diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 34e8a6336ae3c..21d485c002382 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -20522,12 +20522,20 @@ namespace ts {
 
         /** remove undefined from the annotated type of a parameter when there is an initializer (that doesn't include undefined) */
         function removeOptionalityFromDeclaredType(declaredType: Type, declaration: VariableLikeDeclaration): Type {
-            const annotationIncludesUndefined = strictNullChecks &&
-                declaration.kind === SyntaxKind.Parameter &&
-                declaration.initializer &&
-                getFalsyFlags(declaredType) & TypeFlags.Undefined &&
-                !(getFalsyFlags(checkExpression(declaration.initializer)) & TypeFlags.Undefined);
-            return annotationIncludesUndefined ? getTypeWithFacts(declaredType, TypeFacts.NEUndefined) : declaredType;
+            if (pushTypeResolution(declaration.symbol, TypeSystemPropertyName.DeclaredType)) {
+                const annotationIncludesUndefined = strictNullChecks &&
+                    declaration.kind === SyntaxKind.Parameter &&
+                    declaration.initializer &&
+                    getFalsyFlags(declaredType) & TypeFlags.Undefined &&
+                    !(getFalsyFlags(checkExpression(declaration.initializer)) & TypeFlags.Undefined);
+                popTypeResolution();
+
+                return annotationIncludesUndefined ? getTypeWithFacts(declaredType, TypeFacts.NEUndefined) : declaredType;
+            }
+            else {
+                reportCircularityError(declaration.symbol);
+                return declaredType;
+            }
         }
 
         function isConstraintPosition(node: Node) {
diff --git a/tests/baselines/reference/circularOptionalityRemoval.errors.txt b/tests/baselines/reference/circularOptionalityRemoval.errors.txt
new file mode 100644
index 0000000000000..2b60b5b66213a
--- /dev/null
+++ b/tests/baselines/reference/circularOptionalityRemoval.errors.txt
@@ -0,0 +1,32 @@
+tests/cases/compiler/circularOptionalityRemoval.ts(2,14): error TS2502: 'x' is referenced directly or indirectly in its own type annotation.
+tests/cases/compiler/circularOptionalityRemoval.ts(2,38): error TS2372: Parameter 'x' cannot be referenced in its initializer.
+tests/cases/compiler/circularOptionalityRemoval.ts(2,38): error TS2532: Object is possibly 'undefined'.
+tests/cases/compiler/circularOptionalityRemoval.ts(2,46): error TS2372: Parameter 'x' cannot be referenced in its initializer.
+tests/cases/compiler/circularOptionalityRemoval.ts(5,14): error TS1015: Parameter cannot have question mark and initializer.
+tests/cases/compiler/circularOptionalityRemoval.ts(5,14): error TS2502: 'x' is referenced directly or indirectly in its own type annotation.
+tests/cases/compiler/circularOptionalityRemoval.ts(5,27): error TS2304: Cannot find name 'someCondition'.
+tests/cases/compiler/circularOptionalityRemoval.ts(5,54): error TS2372: Parameter 'x' cannot be referenced in its initializer.
+
+
+==== tests/cases/compiler/circularOptionalityRemoval.ts (8 errors) ====
+    // Constructed repro
+    function fn1(x: number | undefined = x > 0 ? x : 0) { }
+                 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+!!! error TS2502: 'x' is referenced directly or indirectly in its own type annotation.
+                                         ~
+!!! error TS2372: Parameter 'x' cannot be referenced in its initializer.
+                                         ~
+!!! error TS2532: Object is possibly 'undefined'.
+                                                 ~
+!!! error TS2372: Parameter 'x' cannot be referenced in its initializer.
+    
+    // Report from user
+    function fn2(x?: string = someCondition ? 'value1' : x) { }
+                 ~
+!!! error TS1015: Parameter cannot have question mark and initializer.
+                 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+!!! error TS2502: 'x' is referenced directly or indirectly in its own type annotation.
+                              ~~~~~~~~~~~~~
+!!! error TS2304: Cannot find name 'someCondition'.
