diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 09354d957a36e..1bcc98cf3ed64 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -18446,7 +18446,7 @@ namespace ts {
                 isTypeAssertion(declaration.initializer) ? type : getWidenedLiteralType(type);
         }
 
-        function isLiteralContextualType(contextualType: Type) {
+        function isLiteralContextualType(contextualType: Type): boolean {
             if (contextualType) {
                 if (contextualType.flags & TypeFlags.TypeVariable) {
                     const constraint = getBaseConstraintOfType(contextualType) || emptyObjectType;
@@ -18458,7 +18458,9 @@ namespace ts {
                     }
                     contextualType = constraint;
                 }
-                return maybeTypeOfKind(contextualType, (TypeFlags.Literal | TypeFlags.Index));
+                return !!(contextualType.flags & (TypeFlags.Literal | TypeFlags.Index) ||
+                    contextualType.flags & TypeFlags.UnionOrIntersection
+                        && forEach((<UnionOrIntersectionType>contextualType).types, isLiteralContextualType));
             }
             return false;
         }
diff --git a/tests/baselines/reference/genericCallStringLiteralUnionNested.errors.txt b/tests/baselines/reference/genericCallStringLiteralUnionNested.errors.txt
new file mode 100644
index 0000000000000..1dca2533612a7
--- /dev/null
+++ b/tests/baselines/reference/genericCallStringLiteralUnionNested.errors.txt
@@ -0,0 +1,50 @@
+tests/cases/compiler/genericCallStringLiteralUnionNested.ts(23,7): error TS2322: Type 'string[]' is not assignable to type '"z"[]'.
+  Type 'string' is not assignable to type '"z"'.
+tests/cases/compiler/genericCallStringLiteralUnionNested.ts(24,7): error TS2322: Type 'number[]' is not assignable to type '1[]'.
+  Type 'number' is not assignable to type '1'.
+tests/cases/compiler/genericCallStringLiteralUnionNested.ts(27,7): error TS2322: Type 'string[]' is not assignable to type '"z"[]'.
+tests/cases/compiler/genericCallStringLiteralUnionNested.ts(28,7): error TS2322: Type 'number[]' is not assignable to type '3[]'.
+  Type 'number' is not assignable to type '3'.
+
+
+==== tests/cases/compiler/genericCallStringLiteralUnionNested.ts (4 errors) ====
+    declare function nestedUnionExtendsString<A extends string>(a: { fields: A | A[] }): Record<A, string>;
+    const t1: {z: string} = nestedUnionExtendsString({ fields: "z" });
+    
+    declare function nestedUnionExtendsLiterals<A extends "z" | "y">(a: { fields: A | A[] }): A[];
+    const t2: "z"[] = nestedUnionExtendsLiterals({ fields: "z" });
+    
+    declare function nestedGenericIntersection<A extends B & C, B extends string, C extends string>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+    const t3: "z"[] = nestedGenericIntersection({ fields: "z" }, ["z", "y"], ["z", "y"]);
+    
+    declare function nestedUnionExtendsNumber<A extends number>(a: { fields: A | A[] }): A[];
+    const t4: 1[] = nestedUnionExtendsNumber({ fields: 1 });
+    
+    declare function nestedUnionExtendsLiteralsNumber<A extends 1 | 2>(a: { fields: A | A[] }): A[];
+    const t5: 2[] = nestedUnionExtendsLiteralsNumber({ fields: 2 });
+    
+    declare function nestedUnionIntersectionGenericNumber<A extends B & C, B extends number, C extends number>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+    const t6: 3[] = nestedUnionIntersectionGenericNumber({ fields: 3 }, [1, 3], [1, 3]);
+    
+    
+    // The following are expected to fail because they don't have an extend string or extend number generic constraint.
+    
+    declare function nestedUnionPlain<A>(a: { fields: A | A[] }): A[];
+    const expectedFail1: "z"[] = nestedUnionPlain({ fields: "z" });
+          ~~~~~~~~~~~~~
+!!! error TS2322: Type 'string[]' is not assignable to type '"z"[]'.
+!!! error TS2322:   Type 'string' is not assignable to type '"z"'.
