diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index d4565607249fd..bcd8ef1771440 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -19545,13 +19545,18 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
             const typeArguments = map(typeParameters, t => getMappedType(t, combinedMapper));
             const newAliasSymbol = aliasSymbol || type.aliasSymbol;
             const newAliasTypeArguments = aliasSymbol ? aliasTypeArguments : instantiateTypes(type.aliasTypeArguments, mapper);
-            const id = getTypeListId(typeArguments) + getAliasId(newAliasSymbol, newAliasTypeArguments);
+            const id = (type.objectFlags & ObjectFlags.SingleSignatureType ? "S" : "") + getTypeListId(typeArguments) + getAliasId(newAliasSymbol, newAliasTypeArguments);
             if (!target.instantiations) {
                 target.instantiations = new Map<string, Type>();
                 target.instantiations.set(getTypeListId(typeParameters) + getAliasId(target.aliasSymbol, target.aliasTypeArguments), target);
             }
             let result = target.instantiations.get(id);
             if (!result) {
+                if (type.objectFlags & ObjectFlags.SingleSignatureType) {
+                    result = instantiateAnonymousType(type, mapper);
+                    target.instantiations.set(id, result);
+                    return result;
+                }
                 const newMapper = createTypeMapper(typeParameters, typeArguments);
                 result = target.objectFlags & ObjectFlags.Reference ? createDeferredTypeReference((type as DeferredTypeReference).target, (type as DeferredTypeReference).node, newMapper, newAliasSymbol, newAliasTypeArguments) :
                     target.objectFlags & ObjectFlags.Mapped ? instantiateMappedType(target as MappedType, newMapper, newAliasSymbol, newAliasTypeArguments) :
diff --git a/tests/baselines/reference/genericCallInferenceWithGenericLocalFunction.symbols b/tests/baselines/reference/genericCallInferenceWithGenericLocalFunction.symbols
new file mode 100644
index 0000000000000..dec6af6bac2c5
--- /dev/null
+++ b/tests/baselines/reference/genericCallInferenceWithGenericLocalFunction.symbols
@@ -0,0 +1,44 @@
+//// [tests/cases/compiler/genericCallInferenceWithGenericLocalFunction.ts] ////
+
+=== genericCallInferenceWithGenericLocalFunction.ts ===
+// https://github.com/microsoft/TypeScript/issues/43961
+
+const createTransform = <I, O>(tr: (from: I) => O) => tr;
+>createTransform : Symbol(createTransform, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 5))
+>I : Symbol(I, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 25))
+>O : Symbol(O, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 27))
+>tr : Symbol(tr, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 31))
+>from : Symbol(from, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 36))
+>I : Symbol(I, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 25))
+>O : Symbol(O, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 27))
+>tr : Symbol(tr, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 31))
+
+function withP2<P>(p: P) {
+>withP2 : Symbol(withP2, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 57))
+>P : Symbol(P, Decl(genericCallInferenceWithGenericLocalFunction.ts, 4, 16))
+>p : Symbol(p, Decl(genericCallInferenceWithGenericLocalFunction.ts, 4, 19))
+>P : Symbol(P, Decl(genericCallInferenceWithGenericLocalFunction.ts, 4, 16))
+
+  const m = <I,>(from: I) => ({ ...from, ...p });
+>m : Symbol(m, Decl(genericCallInferenceWithGenericLocalFunction.ts, 5, 7))
+>I : Symbol(I, Decl(genericCallInferenceWithGenericLocalFunction.ts, 5, 13))
+>from : Symbol(from, Decl(genericCallInferenceWithGenericLocalFunction.ts, 5, 17))
+>I : Symbol(I, Decl(genericCallInferenceWithGenericLocalFunction.ts, 5, 13))
+>from : Symbol(from, Decl(genericCallInferenceWithGenericLocalFunction.ts, 5, 17))
+>p : Symbol(p, Decl(genericCallInferenceWithGenericLocalFunction.ts, 4, 19))
+
+  return createTransform(m);
+>createTransform : Symbol(createTransform, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 5))
+>m : Symbol(m, Decl(genericCallInferenceWithGenericLocalFunction.ts, 5, 7))
