diff --git a/mypy/checker.py b/mypy/checker.py
index 1b57ef780104..1dc87f8e2ab2 100644
--- a/mypy/checker.py
+++ b/mypy/checker.py
@@ -7388,6 +7388,10 @@ def conditional_types(
             # Expression is never of any type in proposed_type_ranges
             return UninhabitedType(), default
         else:
+            if isinstance(current_type, TypeVarType):
+                # narrowing T`-1 to int should *really* return T`-1 with a narrowed upper bound!
+                proposed_type = current_type.copy_modified(upper_bound=proposed_type)
+
             # we can only restrict when the type is precise, not bounded
             proposed_precise_type = UnionType.make_union(
                 [
diff --git a/mypy/subtypes.py b/mypy/subtypes.py
index 4fd3f8ff98ca..b47462058f89 100644
--- a/mypy/subtypes.py
+++ b/mypy/subtypes.py
@@ -1899,7 +1899,7 @@ def restrict_subtype_away(t: Type, s: Type) -> Type:
     """Return t minus s for runtime type assertions.
 
     If we can't determine a precise result, return a supertype of the
-    ideal result (just t is a valid result).
+    ideal result (i.e. just t is a valid result).
 
     This is used for type inference of runtime type checks such as
     isinstance(). Currently, this just removes elements of a union type.
@@ -1914,6 +1914,11 @@ def restrict_subtype_away(t: Type, s: Type) -> Type:
                 if (isinstance(get_proper_type(item), AnyType) or not covers_at_runtime(item, s))
             ]
         return UnionType.make_union(new_items)
+    elif isinstance(p_t, TypeVarType):
+        # TODO: should this check if `p_t.upper_bound` is covered at runtime?
+        # NOTE: I don't think I'm allowed to return proper types like this. But
+        #       I don't know what else I could do.
+        return p_t.copy_modified(upper_bound=restrict_subtype_away(p_t.upper_bound, s))
     elif covers_at_runtime(t, s):
         return UninhabitedType()
     else:
diff --git a/test-data/unit/check-classes.test b/test-data/unit/check-classes.test
index 983cb8454a05..5dd5ea3437da 100644
--- a/test-data/unit/check-classes.test
+++ b/test-data/unit/check-classes.test
@@ -6685,11 +6685,11 @@ class C(Generic[T]):
     def meth(self, cls: Type[T]) -> None:
         if not issubclass(cls, Sub):
             return
-        reveal_type(cls)  # N: Revealed type is "Type[__main__.Sub]"
+        reveal_type(cls)  # N: Revealed type is "Type[T`1]"
     def other(self, cls: Type[T]) -> None:
         if not issubclass(cls, Sub):
             return
-        reveal_type(cls)  # N: Revealed type is "Type[__main__.Sub]"
+        reveal_type(cls)  # N: Revealed type is "Type[T`1]"
 
 [builtins fixtures/isinstancelist.pyi]
 
diff --git a/test-data/unit/check-isinstance.test b/test-data/unit/check-isinstance.test
index b7ee38b69d00..e8dd7c0ebfd8 100644
--- a/test-data/unit/check-isinstance.test
+++ b/test-data/unit/check-isinstance.test
@@ -1821,13 +1821,15 @@ if issubclass(fm, Baz):
 from typing import TypeVar
 
 class A: pass
-class B(A): pass
+class B(A):
+    z: int
 
 T = TypeVar('T', bound=A)
 
 def f(x: T) -> None:
     if isinstance(x, B):
-        reveal_type(x) # N: Revealed type is "__main__.B"
+        reveal_type(x.z) # N: Revealed type is "builtins.int"
+        reveal_type(x) # N: Revealed type is "T`-1"
     else:
         reveal_type(x) # N: Revealed type is "T`-1"
     reveal_type(x) # N: Revealed type is "T`-1"
@@ -2892,3 +2894,19 @@ if hasattr(mod, "y"):
 [file mod.py]
 def __getattr__(attr: str) -> str: ...
 [builtins fixtures/module.pyi]
+
+[case testFunctionCanReturnNarrowedTypeVar]
+from typing import TypeVar
+
+T = TypeVar("T")
+
+def f(x: T) -> T:
+    if isinstance(x, int):
+        reveal_type(x)  # N: Revealed type is "T`-1"
+        x + 42
+        return x
+    else:
+        reveal_type(x)  # N: Revealed type is "T`-1"
+        x + 42  # E: Unsupported left operand type for + ("T")
+        return x
+[builtins fixtures/isinstancelist.pyi]