+    const expectedFail2: 1[] = nestedUnionPlain({ fields: 1 });
+          ~~~~~~~~~~~~~
+!!! error TS2322: Type 'number[]' is not assignable to type '1[]'.
+!!! error TS2322:   Type 'number' is not assignable to type '1'.
+    
+    declare function nestedUnionIntersectionPlainGenerics<A extends B & C, B, C>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+    const expectedFail3: "z"[] = nestedUnionIntersectionPlainGenerics({ fields: "z" }, ["z", "y"], ["z", "y"]);
+          ~~~~~~~~~~~~~
+!!! error TS2322: Type 'string[]' is not assignable to type '"z"[]'.
+    const expectedFail4: 3[] = nestedUnionIntersectionPlainGenerics({ fields: 3 }, [1, 3], [1, 3]);
+          ~~~~~~~~~~~~~
+!!! error TS2322: Type 'number[]' is not assignable to type '3[]'.
+!!! error TS2322:   Type 'number' is not assignable to type '3'.
+    
\ No newline at end of file
diff --git a/tests/baselines/reference/genericCallStringLiteralUnionNested.js b/tests/baselines/reference/genericCallStringLiteralUnionNested.js
new file mode 100644
index 0000000000000..706674a1414ea
--- /dev/null
+++ b/tests/baselines/reference/genericCallStringLiteralUnionNested.js
@@ -0,0 +1,42 @@
+//// [genericCallStringLiteralUnionNested.ts]
+declare function nestedUnionExtendsString<A extends string>(a: { fields: A | A[] }): Record<A, string>;
+const t1: {z: string} = nestedUnionExtendsString({ fields: "z" });
+
+declare function nestedUnionExtendsLiterals<A extends "z" | "y">(a: { fields: A | A[] }): A[];
+const t2: "z"[] = nestedUnionExtendsLiterals({ fields: "z" });
+
+declare function nestedGenericIntersection<A extends B & C, B extends string, C extends string>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+const t3: "z"[] = nestedGenericIntersection({ fields: "z" }, ["z", "y"], ["z", "y"]);
+
+declare function nestedUnionExtendsNumber<A extends number>(a: { fields: A | A[] }): A[];
+const t4: 1[] = nestedUnionExtendsNumber({ fields: 1 });
+
+declare function nestedUnionExtendsLiteralsNumber<A extends 1 | 2>(a: { fields: A | A[] }): A[];
+const t5: 2[] = nestedUnionExtendsLiteralsNumber({ fields: 2 });
+
+declare function nestedUnionIntersectionGenericNumber<A extends B & C, B extends number, C extends number>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+const t6: 3[] = nestedUnionIntersectionGenericNumber({ fields: 3 }, [1, 3], [1, 3]);
+
+
+// The following are expected to fail because they don't have an extend string or extend number generic constraint.
+
+declare function nestedUnionPlain<A>(a: { fields: A | A[] }): A[];
+const expectedFail1: "z"[] = nestedUnionPlain({ fields: "z" });
+const expectedFail2: 1[] = nestedUnionPlain({ fields: 1 });
+
+declare function nestedUnionIntersectionPlainGenerics<A extends B & C, B, C>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+const expectedFail3: "z"[] = nestedUnionIntersectionPlainGenerics({ fields: "z" }, ["z", "y"], ["z", "y"]);
+const expectedFail4: 3[] = nestedUnionIntersectionPlainGenerics({ fields: 3 }, [1, 3], [1, 3]);
+
+
+//// [genericCallStringLiteralUnionNested.js]
+var t1 = nestedUnionExtendsString({ fields: "z" });
+var t2 = nestedUnionExtendsLiterals({ fields: "z" });
+var t3 = nestedGenericIntersection({ fields: "z" }, ["z", "y"], ["z", "y"]);
+var t4 = nestedUnionExtendsNumber({ fields: 1 });
+var t5 = nestedUnionExtendsLiteralsNumber({ fields: 2 });
+var t6 = nestedUnionIntersectionGenericNumber({ fields: 3 }, [1, 3], [1, 3]);
+var expectedFail1 = nestedUnionPlain({ fields: "z" });
+var expectedFail2 = nestedUnionPlain({ fields: 1 });
+var expectedFail3 = nestedUnionIntersectionPlainGenerics({ fields: "z" }, ["z", "y"], ["z", "y"]);
+var expectedFail4 = nestedUnionIntersectionPlainGenerics({ fields: 3 }, [1, 3], [1, 3]);
