diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index d75ae6a8cdc..11b36ae80fb 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -6519,6 +6519,23 @@ namespace ts {
 
         function instantiateType(type: Type, mapper: TypeMapper): Type {
             if (type && mapper !== identityMapper) {
+                // If we are instantiating a type that has a top-level type alias, obtain the instantiation through
+                // the type alias instead in order to share instantiations for the same type arguments. This can
+                // dramatically reduce the number of structurally identical types we generate. Note that we can only
+                // perform this optimization for top-level type aliases. Consider:
+                //
+                //   function f1<T>(x: T) {
+                //     type Foo<X> = { x: X, t: T };
+                //     let obj: Foo<T> = { x: x };
+                //     return obj;
+                //   }
+                //   function f2<U>(x: U) { return f1(x); }
+                //   let z = f2(42);
+                //
+                // Above, the declaration of f2 has an inferred return type that is an instantiation of f1's Foo<X>
+                // equivalent to { x: U, t: U }. When instantiating this return type, we can't go back to Foo<X>'s
+                // cache because all cached instantiations are of the form { x: ???, t: T }, i.e. they have not been
+                // instantiated for T. Instead, we need to further instantiate the { x: U, t: U } form.
                 if (type.aliasSymbol && isTopLevelTypeAlias(type.aliasSymbol)) {
                     if (type.aliasTypeArguments) {
                         return getTypeAliasInstantiation(type.aliasSymbol, instantiateTypes(type.aliasTypeArguments, mapper));