diff --git a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/DiagnosticCompilerTestFE10TestdataTestGenerated.java b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/DiagnosticCompilerTestFE10TestdataTestGenerated.java
index e295187410f..30ca32112fa 100644
--- a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/DiagnosticCompilerTestFE10TestdataTestGenerated.java
+++ b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/DiagnosticCompilerTestFE10TestdataTestGenerated.java
@@ -34558,6 +34558,12 @@ public class DiagnosticCompilerTestFE10TestdataTestGenerated extends AbstractDia
                 runTest("compiler/testData/diagnostics/tests/typeParameters/misplacedConstraints.kt");
             }
 
+            @Test
+            @TestMetadata("outerTypeParameterAsBound.kt")
+            public void testOuterTypeParameterAsBound() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt");
+            }
+
             @Test
             @TestMetadata("propertyTypeParameters.kt")
             public void testPropertyTypeParameters() throws Exception {
diff --git a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/LLFirPreresolvedReversedDiagnosticCompilerFE10TestDataTestGenerated.java b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/LLFirPreresolvedReversedDiagnosticCompilerFE10TestDataTestGenerated.java
index 399ea461967..93e07689fa0 100644
--- a/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/LLFirPreresolvedReversedDiagnosticCompilerFE10TestDataTestGenerated.java
+++ b/analysis/low-level-api-fir/tests/org/jetbrains/kotlin/analysis/low/level/api/fir/diagnostic/compiler/based/LLFirPreresolvedReversedDiagnosticCompilerFE10TestDataTestGenerated.java
@@ -34558,6 +34558,12 @@ public class LLFirPreresolvedReversedDiagnosticCompilerFE10TestDataTestGenerated
                 runTest("compiler/testData/diagnostics/tests/typeParameters/misplacedConstraints.kt");
             }
 
+            @Test
+            @TestMetadata("outerTypeParameterAsBound.kt")
+            public void testOuterTypeParameterAsBound() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt");
+            }
+
             @Test
             @TestMetadata("propertyTypeParameters.kt")
             public void testPropertyTypeParameters() throws Exception {
diff --git a/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirLightTreeOldFrontendDiagnosticsTestGenerated.java b/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirLightTreeOldFrontendDiagnosticsTestGenerated.java
index b4d0c1ec4e3..6ab77af182f 100644
--- a/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirLightTreeOldFrontendDiagnosticsTestGenerated.java
+++ b/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirLightTreeOldFrontendDiagnosticsTestGenerated.java
@@ -34558,6 +34558,12 @@ public class FirLightTreeOldFrontendDiagnosticsTestGenerated extends AbstractFir
                 runTest("compiler/testData/diagnostics/tests/typeParameters/misplacedConstraints.kt");
             }
 
+            @Test
+            @TestMetadata("outerTypeParameterAsBound.kt")
+            public void testOuterTypeParameterAsBound() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt");
+            }
+
             @Test
             @TestMetadata("propertyTypeParameters.kt")
             public void testPropertyTypeParameters() throws Exception {
diff --git a/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirPsiOldFrontendDiagnosticsTestGenerated.java b/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirPsiOldFrontendDiagnosticsTestGenerated.java
index aa3d0b5df52..b9419cb86b0 100644
--- a/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirPsiOldFrontendDiagnosticsTestGenerated.java
+++ b/compiler/fir/analysis-tests/tests-gen/org/jetbrains/kotlin/test/runners/FirPsiOldFrontendDiagnosticsTestGenerated.java
@@ -34672,6 +34672,12 @@ public class FirPsiOldFrontendDiagnosticsTestGenerated extends AbstractFirPsiDia
                 runTest("compiler/testData/diagnostics/tests/typeParameters/misplacedConstraints.kt");
             }
 
+            @Test
+            @TestMetadata("outerTypeParameterAsBound.kt")
+            public void testOuterTypeParameterAsBound() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt");
+            }
+
             @Test
             @TestMetadata("propertyTypeParameters.kt")
             public void testPropertyTypeParameters() throws Exception {
diff --git a/compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.fir.kt b/compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.fir.kt
new file mode 100644
index 00000000000..323ffac9e4d
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.fir.kt
@@ -0,0 +1,13 @@
+// ISSUE: KT-61959
+
+package test
+
+interface OuterParam
+
+class Outer<OuterParam> {
+    class Nested<NestedParam : OuterParam>
+}
+
+fun main() {
+    Outer.Nested<<!UPPER_BOUND_VIOLATED!>OuterParam<!>>()
+}
diff --git a/compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt b/compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt
new file mode 100644
index 00000000000..fe0900afad9
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt
@@ -0,0 +1,13 @@
+// ISSUE: KT-61959
+
+package test
+
+interface OuterParam
+
+class Outer<OuterParam> {
+    class Nested<NestedParam : OuterParam>
+}
+
+fun main() {
+    Outer.Nested<OuterParam>()
+}
diff --git a/compiler/tests-common-new/tests-gen/org/jetbrains/kotlin/test/runners/DiagnosticTestGenerated.java b/compiler/tests-common-new/tests-gen/org/jetbrains/kotlin/test/runners/DiagnosticTestGenerated.java
index 063b330d03e..2d74daecf8f 100644
--- a/compiler/tests-common-new/tests-gen/org/jetbrains/kotlin/test/runners/DiagnosticTestGenerated.java
+++ b/compiler/tests-common-new/tests-gen/org/jetbrains/kotlin/test/runners/DiagnosticTestGenerated.java
@@ -36518,6 +36518,12 @@ public class DiagnosticTestGenerated extends AbstractDiagnosticTest {
                 runTest("compiler/testData/diagnostics/tests/typeParameters/misplacedConstraints.kt");
             }
 
+            @Test
+            @TestMetadata("outerTypeParameterAsBound.kt")
+            public void testOuterTypeParameterAsBound() throws Exception {
+                runTest("compiler/testData/diagnostics/tests/typeParameters/outerTypeParameterAsBound.kt");
+            }
+
             @Test
             @TestMetadata("propertyTypeParameters.kt")
             public void testPropertyTypeParameters() throws Exception {