diff --git a/tests/baselines/reference/genericCallStringLiteralUnionNested.symbols b/tests/baselines/reference/genericCallStringLiteralUnionNested.symbols
new file mode 100644
index 0000000000000..eb8d26d4bcc78
--- /dev/null
+++ b/tests/baselines/reference/genericCallStringLiteralUnionNested.symbols
@@ -0,0 +1,152 @@
+=== tests/cases/compiler/genericCallStringLiteralUnionNested.ts ===
+declare function nestedUnionExtendsString<A extends string>(a: { fields: A | A[] }): Record<A, string>;
+>nestedUnionExtendsString : Symbol(nestedUnionExtendsString, Decl(genericCallStringLiteralUnionNested.ts, 0, 0))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 0, 42))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 0, 60))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 0, 64))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 0, 42))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 0, 42))
+>Record : Symbol(Record, Decl(lib.d.ts, --, --))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 0, 42))
+
+const t1: {z: string} = nestedUnionExtendsString({ fields: "z" });
+>t1 : Symbol(t1, Decl(genericCallStringLiteralUnionNested.ts, 1, 5))
+>z : Symbol(z, Decl(genericCallStringLiteralUnionNested.ts, 1, 11))
+>nestedUnionExtendsString : Symbol(nestedUnionExtendsString, Decl(genericCallStringLiteralUnionNested.ts, 0, 0))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 1, 50))
+
+declare function nestedUnionExtendsLiterals<A extends "z" | "y">(a: { fields: A | A[] }): A[];
+>nestedUnionExtendsLiterals : Symbol(nestedUnionExtendsLiterals, Decl(genericCallStringLiteralUnionNested.ts, 1, 66))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 3, 44))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 3, 65))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 3, 69))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 3, 44))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 3, 44))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 3, 44))
+
+const t2: "z"[] = nestedUnionExtendsLiterals({ fields: "z" });
+>t2 : Symbol(t2, Decl(genericCallStringLiteralUnionNested.ts, 4, 5))
+>nestedUnionExtendsLiterals : Symbol(nestedUnionExtendsLiterals, Decl(genericCallStringLiteralUnionNested.ts, 1, 66))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 4, 46))
+
+declare function nestedGenericIntersection<A extends B & C, B extends string, C extends string>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+>nestedGenericIntersection : Symbol(nestedGenericIntersection, Decl(genericCallStringLiteralUnionNested.ts, 4, 62))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 6, 43))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 6, 59))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 6, 77))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 6, 59))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 6, 77))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 6, 96))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 6, 100))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 6, 43))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 6, 43))
+>b : Symbol(b, Decl(genericCallStringLiteralUnionNested.ts, 6, 119))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 6, 59))
+>c : Symbol(c, Decl(genericCallStringLiteralUnionNested.ts, 6, 127))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 6, 77))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 6, 43))
+
+const t3: "z"[] = nestedGenericIntersection({ fields: "z" }, ["z", "y"], ["z", "y"]);
+>t3 : Symbol(t3, Decl(genericCallStringLiteralUnionNested.ts, 7, 5))
+>nestedGenericIntersection : Symbol(nestedGenericIntersection, Decl(genericCallStringLiteralUnionNested.ts, 4, 62))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 7, 45))
+
+declare function nestedUnionExtendsNumber<A extends number>(a: { fields: A | A[] }): A[];
