diff --git a/src/fsharp/MethodCalls.fs b/src/fsharp/MethodCalls.fs
index 07bd84c44f5..94fbd7ff60f 100644
--- a/src/fsharp/MethodCalls.fs
+++ b/src/fsharp/MethodCalls.fs
@@ -214,11 +214,10 @@ let AdjustCalledArgTypeForOptionals (g: TcGlobals) enforceNullableOptionalsKnown
                     calledArgTy
                 // If at the beginning of inference then use a type variable.
                 else 
-                    let destTy = destNullableTy g calledArgTy
                     match calledArg.OptArgInfo with
-                    // Use the type variable from the Nullable if called arg is not optional.
-                    | NotOptional when isTyparTy g destTy ->
-                        destTy
+                    // If inference has not solved the kind of Nullable on the called arg and is not optional then use this.
+                    | NotOptional when isTyparTy g (destNullableTy g calledArgTy) ->
+                        calledArgTy
                     | _ ->
                         let compgenId = mkSynId range0 unassignedTyparName
                         mkTyparTy (Construct.NewTypar (TyparKind.Type, TyparRigidity.Flexible, SynTypar(compgenId, TyparStaticReq.None, true), false, TyparDynamicReq.No, [], false, false))
diff --git a/tests/fsharp/Compiler/Language/OptionalInteropTests.fs b/tests/fsharp/Compiler/Language/OptionalInteropTests.fs
index cffba65c156..19d32334850 100644
--- a/tests/fsharp/Compiler/Language/OptionalInteropTests.fs
+++ b/tests/fsharp/Compiler/Language/OptionalInteropTests.fs
@@ -6,6 +6,7 @@ open System.Collections.Immutable
 open NUnit.Framework
 open FSharp.Test.Utilities
 open FSharp.Test.Utilities.Utilities
+open FSharp.Test.Utilities.Compiler
 open FSharp.Compiler.Diagnostics
 open Microsoft.CodeAnalysis
 
diff --git a/tests/fsharp/Compiler/Regressions/NullableOptionalRegressionTests.fs b/tests/fsharp/Compiler/Regressions/NullableOptionalRegressionTests.fs
index 93970223ce5..26391ffa1c3 100644
--- a/tests/fsharp/Compiler/Regressions/NullableOptionalRegressionTests.fs
+++ b/tests/fsharp/Compiler/Regressions/NullableOptionalRegressionTests.fs
@@ -33,3 +33,66 @@ let test () =
         |> typecheck
         |> shouldSucceed
         |> ignore
+
+    [<Test>]
+    let ``Method should infer 'z' correctly``() =
+        let fsSrc =
+            """
+namespace FSharpTest
+
+open System
+
+type Test() = class end
+
+type Test with
+
+    static member nullableE (encoder, x: Nullable<'a>) = if x.HasValue then encoder x.Value else Test()
+    static member nullable codec z = Test.nullableE(codec, z)
+            """
+        FSharp fsSrc
+        |> withLangVersionPreview
+        |> typecheck
+        |> shouldSucceed
+        |> ignore
+
+    [<Test>]
+    let ``Method should infer correctly``() =
+        let fsSrc =
+            """
+namespace FSharpTest
+
+open System
+
+type Test() = class end
+
+type Test with
+
+    static member nullableE encoder (x: Nullable<'a>) = if x.HasValue then encoder x.Value else Test()
+    static member nullable codec = Test.nullableE codec
+            """
+        FSharp fsSrc
+        |> withLangVersionPreview
+        |> typecheck
+        |> shouldSucceed
+        |> ignore
+
+    [<Test>]
+    let ``Method should infer correctly 2``() =
+        let fsSrc =
+            """
+namespace FSharpTest
+
+open System
+
+type Test() = class end
+
+type Test with
+
+    static member nullableE encoder (x: Nullable<int32>) = if x.HasValue then encoder x.Value else Test()
+    static member nullable codec = Test.nullableE codec
+            """
+        FSharp fsSrc
+        |> withLangVersionPreview
+        |> typecheck
+        |> shouldSucceed
+        |> ignore