diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 4cd242f264b1a..9347d53fd5056 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -1102,6 +1102,7 @@ const enum IterationUse {
     SpreadFlag = 1 << 5,
     DestructuringFlag = 1 << 6,
     PossiblyOutOfBounds = 1 << 7,
+    ReturnType = 1 << 8,
 
     // Spread, Destructuring, Array element assignment
     Element = AllowsSyncIterablesFlag,
@@ -1114,8 +1115,8 @@ const enum IterationUse {
     YieldStar = AllowsSyncIterablesFlag | YieldStarFlag,
     AsyncYieldStar = AllowsSyncIterablesFlag | AllowsAsyncIterablesFlag | YieldStarFlag,
 
-    GeneratorReturnType = AllowsSyncIterablesFlag,
-    AsyncGeneratorReturnType = AllowsAsyncIterablesFlag,
+    GeneratorReturnType = AllowsSyncIterablesFlag | ReturnType,
+    AsyncGeneratorReturnType = AllowsAsyncIterablesFlag | ReturnType,
 }
 
 const enum IterationTypeKind {
@@ -42859,8 +42860,13 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
         }
 
         const cacheKey = use & IterationUse.AllowsAsyncIterablesFlag ? "iterationTypesOfAsyncIterable" : "iterationTypesOfIterable";
-        const cachedTypes = getCachedIterationTypes(type, cacheKey);
-        if (cachedTypes) return cachedTypes === noIterationTypes ? undefined : cachedTypes;
+        const isReturnType = use & IterationUse.ReturnType;
+        if (!isReturnType) {
+            // Do not use the cached value when collecting the iteration types of a return type as they may
+            // not consider all constituents.
+            const cachedTypes = getCachedIterationTypes(type, cacheKey);
+            if (cachedTypes) return cachedTypes === noIterationTypes ? undefined : cachedTypes;
+        }
 
         let allIterationTypes: IterationTypes[] | undefined;
         for (const constituent of (type as UnionType).types) {
@@ -42873,8 +42879,11 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
                         addRelatedInfo(rootDiag, ...errorOutputContainer.errors);
                     }
                 }
-                setCachedIterationTypes(type, cacheKey, noIterationTypes);
-                return undefined;
+                if (!isReturnType) {
+                    // Do not exit early or cache the iteration types of a return type as they consider all constituents.
+                    setCachedIterationTypes(type, cacheKey, noIterationTypes);
+                    return undefined;
+                }
             }
             else if (errorOutputContainer?.errors?.length) {
                 for (const diag of errorOutputContainer.errors) {
@@ -42886,7 +42895,11 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
         }
 
         const iterationTypes = allIterationTypes ? combineIterationTypes(allIterationTypes) : noIterationTypes;
-        setCachedIterationTypes(type, cacheKey, iterationTypes);
+        if (!isReturnType) {
+            // Do not cache the iteration types of a return type as they consider all constituents. Other usages
+            // will exit early when a non-iterable union member is found.
+            setCachedIterationTypes(type, cacheKey, iterationTypes);
+        }
         return iterationTypes === noIterationTypes ? undefined : iterationTypes;
     }
 
diff --git a/tests/baselines/reference/contextualTypeOnYield1.types b/tests/baselines/reference/contextualTypeOnYield1.types
index 870328bf65173..abca3a3176923 100644
--- a/tests/baselines/reference/contextualTypeOnYield1.types
+++ b/tests/baselines/reference/contextualTypeOnYield1.types
@@ -7,10 +7,10 @@ type FuncOrGeneratorFunc = () => (number | Generator<(arg: number) => void, any,
 
 const f: FuncOrGeneratorFunc = function*() {
 >f : FuncOrGeneratorFunc
->function*() {  yield (num) => console.log(num); // `num` should be inferred to have type `number`.} : () => Generator<(num: number) => void, void, unknown>
+>function*() {  yield (num) => console.log(num); // `num` should be inferred to have type `number`.} : () => Generator<(num: number) => void, void, void>
 
