diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index e83137b87e8..4558a284f32 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -20857,7 +20857,9 @@ namespace ts {
                      // Inferences made from return types have lower priority than all other inferences.
                     inferTypes(context.inferences, inferenceSourceType, inferenceTargetType, InferencePriority.ReturnType);
                     // Create a type mapper for instantiating generic contextual types using the inferences made
-                    // from the return type.
+                    // from the return type. We need a separate inference pass here because (a) instantiation of
+                    // the source type uses the outer context's return mapper (which excludes inferences made from
+                    // outer arguments), and (b) we don't want any further inferences going into this context.
                     const returnContext = createInferenceContext(signature.typeParameters!, signature, context.flags);
                     const returnSourceType = instantiateType(contextualType, outerContext && outerContext.returnMapper);
                     inferTypes(returnContext.inferences, returnSourceType, inferenceTargetType);