diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 9c23c97a2a6..41717d4f0f7 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -2648,6 +2648,9 @@ namespace ts {
                     const falseTypeNode = typeToTypeNodeHelper((<ConditionalType>type).falseType, context);
                     return createConditionalTypeNode(checkTypeNode, extendsTypeNode, trueTypeNode, falseTypeNode);
                 }
+                if (type.flags & TypeFlags.Substitution) {
+                    return typeToTypeNodeHelper((<SubstitutionType>type).typeParameter, context);
+                }
 
                 Debug.fail("Should be unreachable.");
 
@@ -3431,6 +3434,9 @@ namespace ts {
                         writeSpace(writer);
                         writeType((<ConditionalType>type).falseType, TypeFormatFlags.InElementType);
                     }
+                    else if (type.flags & TypeFlags.Substitution) {
+                        writeType((<SubstitutionType>type).typeParameter, TypeFormatFlags.None);
+                    }
                     else {
                         // Should never get here
                         // { ... }
@@ -6480,6 +6486,9 @@ namespace ts {
                 if (t.flags & TypeFlags.Conditional) {
                     return getBaseConstraint(getConstraintOfConditionalType(<ConditionalType>t));
                 }
+                if (t.flags & TypeFlags.Substitution) {
+                    return getBaseConstraint((<SubstitutionType>t).substitute);
+                }
                 if (isGenericMappedType(t)) {
                     return emptyObjectType;
                 }
@@ -7458,7 +7467,7 @@ namespace ts {
                     error(node, Diagnostics.Type_0_is_not_generic, symbolToString(symbol));
                     return unknownType;
                 }
-                return res;
+                return res.flags & TypeFlags.TypeParameter ? getConstrainedTypeParameter(<TypeParameter>res, node) : res;
             }
 
             if (!(symbol.flags & SymbolFlags.Value && isJSDocTypeReference(node))) {
@@ -7497,6 +7506,26 @@ namespace ts {
             }
         }
 
+        function getConstrainedTypeParameter(typeParameter: TypeParameter, node: Node) {
+            let constraints: Type[];
+            while (isTypeNode(node)) {
+                const parent = node.parent;
+                if (parent.kind === SyntaxKind.ConditionalType && node === (<ConditionalTypeNode>parent).trueType) {
+                    if (getTypeFromTypeNode((<ConditionalTypeNode>parent).checkType) === typeParameter) {
+                        constraints = append(constraints, getTypeFromTypeNode((<ConditionalTypeNode>parent).extendsType));
+                    }
+                }
+                node = parent;
+            }
+            if (constraints) {
+                const result = <SubstitutionType>createType(TypeFlags.Substitution);
+                result.typeParameter = typeParameter;
+                result.substitute = getIntersectionType(append(constraints, typeParameter));
+                return result;
+            }
+            return typeParameter;
+        }
+
         function isJSDocTypeReference(node: TypeReferenceType): node is TypeReferenceNode {
             return node.flags & NodeFlags.JSDoc && node.kind === SyntaxKind.TypeReference;
         }
@@ -8395,13 +8424,14 @@ namespace ts {
                 return instantiateType(falseType, mapper);
             }
             // Otherwise return a deferred conditional type
+            const resCheckType = checkType.flags & TypeFlags.Substitution ? (<SubstitutionType>checkType).typeParameter : checkType;
             const resTrueType = instantiateType(trueType, mapper);
             const resFalseType = instantiateType(falseType, mapper);
             const resTypeArguments = instantiateTypes(aliasTypeArguments, mapper);
-            const id = checkType.id + "," + extendsType.id + "," + resTrueType.id + "," + resFalseType.id;
+            const id = resCheckType.id + "," + extendsType.id + "," + resTrueType.id + "," + resFalseType.id;
             let type = conditionalTypes.get(id);
             if (!type) {
-                conditionalTypes.set(id, type = createConditionalType(checkType, extendsType, resTrueType, resFalseType, aliasSymbol, resTypeArguments));
+                conditionalTypes.set(id, type = createConditionalType(resCheckType, extendsType, resTrueType, resFalseType, aliasSymbol, resTypeArguments));
             }
             return type;
         }
@@ -9034,6 +9064,9 @@ namespace ts {
                 if (type.flags & TypeFlags.Conditional) {
                     return getConditionalTypeInstantiation(<ConditionalType>type, mapper);
                 }
+                if (type.flags & TypeFlags.Substitution) {
+                    return instantiateType((<SubstitutionType>type).typeParameter, mapper);
+                }
             }
             return type;
         }
@@ -9619,6 +9652,13 @@ namespace ts {
                 if (target.flags & TypeFlags.StringOrNumberLiteral && target.flags & TypeFlags.FreshLiteral) {
                     target = (<LiteralType>target).regularType;
                 }
+                if (source.flags & TypeFlags.Substitution) {
+                    source = (<SubstitutionType>source).substitute;
+                }
+                if (target.flags & TypeFlags.Substitution) {
+                    target = (<SubstitutionType>target).typeParameter;
+                }
+
                 // both types are the same - covers 'they are the same primitive type or both are Any' or the same type parameter cases
                 if (source === target) return Ternary.True;
 
