diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index ef428f26de9..8fef558968e 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -12771,7 +12771,10 @@ namespace ts {
             if (!contextualSignature) {
                 reportErrorsFromWidening(func, type);
             }
-            if (isUnitType(type) && !(contextualSignature && isLiteralContextualType(getReturnTypeOfSignature(contextualSignature)))) {
+            if (isUnitType(type) &&
+                !(contextualSignature &&
+                    isLiteralContextualType(
+                        contextualSignature === getSignatureFromDeclaration(func) ? type : getReturnTypeOfSignature(contextualSignature)))) {
                 type = getWidenedLiteralType(type);
             }
 
diff --git a/tests/baselines/reference/selfReference.js b/tests/baselines/reference/selfReference.js
new file mode 100644
index 00000000000..2bb8ce9d9d0
--- /dev/null
+++ b/tests/baselines/reference/selfReference.js
@@ -0,0 +1,6 @@
+//// [selfReference.ts]
+declare function asFunction<T>(value: T): () => T;
+asFunction(() => { return 1; });
+
+//// [selfReference.js]
+asFunction(function () { return 1; });
diff --git a/tests/baselines/reference/selfReference.symbols b/tests/baselines/reference/selfReference.symbols
new file mode 100644
index 00000000000..dc618eaae17
--- /dev/null
+++ b/tests/baselines/reference/selfReference.symbols
@@ -0,0 +1,11 @@
+=== tests/cases/compiler/selfReference.ts ===
+declare function asFunction<T>(value: T): () => T;
+>asFunction : Symbol(asFunction, Decl(selfReference.ts, 0, 0))
+>T : Symbol(T, Decl(selfReference.ts, 0, 28))
+>value : Symbol(value, Decl(selfReference.ts, 0, 31))
+>T : Symbol(T, Decl(selfReference.ts, 0, 28))
+>T : Symbol(T, Decl(selfReference.ts, 0, 28))
+
+asFunction(() => { return 1; });
+>asFunction : Symbol(asFunction, Decl(selfReference.ts, 0, 0))
+
diff --git a/tests/baselines/reference/selfReference.types b/tests/baselines/reference/selfReference.types
new file mode 100644
index 00000000000..eed1da72387
--- /dev/null
+++ b/tests/baselines/reference/selfReference.types
@@ -0,0 +1,14 @@
+=== tests/cases/compiler/selfReference.ts ===
+declare function asFunction<T>(value: T): () => T;
+>asFunction : <T>(value: T) => () => T
+>T : T
+>value : T
+>T : T
+>T : T
+
+asFunction(() => { return 1; });
+>asFunction(() => { return 1; }) : () => () => 1
+>asFunction : <T>(value: T) => () => T
+>() => { return 1; } : () => 1
+>1 : 1
+
diff --git a/tests/cases/compiler/selfReference.ts b/tests/cases/compiler/selfReference.ts
new file mode 100644
index 00000000000..708acc42e02
--- /dev/null
+++ b/tests/cases/compiler/selfReference.ts
@@ -0,0 +1,3 @@
+// @noImplicitAny: true
+declare function asFunction<T>(value: T): () => T;
+asFunction(() => { return 1; });
\ No newline at end of file