+>nestedUnionExtendsNumber : Symbol(nestedUnionExtendsNumber, Decl(genericCallStringLiteralUnionNested.ts, 7, 85))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 9, 42))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 9, 60))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 9, 64))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 9, 42))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 9, 42))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 9, 42))
+
+const t4: 1[] = nestedUnionExtendsNumber({ fields: 1 });
+>t4 : Symbol(t4, Decl(genericCallStringLiteralUnionNested.ts, 10, 5))
+>nestedUnionExtendsNumber : Symbol(nestedUnionExtendsNumber, Decl(genericCallStringLiteralUnionNested.ts, 7, 85))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 10, 42))
+
+declare function nestedUnionExtendsLiteralsNumber<A extends 1 | 2>(a: { fields: A | A[] }): A[];
+>nestedUnionExtendsLiteralsNumber : Symbol(nestedUnionExtendsLiteralsNumber, Decl(genericCallStringLiteralUnionNested.ts, 10, 56))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 12, 50))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 12, 67))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 12, 71))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 12, 50))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 12, 50))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 12, 50))
+
+const t5: 2[] = nestedUnionExtendsLiteralsNumber({ fields: 2 });
+>t5 : Symbol(t5, Decl(genericCallStringLiteralUnionNested.ts, 13, 5))
+>nestedUnionExtendsLiteralsNumber : Symbol(nestedUnionExtendsLiteralsNumber, Decl(genericCallStringLiteralUnionNested.ts, 10, 56))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 13, 50))
+
+declare function nestedUnionIntersectionGenericNumber<A extends B & C, B extends number, C extends number>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+>nestedUnionIntersectionGenericNumber : Symbol(nestedUnionIntersectionGenericNumber, Decl(genericCallStringLiteralUnionNested.ts, 13, 64))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 15, 54))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 15, 70))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 15, 88))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 15, 70))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 15, 88))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 15, 107))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 15, 111))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 15, 54))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 15, 54))
+>b : Symbol(b, Decl(genericCallStringLiteralUnionNested.ts, 15, 130))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 15, 70))
+>c : Symbol(c, Decl(genericCallStringLiteralUnionNested.ts, 15, 138))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 15, 88))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 15, 54))
+
+const t6: 3[] = nestedUnionIntersectionGenericNumber({ fields: 3 }, [1, 3], [1, 3]);
+>t6 : Symbol(t6, Decl(genericCallStringLiteralUnionNested.ts, 16, 5))
+>nestedUnionIntersectionGenericNumber : Symbol(nestedUnionIntersectionGenericNumber, Decl(genericCallStringLiteralUnionNested.ts, 13, 64))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 16, 54))
+
+
+// The following are expected to fail because they don't have an extend string or extend number generic constraint.
+
+declare function nestedUnionPlain<A>(a: { fields: A | A[] }): A[];
+>nestedUnionPlain : Symbol(nestedUnionPlain, Decl(genericCallStringLiteralUnionNested.ts, 16, 84))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 21, 34))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 21, 37))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 21, 41))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 21, 34))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 21, 34))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 21, 34))
