diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 22ab44ee089..b3b6557c98b 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -3144,8 +3144,7 @@ namespace ts {
                 // Use contextual parameter type if one is available
                 let type: Type;
                 if (declaration.symbol.name === "this") {
-                    const thisParameter = getContextualThisParameter(func);
-                    type = thisParameter ? getTypeOfSymbol(thisParameter) : undefined;
+                    type = getContextualThisParameterType(func);
                 }
                 else {
                     type = getContextuallyTypedParameterType(<ParameterDeclaration>declaration);
@@ -4789,9 +4788,6 @@ namespace ts {
                 if (isJSConstructSignature) {
                     minArgumentCount--;
                 }
-                if (!thisParameter && isObjectLiteralMethod(declaration)) {
-                    thisParameter = getContextualThisParameter(declaration);
-                }
 
                 const classType = declaration.kind === SyntaxKind.Constructor ?
                     getDeclaredTypeOfClassOrInterface(getMergedSymbol((<ClassDeclaration>declaration.parent).symbol))
@@ -6101,9 +6097,24 @@ namespace ts {
         }
 
         function isContextSensitiveFunctionLikeDeclaration(node: FunctionLikeDeclaration) {
-            const areAllParametersUntyped = !forEach(node.parameters, p => p.type);
-            const isNullaryArrow = node.kind === SyntaxKind.ArrowFunction && !node.parameters.length;
-            return !node.typeParameters && areAllParametersUntyped && !isNullaryArrow;
+            // Functions with type parameters are not context sensitive.
+            if (node.typeParameters) {
+                return false;
+            }
+            // Functions with any parameters that lack type annotations are context sensitive.
+            if (forEach(node.parameters, p => !p.type)) {
+                return true;
+            }
+            // For arrow functions we now know we're not context sensitive.
+            if (node.kind === SyntaxKind.ArrowFunction) {
+                return false;
+            }
+            // If the first parameter is not an explicit 'this' parameter, then the function has
+            // an implicit 'this' parameter which is subject to contextual typing. Otherwise we
+            // know that all parameters (including 'this') have type annotations and nothing is
+            // subject to contextual typing.
+            const parameter = firstOrUndefined(node.parameters);
+            return !(parameter && parameter.name.kind === SyntaxKind.Identifier && (<Identifier>parameter.name).text === "this");
         }
 
         function isContextSensitiveFunctionOrObjectLiteralMethod(func: Node): func is FunctionExpression | ArrowFunction | MethodDeclaration {
@@ -9629,7 +9640,7 @@ namespace ts {
                     }
                 }
 
-                const thisType = getThisTypeOfDeclaration(container);
+                let thisType = getThisTypeOfDeclaration(container) || getContextualThisParameterType(container);
                 if (thisType) {
                     return thisType;
                 }
@@ -9869,14 +9880,16 @@ namespace ts {
             }
         }
 
-        function getContextualThisParameter(func: FunctionLikeDeclaration): Symbol {
+        function getContextualThisParameterType(func: FunctionLikeDeclaration): Type {
             if (isContextSensitiveFunctionOrObjectLiteralMethod(func) && func.kind !== SyntaxKind.ArrowFunction) {
                 const contextualSignature = getContextualSignature(func);
                 if (contextualSignature) {
-                    return contextualSignature.thisParameter;
+                    const thisParameter = contextualSignature.thisParameter;
+                    if (thisParameter) {
+                        return getTypeOfSymbol(thisParameter);
+                    }
                 }
             }
-
             return undefined;
         }
 
@@ -12840,21 +12853,36 @@ namespace ts {
 
         function assignContextualParameterTypes(signature: Signature, context: Signature, mapper: TypeMapper) {
             const len = signature.parameters.length - (signature.hasRestParameter ? 1 : 0);
-            if (context.thisParameter) {
-                if (!signature.thisParameter) {
-                    signature.thisParameter = createTransientSymbol(context.thisParameter, undefined);
+            if (isInferentialContext(mapper)) {
+                for (let i = 0; i < len; i++) {
+                    const declaration = <ParameterDeclaration>signature.parameters[i].valueDeclaration;
+                    if (declaration.type) {
+                        inferTypes(mapper.context, getTypeFromTypeNode(declaration.type), getTypeAtPosition(context, i));
+                    }
+                }
+            }
+            if (context.thisParameter) {
+                const parameter = signature.thisParameter;
+                if (!parameter || parameter.valueDeclaration && !(<ParameterDeclaration>parameter.valueDeclaration).type) {
+                    if (!parameter) {
+                        signature.thisParameter = createTransientSymbol(context.thisParameter, undefined);
+                    }
+                    assignTypeToParameterAndFixTypeParameters(signature.thisParameter, getTypeOfSymbol(context.thisParameter), mapper);
                 }
-                assignTypeToParameterAndFixTypeParameters(signature.thisParameter, getTypeOfSymbol(context.thisParameter), mapper);
             }
             for (let i = 0; i < len; i++) {
                 const parameter = signature.parameters[i];
-                const contextualParameterType = getTypeAtPosition(context, i);
-                assignTypeToParameterAndFixTypeParameters(parameter, contextualParameterType, mapper);
+                if (!(<ParameterDeclaration>parameter.valueDeclaration).type) {
+                    const contextualParameterType = getTypeAtPosition(context, i);
+                    assignTypeToParameterAndFixTypeParameters(parameter, contextualParameterType, mapper);
+                }
             }
             if (signature.hasRestParameter && isRestParameterIndex(context, signature.parameters.length - 1)) {
                 const parameter = lastOrUndefined(signature.parameters);
-                const contextualParameterType = getTypeOfSymbol(lastOrUndefined(context.parameters));
-                assignTypeToParameterAndFixTypeParameters(parameter, contextualParameterType, mapper);
+                if (!(<ParameterDeclaration>parameter.valueDeclaration).type) {
+                    const contextualParameterType = getTypeOfSymbol(lastOrUndefined(context.parameters));
+                    assignTypeToParameterAndFixTypeParameters(parameter, contextualParameterType, mapper);
+                }
             }
         }