   yield (num) => console.log(num); // `num` should be inferred to have type `number`.
->yield (num) => console.log(num) : any
+>yield (num) => console.log(num) : void
 >(num) => console.log(num) : (num: number) => void
 >num : number
 >console.log(num) : void
diff --git a/tests/baselines/reference/contextualTypeOnYield2.types b/tests/baselines/reference/contextualTypeOnYield2.types
index 36299f95f2b54..0d54bdf7dd790 100644
--- a/tests/baselines/reference/contextualTypeOnYield2.types
+++ b/tests/baselines/reference/contextualTypeOnYield2.types
@@ -7,7 +7,7 @@ type OrGen = () => (number | Generator<string, (arg: number) => void, undefined>
 
 const g: OrGen = function* () {
 >g : OrGen
->function* () {    return (num) => console.log(num);} : () => Generator<never, (num: number) => void, unknown>
+>function* () {    return (num) => console.log(num);} : () => Generator<never, (num: number) => void, undefined>
 
     return (num) => console.log(num);
 >(num) => console.log(num) : (num: number) => void
diff --git a/tests/baselines/reference/generatorYieldContextualType.types b/tests/baselines/reference/generatorYieldContextualType.types
index 84bac6e374eb5..e925716d97358 100644
--- a/tests/baselines/reference/generatorYieldContextualType.types
+++ b/tests/baselines/reference/generatorYieldContextualType.types
@@ -27,11 +27,11 @@ declare function f2<T, R, S>(gen: () => Generator<R, T, S> | AsyncGenerator<R, T
 f2<0, 0, 1>(async function* () {
 >f2<0, 0, 1>(async function* () {	const a = yield 0;	return 0;}) : void
 >f2 : <T, R, S>(gen: () => Generator<R, T, S> | AsyncGenerator<R, T, S>) => void
->async function* () {	const a = yield 0;	return 0;} : () => AsyncGenerator<0, 0, 1 | undefined>
+>async function* () {	const a = yield 0;	return 0;} : () => AsyncGenerator<0, 0, 1>
 
 	const a = yield 0;
->a : 1 | undefined
->yield 0 : 1 | undefined
+>a : 1
+>yield 0 : 1
 >0 : 0
 
