diff --git a/compiler/src/dotty/tools/dotc/typer/Implicits.scala b/compiler/src/dotty/tools/dotc/typer/Implicits.scala
index ede44c2b7f86..020027ea9d74 100644
--- a/compiler/src/dotty/tools/dotc/typer/Implicits.scala
+++ b/compiler/src/dotty/tools/dotc/typer/Implicits.scala
@@ -627,6 +627,9 @@ trait ImplicitRunInfo:
               traverse(t.underlying)
             case t: TermParamRef =>
               traverse(t.underlying)
+            case t: TypeLambda =>
+              for p <- t.paramRefs do partSeen += p
+              traverseChildren(t)
             case t =>
               traverseChildren(t)
 
diff --git a/tests/neg/i16146.scala b/tests/neg/i16146.scala
new file mode 100644
index 000000000000..6aed6b263ce4
--- /dev/null
+++ b/tests/neg/i16146.scala
@@ -0,0 +1,3 @@
+
+type N = [X] => (X => X) => X => X
+val exp = (a: N) => (b: N) => b(a) // error