diff --git a/compiler/src/dotty/tools/dotc/core/TypeComparer.scala b/compiler/src/dotty/tools/dotc/core/TypeComparer.scala
index fe9355c55d28..4265f57851d6 100644
--- a/compiler/src/dotty/tools/dotc/core/TypeComparer.scala
+++ b/compiler/src/dotty/tools/dotc/core/TypeComparer.scala
@@ -148,7 +148,23 @@ class TypeComparer(initctx: Context) extends DotClass with ConstraintHandling {
       if (Config.traceDeepSubTypeRecursions && !this.isInstanceOf[ExplainingTypeComparer])
         ctx.log(TypeComparer.explained(implicit ctx => ctx.typeComparer.isSubType(tp1, tp2)))
     }
-    val p = (tp1, tp2)
+    // Eliminate LazyRefs before checking whether we have seen a type before
+    val normalize = new TypeMap {
+      val DerefLimit = 10
+      var derefCount = 0
+      def apply(t: Type) = t match {
+        case t: LazyRef =>
+          // Dereference a lazyref to detect underlying matching types, but
+          // be careful not to get into an infinite recursion. If recursion count
+          // exceeds `DerefLimit`, approximate with `NoType` instead.
+          derefCount += 1
+          if (derefCount >= DerefLimit) NoType
+          else try mapOver(t.ref) finally derefCount -= 1
+        case _ =>
+          mapOver(t)
+      }
+    }
+    val p = (normalize(tp1), normalize(tp2))
     !pendingSubTypes(p) && {
       try {
         pendingSubTypes += p
diff --git a/compiler/test/dotty/tools/dotc/CompilationTests.scala b/compiler/test/dotty/tools/dotc/CompilationTests.scala
index 480f1d3ee122..53b6d775675f 100644
--- a/compiler/test/dotty/tools/dotc/CompilationTests.scala
+++ b/compiler/test/dotty/tools/dotc/CompilationTests.scala
@@ -191,6 +191,7 @@ class CompilationTests extends ParallelTesting {
     compileFile("../tests/neg-custom-args/pureStatement.scala", defaultOptions.and("-Xfatal-warnings")) +
     compileFile("../tests/neg-custom-args/i3589-a.scala", defaultOptions.and("-Xfatal-warnings")) +
     compileFile("../tests/neg-custom-args/i2333.scala", defaultOptions.and("-Xfatal-warnings")) +
+    compileFile("../tests/neg-custom-args/i3882.scala", allowDeepSubtypes) +
     compileFile("../tests/neg-custom-args/phantom-overload.scala", allowDoubleBindings) +
     compileFile("../tests/neg-custom-args/phantom-overload-2.scala", allowDoubleBindings) +
     compileFile("../tests/neg-custom-args/structural.scala", defaultOptions.and("-Xfatal-warnings"))
diff --git a/tests/neg-custom-args/i3882.scala b/tests/neg-custom-args/i3882.scala
new file mode 100644
index 000000000000..eb28fd5632ce
--- /dev/null
+++ b/tests/neg-custom-args/i3882.scala
@@ -0,0 +1,5 @@
+trait Ring[A <: Ring[A]]
+
+object Test {
+  def crash[T <: Ring[_ <: T]]: Ring[T] = ??? // error: Type argument T does not conform to upper bound Ring[LazyRef(T)]
+}