diff --git a/tests/cases/compiler/unionReductionMutualSubtypes.ts b/tests/cases/compiler/unionReductionMutualSubtypes.ts
new file mode 100644
index 00000000000..aa1c1320a0d
--- /dev/null
+++ b/tests/cases/compiler/unionReductionMutualSubtypes.ts
@@ -0,0 +1,15 @@
+// @strict: true
+
+// Repro from #35414
+
+interface ReturnVal {
+    something(): void;
+}
+
+const k: ReturnVal = { something() { } }
+
+declare const val: ReturnVal;
+function run(options: { something?(b?: string): void }) {
+    const something = options.something ?? val.something;
+    something('');
+}