+
+const expectedFail1: "z"[] = nestedUnionPlain({ fields: "z" });
+>expectedFail1 : Symbol(expectedFail1, Decl(genericCallStringLiteralUnionNested.ts, 22, 5))
+>nestedUnionPlain : Symbol(nestedUnionPlain, Decl(genericCallStringLiteralUnionNested.ts, 16, 84))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 22, 47))
+
+const expectedFail2: 1[] = nestedUnionPlain({ fields: 1 });
+>expectedFail2 : Symbol(expectedFail2, Decl(genericCallStringLiteralUnionNested.ts, 23, 5))
+>nestedUnionPlain : Symbol(nestedUnionPlain, Decl(genericCallStringLiteralUnionNested.ts, 16, 84))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 23, 45))
+
+declare function nestedUnionIntersectionPlainGenerics<A extends B & C, B, C>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+>nestedUnionIntersectionPlainGenerics : Symbol(nestedUnionIntersectionPlainGenerics, Decl(genericCallStringLiteralUnionNested.ts, 23, 59))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 25, 54))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 25, 70))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 25, 73))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 25, 70))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 25, 73))
+>a : Symbol(a, Decl(genericCallStringLiteralUnionNested.ts, 25, 77))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 25, 81))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 25, 54))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 25, 54))
+>b : Symbol(b, Decl(genericCallStringLiteralUnionNested.ts, 25, 100))
+>B : Symbol(B, Decl(genericCallStringLiteralUnionNested.ts, 25, 70))
+>c : Symbol(c, Decl(genericCallStringLiteralUnionNested.ts, 25, 108))
+>C : Symbol(C, Decl(genericCallStringLiteralUnionNested.ts, 25, 73))
+>A : Symbol(A, Decl(genericCallStringLiteralUnionNested.ts, 25, 54))
+
+const expectedFail3: "z"[] = nestedUnionIntersectionPlainGenerics({ fields: "z" }, ["z", "y"], ["z", "y"]);
+>expectedFail3 : Symbol(expectedFail3, Decl(genericCallStringLiteralUnionNested.ts, 26, 5))
+>nestedUnionIntersectionPlainGenerics : Symbol(nestedUnionIntersectionPlainGenerics, Decl(genericCallStringLiteralUnionNested.ts, 23, 59))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 26, 67))
+
+const expectedFail4: 3[] = nestedUnionIntersectionPlainGenerics({ fields: 3 }, [1, 3], [1, 3]);
+>expectedFail4 : Symbol(expectedFail4, Decl(genericCallStringLiteralUnionNested.ts, 27, 5))
+>nestedUnionIntersectionPlainGenerics : Symbol(nestedUnionIntersectionPlainGenerics, Decl(genericCallStringLiteralUnionNested.ts, 23, 59))
+>fields : Symbol(fields, Decl(genericCallStringLiteralUnionNested.ts, 27, 65))
+
diff --git a/tests/baselines/reference/genericCallStringLiteralUnionNested.types b/tests/baselines/reference/genericCallStringLiteralUnionNested.types
new file mode 100644
index 0000000000000..ef8a341b40ced
--- /dev/null
+++ b/tests/baselines/reference/genericCallStringLiteralUnionNested.types
@@ -0,0 +1,206 @@
+=== tests/cases/compiler/genericCallStringLiteralUnionNested.ts ===
+declare function nestedUnionExtendsString<A extends string>(a: { fields: A | A[] }): Record<A, string>;
+>nestedUnionExtendsString : <A extends string>(a: { fields: A | A[]; }) => Record<A, string>
+>A : A
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>Record : Record<K, T>
+>A : A
+
+const t1: {z: string} = nestedUnionExtendsString({ fields: "z" });
+>t1 : { z: string; }
+>z : string
+>nestedUnionExtendsString({ fields: "z" }) : Record<"z", string>
+>nestedUnionExtendsString : <A extends string>(a: { fields: A | A[]; }) => Record<A, string>
+>{ fields: "z" } : { fields: "z"; }
+>fields : string
+>"z" : "z"
+