+                                                         ~
+!!! error TS2372: Parameter 'x' cannot be referenced in its initializer.
\ No newline at end of file
diff --git a/tests/baselines/reference/circularOptionalityRemoval.js b/tests/baselines/reference/circularOptionalityRemoval.js
new file mode 100644
index 0000000000000..c584c2f3949f8
--- /dev/null
+++ b/tests/baselines/reference/circularOptionalityRemoval.js
@@ -0,0 +1,16 @@
+//// [circularOptionalityRemoval.ts]
+// Constructed repro
+function fn1(x: number | undefined = x > 0 ? x : 0) { }
+
+// Report from user
+function fn2(x?: string = someCondition ? 'value1' : x) { }
+
+//// [circularOptionalityRemoval.js]
+// Constructed repro
+function fn1(x) {
+    if (x === void 0) { x = x > 0 ? x : 0; }
+}
+// Report from user
+function fn2(x) {
+    if (x === void 0) { x = someCondition ? 'value1' : x; }
+}
diff --git a/tests/baselines/reference/circularOptionalityRemoval.symbols b/tests/baselines/reference/circularOptionalityRemoval.symbols
new file mode 100644
index 0000000000000..06bfd9da771a6
--- /dev/null
+++ b/tests/baselines/reference/circularOptionalityRemoval.symbols
@@ -0,0 +1,14 @@
+=== tests/cases/compiler/circularOptionalityRemoval.ts ===
+// Constructed repro
+function fn1(x: number | undefined = x > 0 ? x : 0) { }
+>fn1 : Symbol(fn1, Decl(circularOptionalityRemoval.ts, 0, 0))
+>x : Symbol(x, Decl(circularOptionalityRemoval.ts, 1, 13))
+>x : Symbol(x, Decl(circularOptionalityRemoval.ts, 1, 13))
+>x : Symbol(x, Decl(circularOptionalityRemoval.ts, 1, 13))
+
+// Report from user
+function fn2(x?: string = someCondition ? 'value1' : x) { }
+>fn2 : Symbol(fn2, Decl(circularOptionalityRemoval.ts, 1, 55))
+>x : Symbol(x, Decl(circularOptionalityRemoval.ts, 4, 13))
+>x : Symbol(x, Decl(circularOptionalityRemoval.ts, 4, 13))
+
diff --git a/tests/baselines/reference/circularOptionalityRemoval.types b/tests/baselines/reference/circularOptionalityRemoval.types
new file mode 100644
index 0000000000000..5783b24a6c379
--- /dev/null
+++ b/tests/baselines/reference/circularOptionalityRemoval.types
@@ -0,0 +1,21 @@
+=== tests/cases/compiler/circularOptionalityRemoval.ts ===
+// Constructed repro
+function fn1(x: number | undefined = x > 0 ? x : 0) { }
+>fn1 : (x?: number | undefined) => void
+>x : number | undefined
+>x > 0 ? x : 0 : number | undefined
+>x > 0 : boolean
+>x : number | undefined
+>0 : 0
+>x : number | undefined
+>0 : 0
+
+// Report from user
+function fn2(x?: string = someCondition ? 'value1' : x) { }
+>fn2 : (x?: string | undefined) => void
+>x : string | undefined
+>someCondition ? 'value1' : x : string | undefined
+>someCondition : any
+>'value1' : "value1"
+>x : string | undefined
+
diff --git a/tests/cases/compiler/circularOptionalityRemoval.ts b/tests/cases/compiler/circularOptionalityRemoval.ts
new file mode 100644
index 0000000000000..20a6a4085703a
--- /dev/null
+++ b/tests/cases/compiler/circularOptionalityRemoval.ts
@@ -0,0 +1,7 @@
+// @strictNullChecks: true
+
+// Constructed repro
+function fn1(x: number | undefined = x > 0 ? x : 0) { }
+
+// Report from user
+function fn2(x?: string = someCondition ? 'value1' : x) { }
\ No newline at end of file