diff --git a/src/compiler/types.ts b/src/compiler/types.ts
index 5acee864e1b..f426370002b 100644
--- a/src/compiler/types.ts
+++ b/src/compiler/types.ts
@@ -3401,15 +3401,16 @@ namespace ts {
         Index                   = 1 << 19,  // keyof T
         IndexedAccess           = 1 << 20,  // T[K]
         Conditional             = 1 << 21,  // T extends U ? X : Y
+        Substitution            = 1 << 22,  // Type parameter substitution
         /* @internal */
-        FreshLiteral            = 1 << 22,  // Fresh literal or unique type
+        FreshLiteral            = 1 << 23,  // Fresh literal or unique type
         /* @internal */
-        ContainsWideningType    = 1 << 23,  // Type is or contains undefined or null widening type
+        ContainsWideningType    = 1 << 24,  // Type is or contains undefined or null widening type
         /* @internal */
-        ContainsObjectLiteral   = 1 << 24,  // Type is or contains object literal type
+        ContainsObjectLiteral   = 1 << 25,  // Type is or contains object literal type
         /* @internal */
-        ContainsAnyFunctionType = 1 << 25,  // Type is or contains the anyFunctionType
-        NonPrimitive            = 1 << 26,  // intrinsic object type
+        ContainsAnyFunctionType = 1 << 26,  // Type is or contains the anyFunctionType
+        NonPrimitive            = 1 << 27,  // intrinsic object type
         /* @internal */
         GenericMappedType       = 1 << 29,  // Flag used by maybeTypeOfKind
 
@@ -3435,7 +3436,7 @@ namespace ts {
         UnionOrIntersection = Union | Intersection,
         StructuredType = Object | Union | Intersection,
         TypeVariable = TypeParameter | IndexedAccess,
-        InstantiableNonPrimitive = TypeVariable | Conditional,
+        InstantiableNonPrimitive = TypeVariable | Conditional | Substitution,
         InstantiablePrimitive = Index,
         Instantiable = InstantiableNonPrimitive | InstantiablePrimitive,
         StructuredOrInstantiable = StructuredType | Instantiable,
@@ -3693,6 +3694,7 @@ namespace ts {
         type: InstantiableType | UnionOrIntersectionType;
     }
 
+    // T extends U ? X : Y (TypeFlags.Conditional)
     export interface ConditionalType extends InstantiableType {
         checkType: Type;
         extendsType: Type;
@@ -3700,6 +3702,12 @@ namespace ts {
         falseType: Type;
     }
 
+    // Type parameter substitution (TypeFlags.Substitution)
+    export interface SubstitutionType extends InstantiableType {
+        typeParameter: TypeParameter;  // Target type parameter
+        substitute: Type;              // Type to substitute for type parameter
+    }
+
     export const enum SignatureKind {
         Call,
         Construct,