+declare function nestedUnionExtendsLiterals<A extends "z" | "y">(a: { fields: A | A[] }): A[];
+>nestedUnionExtendsLiterals : <A extends "z" | "y">(a: { fields: A | A[]; }) => A[]
+>A : A
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>A : A
+
+const t2: "z"[] = nestedUnionExtendsLiterals({ fields: "z" });
+>t2 : "z"[]
+>nestedUnionExtendsLiterals({ fields: "z" }) : "z"[]
+>nestedUnionExtendsLiterals : <A extends "z" | "y">(a: { fields: A | A[]; }) => A[]
+>{ fields: "z" } : { fields: "z"; }
+>fields : string
+>"z" : "z"
+
+declare function nestedGenericIntersection<A extends B & C, B extends string, C extends string>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+>nestedGenericIntersection : <A extends B & C, B extends string, C extends string>(a: { fields: A | A[]; }, b: B[], c: C[]) => A[]
+>A : A
+>B : B
+>C : C
+>B : B
+>C : C
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>b : B[]
+>B : B
+>c : C[]
+>C : C
+>A : A
+
+const t3: "z"[] = nestedGenericIntersection({ fields: "z" }, ["z", "y"], ["z", "y"]);
+>t3 : "z"[]
+>nestedGenericIntersection({ fields: "z" }, ["z", "y"], ["z", "y"]) : "z"[]
+>nestedGenericIntersection : <A extends B & C, B extends string, C extends string>(a: { fields: A | A[]; }, b: B[], c: C[]) => A[]
+>{ fields: "z" } : { fields: "z"; }
+>fields : string
+>"z" : "z"
+>["z", "y"] : ("z" | "y")[]
+>"z" : "z"
+>"y" : "y"
+>["z", "y"] : ("z" | "y")[]
+>"z" : "z"
+>"y" : "y"
+
+declare function nestedUnionExtendsNumber<A extends number>(a: { fields: A | A[] }): A[];
+>nestedUnionExtendsNumber : <A extends number>(a: { fields: A | A[]; }) => A[]
+>A : A
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>A : A
+
+const t4: 1[] = nestedUnionExtendsNumber({ fields: 1 });
+>t4 : 1[]
+>nestedUnionExtendsNumber({ fields: 1 }) : 1[]
+>nestedUnionExtendsNumber : <A extends number>(a: { fields: A | A[]; }) => A[]
+>{ fields: 1 } : { fields: 1; }
+>fields : number
+>1 : 1
+
+declare function nestedUnionExtendsLiteralsNumber<A extends 1 | 2>(a: { fields: A | A[] }): A[];
+>nestedUnionExtendsLiteralsNumber : <A extends 1 | 2>(a: { fields: A | A[]; }) => A[]
+>A : A
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>A : A
+
+const t5: 2[] = nestedUnionExtendsLiteralsNumber({ fields: 2 });
+>t5 : 2[]
+>nestedUnionExtendsLiteralsNumber({ fields: 2 }) : 2[]
+>nestedUnionExtendsLiteralsNumber : <A extends 1 | 2>(a: { fields: A | A[]; }) => A[]
+>{ fields: 2 } : { fields: 2; }
+>fields : number
+>2 : 2
+
+declare function nestedUnionIntersectionGenericNumber<A extends B & C, B extends number, C extends number>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+>nestedUnionIntersectionGenericNumber : <A extends B & C, B extends number, C extends number>(a: { fields: A | A[]; }, b: B[], c: C[]) => A[]
+>A : A
+>B : B
+>C : C
+>B : B
+>C : C
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>b : B[]
+>B : B
+>c : C[]
+>C : C
+>A : A
+
+const t6: 3[] = nestedUnionIntersectionGenericNumber({ fields: 3 }, [1, 3], [1, 3]);
+>t6 : 3[]
+>nestedUnionIntersectionGenericNumber({ fields: 3 }, [1, 3], [1, 3]) : 3[]
+>nestedUnionIntersectionGenericNumber : <A extends B & C, B extends number, C extends number>(a: { fields: A | A[]; }, b: B[], c: C[]) => A[]
+>{ fields: 3 } : { fields: 3; }
+>fields : number
+>3 : 3
+>[1, 3] : (1 | 3)[]
+>1 : 1
+>3 : 3
+>[1, 3] : (1 | 3)[]
+>1 : 1
+>3 : 3
+
+
+// The following are expected to fail because they don't have an extend string or extend number generic constraint.
+
+declare function nestedUnionPlain<A>(a: { fields: A | A[] }): A[];
+>nestedUnionPlain : <A>(a: { fields: A | A[]; }) => A[]
+>A : A
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>A : A
+
+const expectedFail1: "z"[] = nestedUnionPlain({ fields: "z" });
+>expectedFail1 : "z"[]
+>nestedUnionPlain({ fields: "z" }) : string[]