 	return 0;
diff --git a/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.js b/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.js
new file mode 100644
index 0000000000000..97279e3d8a61f
--- /dev/null
+++ b/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.js
@@ -0,0 +1,73 @@
+//// [tests/cases/compiler/typeOfYieldWithUnionInContextualReturnType.ts] ////
+
+//// [typeOfYieldWithUnionInContextualReturnType.ts]
+// https://github.com/microsoft/TypeScript/issues/42439
+
+type SyncSequenceFactory = () => Generator<string, string, string>;
+
+type AsyncSequenceFactory = () => AsyncGenerator<string, string, string>;
+
+type SequenceFactory = SyncSequenceFactory | AsyncSequenceFactory
+
+const syncFactory: SyncSequenceFactory = function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
+
+const asyncFactory: AsyncSequenceFactory = async function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
+
+const looserSyncFactory: SequenceFactory = function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
+
+const looserAsyncFactory: SequenceFactory = async function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
+
+//// [typeOfYieldWithUnionInContextualReturnType.js]
+// https://github.com/microsoft/TypeScript/issues/42439
+const syncFactory = function* () {
+    let name = "";
+    while (!name) {
+        name = yield "What is your name?";
+    }
+    return `That's the end of the game, ${name}`;
+};
+const asyncFactory = async function* () {
+    let name = "";
+    while (!name) {
+        name = yield "What is your name?";
+    }
+    return `That's the end of the game, ${name}`;
+};
+const looserSyncFactory = function* () {
+    let name = "";
+    while (!name) {
+        name = yield "What is your name?";
+    }
+    return `That's the end of the game, ${name}`;
+};
+const looserAsyncFactory = async function* () {
+    let name = "";
+    while (!name) {
+        name = yield "What is your name?";
+    }
+    return `That's the end of the game, ${name}`;
+};
diff --git a/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.symbols b/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.symbols
new file mode 100644
index 0000000000000..0f02ce9e15785
--- /dev/null
+++ b/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.symbols
@@ -0,0 +1,85 @@
+//// [tests/cases/compiler/typeOfYieldWithUnionInContextualReturnType.ts] ////
+
+=== typeOfYieldWithUnionInContextualReturnType.ts ===
+// https://github.com/microsoft/TypeScript/issues/42439
+
+type SyncSequenceFactory = () => Generator<string, string, string>;
+>SyncSequenceFactory : Symbol(SyncSequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 0, 0))
+>Generator : Symbol(Generator, Decl(lib.es2015.generator.d.ts, --, --))
+
+type AsyncSequenceFactory = () => AsyncGenerator<string, string, string>;
+>AsyncSequenceFactory : Symbol(AsyncSequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 2, 67))
+>AsyncGenerator : Symbol(AsyncGenerator, Decl(lib.es2018.asyncgenerator.d.ts, --, --))
+
+type SequenceFactory = SyncSequenceFactory | AsyncSequenceFactory
+>SequenceFactory : Symbol(SequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 4, 73))
+>SyncSequenceFactory : Symbol(SyncSequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 0, 0))
+>AsyncSequenceFactory : Symbol(AsyncSequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 2, 67))
+
+const syncFactory: SyncSequenceFactory = function* (){
+>syncFactory : Symbol(syncFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 8, 5))
+>SyncSequenceFactory : Symbol(SyncSequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 0, 0))
+
+  let name = "";
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 9, 5))
+
+  while(!name){
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 9, 5))
+
+    name = yield "What is your name?"
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 9, 5))
+  }
+  return `That's the end of the game, ${name}`
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 9, 5))
+} 
+
+const asyncFactory: AsyncSequenceFactory = async function* (){
+>asyncFactory : Symbol(asyncFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 16, 5))
+>AsyncSequenceFactory : Symbol(AsyncSequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 2, 67))
+
+  let name = "";
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 17, 5))
+
+  while(!name){
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 17, 5))
+
+    name = yield "What is your name?"
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 17, 5))
+  }
+  return `That's the end of the game, ${name}`
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 17, 5))
+} 
+
+const looserSyncFactory: SequenceFactory = function* (){
+>looserSyncFactory : Symbol(looserSyncFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 24, 5))
+>SequenceFactory : Symbol(SequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 4, 73))
+
+  let name = "";
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 25, 5))
+
+  while(!name){
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 25, 5))
+
+    name = yield "What is your name?"
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 25, 5))
+  }
+  return `That's the end of the game, ${name}`
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 25, 5))
+} 
+
+const looserAsyncFactory: SequenceFactory = async function* (){
