diff --git a/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceSession.java b/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceSession.java
index ba58f4e48a3d..1addc14dfc38 100644
--- a/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceSession.java
+++ b/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceSession.java
@@ -1984,8 +1984,8 @@ public class InferenceSession {
             final PsiSubstitutor sSubstitutor = TypeConversionUtil.getSuperClassSubstitutor(gClass, (PsiClassType)sBound);
             final PsiSubstitutor tSubstitutor = TypeConversionUtil.getSuperClassSubstitutor(gClass, (PsiClassType)tBound);
             for (PsiTypeParameter typeParameter : gClass.getTypeParameters()) {
-              final PsiType sType = sSubstitutor.substitute(typeParameter);
-              final PsiType tType = tSubstitutor.substitute(typeParameter);
+              final PsiType sType = sSubstitutor.substituteWithBoundsPromotion(typeParameter);
+              final PsiType tType = tSubstitutor.substituteWithBoundsPromotion(typeParameter);
               final Pair<PsiType, PsiType> typePair = Pair.create(sType, tType);
               if (!processor.process(typePair)) {
                 return gClass;
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/graphInference/ValidIntersectionTypeWithCapturedBounds.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/graphInference/ValidIntersectionTypeWithCapturedBounds.java
new file mode 100644
index 000000000000..d66c2f810a19
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/graphInference/ValidIntersectionTypeWithCapturedBounds.java
@@ -0,0 +1,11 @@
+
+abstract class Bug {
+    {
+        D<?> _m = m();
+    }
+
+    abstract <J extends C<? extends String>> J m();
+}
+
+abstract class C<T extends String> { }
+abstract class D<T extends String> extends C<T> { }
diff --git a/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java b/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java
index 2c09c1102be5..645a9442f600 100644
--- a/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java
@@ -115,6 +115,7 @@ public class GraphInferenceHighlightingTest extends LightDaemonAnalyzerTestCase
   public void testPullUncheckedWarningNotionThroughNestedCalls() { doTest(); }
   public void testIDEA149774() { doTest(); }
   public void testDisjunctionTypes() { doTest(); }
+  public void testValidIntersectionTypeWithCapturedBounds() { doTest(); }
   public void testPushErasedStateToArguments() { doTest(); }
   public void testStopAtStandaloneConditional() { doTest(); }
   public void testTransitiveInferenceVariableDependencies() { doTest(); }