diff --git a/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceVariable.java b/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceVariable.java
index 1443eeccbf19..f2fe9f87d2e1 100644
--- a/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceVariable.java
+++ b/java/java-psi-impl/src/com/intellij/psi/impl/source/resolve/graphInference/InferenceVariable.java
@@ -17,6 +17,7 @@ package com.intellij.psi.impl.source.resolve.graphInference;
 
 import com.intellij.psi.*;
 import com.intellij.psi.impl.light.LightTypeParameter;
+import com.intellij.psi.util.PsiTreeUtil;
 import com.intellij.psi.util.PsiUtil;
 import org.jetbrains.annotations.NotNull;
 
@@ -150,7 +151,12 @@ public class InferenceVariable extends LightTypeParameter {
 
   @Override
   public boolean isEquivalentTo(PsiElement another) {
-    return this == another || getDelegate() == another;
+    if (this == another) return true;
+
+    if (getDelegate() == another && myContext != null && !PsiTreeUtil.isAncestor(((PsiTypeParameter)another).getOwner(), myContext, false)) {
+      return true;
+    }
+    return false;
   }
 
   @Override
@@ -163,6 +169,11 @@ public class InferenceVariable extends LightTypeParameter {
     return getDelegate().toString();
   }
 
+  @Override
+  public PsiTypeParameterListOwner getOwner() {
+    return null;
+  }
+
   public PsiElement getCallContext() {
     return myContext;
   }
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/graphInference/RecursiveCallsWithNestedInference.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/graphInference/RecursiveCallsWithNestedInference.java
new file mode 100644
index 000000000000..d38d5588972d
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/lambda/graphInference/RecursiveCallsWithNestedInference.java
@@ -0,0 +1,35 @@
+import java.util.*;
+import java.util.stream.Collectors;
+
+class Test {
+  private <S> List<S> bar(List<S> list) {
+    return null;
+  }
+
+  private <E> List<List<E>> foo(List<E> l) {
+    foo(bar(l));
+    final List<List<Object>> perms = foo(null);
+    return null;
+  }
+
+  public static <E> List<E> pipe(E head, List<E> tail) {
+    List<E> newList = new ArrayList<>(tail);
+    newList.add(0, head);
+    return newList;
+  }
+  public static <E> List<E> subtract(List<E> list, E e) {
+    List<E> newList = new ArrayList<>(list);
+    newList.remove(e);
+    return newList;
+  }
+  public static <E> List<List<E>> perms(List<E> l) {
+    return l.isEmpty()
+           ? Collections.singletonList(Collections.emptyList())
+           : l.stream().flatMap(h -> perms(subtract(l, h)).stream()
+             .map(t -> pipe(h, t))).collect(Collectors.toList());
+  }
+
+  public static void main(String[] args) {
+    System.out.println(perms(Arrays.asList("a", "b", "c")));
+  }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java
index 2decfac0b681..5f049b61decb 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GraphInferenceHighlightingTest.java
@@ -319,6 +319,10 @@ public class GraphInferenceHighlightingTest extends LightDaemonAnalyzerTestCase
     doTest();
   }
 
+  public void testRecursiveCallsWithNestedInference() throws Exception {
+    doTest();
+  }
+
   private void doTest() throws Exception {
     doTest(false);
   }