diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 5748f07630582..477851cc4e299 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -30501,6 +30501,7 @@ namespace ts {
             // decorators are applied to a declaration by the emitter, and not to an expression.
             const isSingleNonGenericCandidate = candidates.length === 1 && !candidates[0].typeParameters;
             let argCheckMode = !isDecorator && !isSingleNonGenericCandidate && some(args, isContextSensitive) ? CheckMode.SkipContextSensitive : CheckMode.Normal;
+            argCheckMode |= checkMode & CheckMode.IsForStringLiteralArgumentCompletions;
 
             // The following variables are captured and modified by calls to chooseOverload.
             // If overload resolution or type argument inference fails, we want to report the
@@ -30726,7 +30727,7 @@ namespace ts {
                         // If one or more context sensitive arguments were excluded, we start including
                         // them now (and keeping do so for any subsequent candidates) and perform a second
                         // round of type inference and applicability checking for this particular candidate.
-                        argCheckMode = CheckMode.Normal;
+                        argCheckMode = checkMode & CheckMode.IsForStringLiteralArgumentCompletions;
                         if (inferenceContext) {
                             const typeArgumentTypes = inferTypeArguments(node, candidate, args, argCheckMode, inferenceContext);
                             checkCandidate = getSignatureInstantiation(candidate, typeArgumentTypes, isInJSFile(candidate.declaration), inferenceContext && inferenceContext.inferredTypeParameters);
diff --git a/tests/cases/fourslash/completionsLiteralMatchingGenericSignature.ts b/tests/cases/fourslash/completionsLiteralMatchingGenericSignature.ts
new file mode 100644
index 0000000000000..85e44adf14a74
--- /dev/null
+++ b/tests/cases/fourslash/completionsLiteralMatchingGenericSignature.ts
@@ -0,0 +1,9 @@
+/// <reference path="fourslash.ts" />
+
+// @Filename: /a.tsx
+//// declare function bar1<P extends "" | "bar" | "baz">(p: P): void;
+////
+//// bar1("/*ts*/")
+////
+
+verify.completions({ marker: ["ts"], exact: ["", "bar", "baz"] });