+}
+
+const addP2 = withP2({ foo: 1 });
+>addP2 : Symbol(addP2, Decl(genericCallInferenceWithGenericLocalFunction.ts, 9, 5))
+>withP2 : Symbol(withP2, Decl(genericCallInferenceWithGenericLocalFunction.ts, 2, 57))
+>foo : Symbol(foo, Decl(genericCallInferenceWithGenericLocalFunction.ts, 9, 22))
+
+const added2 = addP2({ bar: 2 });
+>added2 : Symbol(added2, Decl(genericCallInferenceWithGenericLocalFunction.ts, 10, 5))
+>addP2 : Symbol(addP2, Decl(genericCallInferenceWithGenericLocalFunction.ts, 9, 5))
+>bar : Symbol(bar, Decl(genericCallInferenceWithGenericLocalFunction.ts, 10, 22))
+
diff --git a/tests/baselines/reference/genericCallInferenceWithGenericLocalFunction.types b/tests/baselines/reference/genericCallInferenceWithGenericLocalFunction.types
new file mode 100644
index 0000000000000..05b6d0617f3db
--- /dev/null
+++ b/tests/baselines/reference/genericCallInferenceWithGenericLocalFunction.types
@@ -0,0 +1,76 @@
+//// [tests/cases/compiler/genericCallInferenceWithGenericLocalFunction.ts] ////
+
+=== genericCallInferenceWithGenericLocalFunction.ts ===
+// https://github.com/microsoft/TypeScript/issues/43961
+
+const createTransform = <I, O>(tr: (from: I) => O) => tr;
+>createTransform : <I, O>(tr: (from: I) => O) => (from: I) => O
+>                : ^ ^^ ^^  ^^              ^^^^^^    ^^ ^^^^^ 
+><I, O>(tr: (from: I) => O) => tr : <I, O>(tr: (from: I) => O) => (from: I) => O
+>                                 : ^ ^^ ^^  ^^              ^^^^^^    ^^ ^^^^^ 
+>tr : (from: I) => O
+>   : ^    ^^ ^^^^^ 
+>from : I
+>     : ^
+>tr : (from: I) => O
+>   : ^    ^^ ^^^^^ 
+
+function withP2<P>(p: P) {
+>withP2 : <P>(p: P) => <I>(from: I) => I & P
+>       : ^ ^^ ^^ ^^^^^^^^^    ^^^^^^^^^^^^^
+>p : P
+>  : ^
+
+  const m = <I,>(from: I) => ({ ...from, ...p });
+>m : <I>(from: I) => I & P
+>  : ^ ^^    ^^ ^^^^^^^^^^
+><I,>(from: I) => ({ ...from, ...p }) : <I>(from: I) => I & P
+>                                     : ^ ^^    ^^ ^^^^^^^^^^
+>from : I
+>     : ^
+>({ ...from, ...p }) : I & P
+>                    : ^^^^^
+>{ ...from, ...p } : I & P
+>                  : ^^^^^
+>from : I
+>     : ^
+>p : P
+>  : ^
+
+  return createTransform(m);
+>createTransform(m) : <I>(from: I) => I & P
+>                   : ^^^^    ^^^^^^^^^^^^^
+>createTransform : <I, O>(tr: (from: I) => O) => (from: I) => O
+>                : ^ ^^ ^^  ^^              ^^^^^^    ^^ ^^^^^^
+>m : <I>(from: I) => I & P
+>  : ^ ^^    ^^ ^^^^^^^^^^
+}
+
+const addP2 = withP2({ foo: 1 });
+>addP2 : <I>(from: I) => I & { foo: number; }
+>      : ^^^^    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^
+>withP2({ foo: 1 }) : <I>(from: I) => I & { foo: number; }
+>                   : ^^^^    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^
+>withP2 : <P>(p: P) => <I>(from: I) => I & P
+>       : ^ ^^ ^^ ^^^^^^^^^    ^^^^^^^^^^^^^
+>{ foo: 1 } : { foo: number; }
+>           : ^^^^^^^^^^^^^^^^
+>foo : number
+>    : ^^^^^^
+>1 : 1
+>  : ^
+
+const added2 = addP2({ bar: 2 });
+>added2 : { bar: number; } & { foo: number; }
+>       : ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
+>addP2({ bar: 2 }) : { bar: number; } & { foo: number; }
+>                  : ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
+>addP2 : <I>(from: I) => I & { foo: number; }
+>      : ^^^^    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^
+>{ bar: 2 } : { bar: number; }
+>           : ^^^^^^^^^^^^^^^^
+>bar : number
+>    : ^^^^^^
+>2 : 2
+>  : ^
+
diff --git a/tests/cases/compiler/genericCallInferenceWithGenericLocalFunction.ts b/tests/cases/compiler/genericCallInferenceWithGenericLocalFunction.ts
new file mode 100644
index 0000000000000..1aff11c5b3507
--- /dev/null
+++ b/tests/cases/compiler/genericCallInferenceWithGenericLocalFunction.ts
@@ -0,0 +1,14 @@
+// @strict: true
+// @noEmit: true
+
+// https://github.com/microsoft/TypeScript/issues/43961
+
+const createTransform = <I, O>(tr: (from: I) => O) => tr;
+
+function withP2<P>(p: P) {
+  const m = <I,>(from: I) => ({ ...from, ...p });
+  return createTransform(m);
+}
+
+const addP2 = withP2({ foo: 1 });
+const added2 = addP2({ bar: 2 });