diff --git a/compiler/testData/diagnostics/tests/generics/kt5508.kt b/compiler/testData/diagnostics/tests/generics/kt5508.kt
new file mode 100644
index 00000000000..ff91db9e69b
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/generics/kt5508.kt
@@ -0,0 +1,14 @@
+// KT-5508 Stackoverflow in type substitution
+
+abstract class A<T> {
+    public abstract fun Foo(x: T)
+
+    public inner abstract class B<S> : A<B<S>>() {
+        public inner class C<U> : B<C<U>>()
+        {
+            override fun Foo(x: B<C<U>>) {
+                throw UnsupportedOperationException()
+            }
+        }
+    }
+}
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/generics/kt5508.txt b/compiler/testData/diagnostics/tests/generics/kt5508.txt
new file mode 100644
index 00000000000..9ae815c9587
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/generics/kt5508.txt
@@ -0,0 +1,25 @@
+package
+
+public abstract class A</*0*/ T> {
+    public constructor A</*0*/ T>()
+    public abstract fun Foo(/*0*/ x: T): kotlin.Unit
+    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
+
+    public abstract inner class B</*0*/ S> : A<A.B<S>> {
+        public constructor B</*0*/ S>()
+        public abstract override /*1*/ /*fake_override*/ fun Foo(/*0*/ x: A.B<S>): kotlin.Unit
+        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
+
+        public final inner class C</*0*/ U> : A.B<A.B.C<U>> {
+            public constructor C</*0*/ U>()
+            public open override /*1*/ fun Foo(/*0*/ x: A.B<A.B.C<U>>): kotlin.Unit
+            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/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
index 3184c8c62c0..8113e8add9d 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
@@ -6546,6 +6546,12 @@ public class JetDiagnosticsTestGenerated extends AbstractJetDiagnosticsTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("kt5508.kt")
+            public void testKt5508() throws Exception {
+                String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/generics/kt5508.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("Projections.kt")
             public void testProjections() throws Exception {
                 String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/generics/Projections.kt");