+>looserAsyncFactory : Symbol(looserAsyncFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 32, 5))
+>SequenceFactory : Symbol(SequenceFactory, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 4, 73))
+
+  let name = "";
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 33, 5))
+
+  while(!name){
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 33, 5))
+
+    name = yield "What is your name?"
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 33, 5))
+  }
+  return `That's the end of the game, ${name}`
+>name : Symbol(name, Decl(typeOfYieldWithUnionInContextualReturnType.ts, 33, 5))
+} 
diff --git a/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.types b/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.types
new file mode 100644
index 0000000000000..3740eb7815dd6
--- /dev/null
+++ b/tests/baselines/reference/typeOfYieldWithUnionInContextualReturnType.types
@@ -0,0 +1,105 @@
+//// [tests/cases/compiler/typeOfYieldWithUnionInContextualReturnType.ts] ////
+
+=== typeOfYieldWithUnionInContextualReturnType.ts ===
+// https://github.com/microsoft/TypeScript/issues/42439
+
+type SyncSequenceFactory = () => Generator<string, string, string>;
+>SyncSequenceFactory : () => Generator<string, string, string>
+
+type AsyncSequenceFactory = () => AsyncGenerator<string, string, string>;
+>AsyncSequenceFactory : () => AsyncGenerator<string, string, string>
+
+type SequenceFactory = SyncSequenceFactory | AsyncSequenceFactory
+>SequenceFactory : SyncSequenceFactory | AsyncSequenceFactory
+
+const syncFactory: SyncSequenceFactory = function* (){
+>syncFactory : SyncSequenceFactory
+>function* (){  let name = "";  while(!name){    name = yield "What is your name?"  }  return `That's the end of the game, ${name}`} : () => Generator<string, string, string>
+
+  let name = "";
+>name : string
+>"" : ""
+
+  while(!name){
+>!name : boolean
+>name : string
+
+    name = yield "What is your name?"
+>name = yield "What is your name?" : string
+>name : string
+>yield "What is your name?" : string
+>"What is your name?" : "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+>`That's the end of the game, ${name}` : string
+>name : string
+} 
+
+const asyncFactory: AsyncSequenceFactory = async function* (){
+>asyncFactory : AsyncSequenceFactory
+>async function* (){  let name = "";  while(!name){    name = yield "What is your name?"  }  return `That's the end of the game, ${name}`} : () => AsyncGenerator<string, string, string>
+
+  let name = "";
+>name : string
+>"" : ""
+
+  while(!name){
+>!name : boolean
+>name : string
+
+    name = yield "What is your name?"
+>name = yield "What is your name?" : string
+>name : string
+>yield "What is your name?" : string
+>"What is your name?" : "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+>`That's the end of the game, ${name}` : string
+>name : string
+} 
+
+const looserSyncFactory: SequenceFactory = function* (){
+>looserSyncFactory : SequenceFactory
+>function* (){  let name = "";  while(!name){    name = yield "What is your name?"  }  return `That's the end of the game, ${name}`} : () => Generator<string, string, string>
+
+  let name = "";
+>name : string
+>"" : ""
+
+  while(!name){
+>!name : boolean
+>name : string
+
+    name = yield "What is your name?"
+>name = yield "What is your name?" : string
+>name : string
+>yield "What is your name?" : string
+>"What is your name?" : "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+>`That's the end of the game, ${name}` : string
+>name : string
+} 
+
+const looserAsyncFactory: SequenceFactory = async function* (){
+>looserAsyncFactory : SequenceFactory
+>async function* (){  let name = "";  while(!name){    name = yield "What is your name?"  }  return `That's the end of the game, ${name}`} : () => AsyncGenerator<string, string, string>
+
+  let name = "";
+>name : string
+>"" : ""
+
+  while(!name){
+>!name : boolean
+>name : string
+
+    name = yield "What is your name?"
+>name = yield "What is your name?" : string
+>name : string
+>yield "What is your name?" : string
+>"What is your name?" : "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+>`That's the end of the game, ${name}` : string
+>name : string
+} 
diff --git a/tests/cases/compiler/typeOfYieldWithUnionInContextualReturnType.ts b/tests/cases/compiler/typeOfYieldWithUnionInContextualReturnType.ts
new file mode 100644
index 0000000000000..f444a5461a46b
--- /dev/null
+++ b/tests/cases/compiler/typeOfYieldWithUnionInContextualReturnType.ts
@@ -0,0 +1,40 @@
+// @target: esnext
+// https://github.com/microsoft/TypeScript/issues/42439
+
+type SyncSequenceFactory = () => Generator<string, string, string>;
+
+type AsyncSequenceFactory = () => AsyncGenerator<string, string, string>;
+
+type SequenceFactory = SyncSequenceFactory | AsyncSequenceFactory
+
+const syncFactory: SyncSequenceFactory = function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
+
+const asyncFactory: AsyncSequenceFactory = async function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
+
+const looserSyncFactory: SequenceFactory = function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
+
+const looserAsyncFactory: SequenceFactory = async function* (){
+  let name = "";
+  while(!name){
+    name = yield "What is your name?"
+  }
+  return `That's the end of the game, ${name}`
+} 
\ No newline at end of file