin.fir.resolve.calls.ResolutionContext
 import org.jetbrains.kotlin.fir.resolve.calls.candidate
 import org.jetbrains.kotlin.fir.resolve.inference.model.ConeBuilderInferenceSubstitutionConstraintPosition
+import org.jetbrains.kotlin.fir.resolve.substitution.AbstractConeSubstitutor
 import org.jetbrains.kotlin.fir.resolve.substitution.ChainedSubstitutor
 import org.jetbrains.kotlin.fir.resolve.substitution.ConeSubstitutor
 import org.jetbrains.kotlin.fir.resolve.substitution.replaceStubsAndTypeVariablesToErrors
@@ -230,6 +229,23 @@ class FirBuilderInferenceSession(
         return introducedConstraint
     }
 
+    private fun extractCommonCapturedTypes(lower: ConeKotlinType, upper: ConeKotlinType): List<ConeCapturedType> {
+        val extractedCapturedTypes = mutableSetOf<ConeCapturedType>().also { extractCapturedTypesTo(lower, it) }
+        return extractedCapturedTypes.filter { capturedType ->
+            upper.contains { it is ConeCapturedType && it.constructor === capturedType.constructor }
+        }
+    }
+
+    private fun extractCapturedTypesTo(type: ConeKotlinType, to: MutableSet<ConeCapturedType>) {
+        if (type is ConeCapturedType) {
+            to.add(type)
+        }
+        for (typeArgument in type.typeArguments) {
+            if (typeArgument !is ConeKotlinTypeProjection) continue
+            extractCapturedTypesTo(typeArgument.type, to)
+        }
+    }
+
     private fun getResultingSubstitutor(commonSystem: NewConstraintSystemImpl): ConeSubstitutor {
         val nonFixedToVariablesSubstitutor = createNonFixedTypeToVariableSubstitutor()
         val commonSystemSubstitutor = commonSystem.buildCurrentSubstitutor() as ConeSubstitutor
@@ -297,12 +313,44 @@ class FirBuilderInferenceSession(
     }
 
     private fun InitialConstraint.substitute(
-        substitutor: TypeSubstitutorMarker,
+        substitutor: ConeSubstitutor,
         fixedTypeVariables: Map<TypeConstructorMarker, KotlinTypeMarker>
     ): InitialConstraint {
+        require(constraintKind != ConstraintKind.LOWER)
+
+        // TODO(KT-63996, KT-64027): This function assumes types passed in lower, upper order which isn't true for equality constraints
+        val commonCapTypes = extractCommonCapturedTypes(lower = a as ConeKotlinType, upper = b as ConeKotlinType)
+
+        // TODO(KT-64027): This logic tries to work-around the problem with type substitution consistency in captured types
+        //  In order to preserve consistency we collect captured types from both a and b and substitute them collectively
+        //  E.g:
+        //  substitutor = { B => W }
+        //  a = C<CapturedType(out B)_0>, b = D<CapturedType(out B)_0>
+        //  commonCapTypes = [CapturedType(out B)_0]
+        //  capTypesSubstitutor = { CapturedTypeConstructor_0 => CapturedType(out W)_1 }
+        //  substitutedLowerType = C<CapturedType(out W)_1>
+        //  substitutedUpperType = D<CapturedType(out W)_1>
+        val substitutedCommonCapType = commonCapTypes.associate {
+            it.constructor to substitutor.substituteOrSelf(it)
+        }
+
+        val capTypesSubstitutor = object : AbstractConeSubstitutor(resolutionContext.typeContext) {
+            override fun substituteType(type: ConeKotlinType): ConeKotlinType? {
+                if (type !is ConeCapturedType) return null
+                return substitutedCommonCapType[type.constructor]
+            }
+        }
+
         // TODO: invalid naming. It doesn't make sense case of equality constraints
-        val substitutedLowerType = substitutor.safeSubstitute(resolutionContext.typeContext, this.a)
-        val substitutedUpperType = substitutor.safeSubstitute(resolutionContext.typeContext, this.b)
+        val substitutedLowerType = substitutor.safeSubstitute(
+            resolutionContext.typeContext,
+            capTypesSubstitutor.safeSubstitute(resolutionContext.typeContext, this.a)
+        )
+        val substitutedUpperType = substitutor.safeSubstitute(
+            resolutionContext.typeContext,
+            capTypesSubstitutor.safeSubstitute(resolutionContext.typeContext, this.b)
+        )
+
 
         val a = a
         // In situation when some type variable _T is fixed to Stub(_T)?,
diff --git a/compiler/testData/diagnostics/tests/inference/builderInference/stubTypes/capturedTypes.fir.kt b/compiler/testData/diagnostics/tests/inference/builderInference/stubTypes/capturedTypes.fir.kt
index 8c5bef933d3..2f277f0f465 100644
--- a/compiler/testData/diagnostics/tests/inference/builderInference/stubTypes/capturedTypes.fir.kt
+++ b/compiler/testData/diagnostics/tests/inference/builderInference/stubTypes/capturedTypes.fir.kt
@@ -26,7 +26,7 @@ fun <K> captureIn(x: Inv<out K>): K = null as K
 fun <K> capture(x: Inv<K>): K = null as K
 
 fun main() {
-    <!NEW_INFERENCE_ERROR!>build {
+    build {
         emit("")
         getInv()
         captureOut(getInv())
@@ -35,7 +35,7 @@ fun main() {
         // K is fixed into CapturedType(out NotFixed: TypeVariable(R))
         capture(getOut())
         ""
-    }<!>
+    }
     build {
         emit("")
         // K is fixed into CapturedType(in NotFixed: TypeVariable(R))