diff --git a/compiler/testData/diagnostics/tests/resolve/CycleInTypeArgs.kt b/compiler/testData/diagnostics/tests/resolve/CycleInTypeArgs.kt
new file mode 100644
index 00000000000..d8ef905f937
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/resolve/CycleInTypeArgs.kt
@@ -0,0 +1,3 @@
+class Class1<T : Class2<Class1<<!UNRESOLVED_REFERENCE!>X<!>>>>
+
+class Class2<T : Class1<Class2<<!UNRESOLVED_REFERENCE!>X<!>>>>
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/resolve/CycleInTypeArgs.txt b/compiler/testData/diagnostics/tests/resolve/CycleInTypeArgs.txt
new file mode 100644
index 00000000000..a491f8c758a
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/resolve/CycleInTypeArgs.txt
@@ -0,0 +1,15 @@
+package
+
+internal final class Class1</*0*/ T : Class2<Class1<[ERROR : X]>>> {
+    public constructor Class1</*0*/ T : Class2<Class1<[ERROR : X]>>>()
+    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
+}
+
+internal final class Class2</*0*/ T : Class1<Class2<[ERROR : X]>>> {
+    public constructor Class2</*0*/ T : Class1<Class2<[ERROR : X]>>>()
+    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 fa2386346d4..5785310daf2 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
@@ -11541,6 +11541,12 @@ public class JetDiagnosticsTestGenerated extends AbstractJetDiagnosticsTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("CycleInTypeArgs.kt")
+            public void testCycleInTypeArgs() throws Exception {
+                String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/resolve/CycleInTypeArgs.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("incompleteConstructorInvocation.kt")
             public void testIncompleteConstructorInvocation() throws Exception {
                 String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/resolve/incompleteConstructorInvocation.kt");
diff --git a/core/descriptors/src/org/jetbrains/kotlin/descriptors/impl/AbstractTypeParameterDescriptor.java b/core/descriptors/src/org/jetbrains/kotlin/descriptors/impl/AbstractTypeParameterDescriptor.java
index 59e11428c9b..c37da05615c 100644
--- a/core/descriptors/src/org/jetbrains/kotlin/descriptors/impl/AbstractTypeParameterDescriptor.java
+++ b/core/descriptors/src/org/jetbrains/kotlin/descriptors/impl/AbstractTypeParameterDescriptor.java
@@ -82,12 +82,12 @@ public abstract class AbstractTypeParameterDescriptor extends DeclarationDescrip
                                        )));
             }
         });
-        this.upperBounds = storageManager.createLazyValue(new Function0<Set<JetType>>() {
+        this.upperBounds = storageManager.createRecursionTolerantLazyValue(new Function0<Set<JetType>>() {
             @Override
             public Set<JetType> invoke() {
                 return resolveUpperBounds();
             }
-        });
+        }, Collections.singleton(ErrorUtils.createErrorType("Recursion while calculating upper bounds")));
         this.upperBoundsAsType = storageManager.createLazyValue(new Function0<JetType>() {
             @Override
             public JetType invoke() {