+>nestedUnionPlain : <A>(a: { fields: A | A[]; }) => A[]
+>{ fields: "z" } : { fields: string; }
+>fields : string
+>"z" : "z"
+
+const expectedFail2: 1[] = nestedUnionPlain({ fields: 1 });
+>expectedFail2 : 1[]
+>nestedUnionPlain({ fields: 1 }) : number[]
+>nestedUnionPlain : <A>(a: { fields: A | A[]; }) => A[]
+>{ fields: 1 } : { fields: number; }
+>fields : number
+>1 : 1
+
+declare function nestedUnionIntersectionPlainGenerics<A extends B & C, B, C>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+>nestedUnionIntersectionPlainGenerics : <A extends B & C, B, C>(a: { fields: A | A[]; }, b: B[], c: C[]) => A[]
+>A : A
+>B : B
+>C : C
+>B : B
+>C : C
+>a : { fields: A | A[]; }
+>fields : A | A[]
+>A : A
+>A : A
+>b : B[]
+>B : B
+>c : C[]
+>C : C
+>A : A
+
+const expectedFail3: "z"[] = nestedUnionIntersectionPlainGenerics({ fields: "z" }, ["z", "y"], ["z", "y"]);
+>expectedFail3 : "z"[]
+>nestedUnionIntersectionPlainGenerics({ fields: "z" }, ["z", "y"], ["z", "y"]) : string[]
+>nestedUnionIntersectionPlainGenerics : <A extends B & C, B, C>(a: { fields: A | A[]; }, b: B[], c: C[]) => A[]
+>{ fields: "z" } : { fields: string; }
+>fields : string
+>"z" : "z"
+>["z", "y"] : string[]
+>"z" : "z"
+>"y" : "y"
+>["z", "y"] : string[]
+>"z" : "z"
+>"y" : "y"
+
+const expectedFail4: 3[] = nestedUnionIntersectionPlainGenerics({ fields: 3 }, [1, 3], [1, 3]);
+>expectedFail4 : 3[]
+>nestedUnionIntersectionPlainGenerics({ fields: 3 }, [1, 3], [1, 3]) : number[]
+>nestedUnionIntersectionPlainGenerics : <A extends B & C, B, C>(a: { fields: A | A[]; }, b: B[], c: C[]) => A[]
+>{ fields: 3 } : { fields: number; }
+>fields : number
+>3 : 3
+>[1, 3] : number[]
+>1 : 1
+>3 : 3
+>[1, 3] : number[]
+>1 : 1
+>3 : 3
+
diff --git a/tests/cases/compiler/genericCallStringLiteralUnionNested.ts b/tests/cases/compiler/genericCallStringLiteralUnionNested.ts
new file mode 100644
index 0000000000000..81ed587294ed7
--- /dev/null
+++ b/tests/cases/compiler/genericCallStringLiteralUnionNested.ts
@@ -0,0 +1,28 @@
+declare function nestedUnionExtendsString<A extends string>(a: { fields: A | A[] }): Record<A, string>;
+const t1: {z: string} = nestedUnionExtendsString({ fields: "z" });
+
+declare function nestedUnionExtendsLiterals<A extends "z" | "y">(a: { fields: A | A[] }): A[];
+const t2: "z"[] = nestedUnionExtendsLiterals({ fields: "z" });
+
+declare function nestedGenericIntersection<A extends B & C, B extends string, C extends string>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+const t3: "z"[] = nestedGenericIntersection({ fields: "z" }, ["z", "y"], ["z", "y"]);
+
+declare function nestedUnionExtendsNumber<A extends number>(a: { fields: A | A[] }): A[];
+const t4: 1[] = nestedUnionExtendsNumber({ fields: 1 });
+
+declare function nestedUnionExtendsLiteralsNumber<A extends 1 | 2>(a: { fields: A | A[] }): A[];
+const t5: 2[] = nestedUnionExtendsLiteralsNumber({ fields: 2 });
+
+declare function nestedUnionIntersectionGenericNumber<A extends B & C, B extends number, C extends number>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+const t6: 3[] = nestedUnionIntersectionGenericNumber({ fields: 3 }, [1, 3], [1, 3]);
+
+
+// The following are expected to fail because they don't have an extend string or extend number generic constraint.
+
+declare function nestedUnionPlain<A>(a: { fields: A | A[] }): A[];
+const expectedFail1: "z"[] = nestedUnionPlain({ fields: "z" });
+const expectedFail2: 1[] = nestedUnionPlain({ fields: 1 });
+
+declare function nestedUnionIntersectionPlainGenerics<A extends B & C, B, C>(a: { fields: A | A[] }, b: B[], c: C[]): A[];
+const expectedFail3: "z"[] = nestedUnionIntersectionPlainGenerics({ fields: "z" }, ["z", "y"], ["z", "y"]);
+const expectedFail4: 3[] = nestedUnionIntersectionPlainGenerics({ fields: 3 }, [1, 3], [1, 3]);