diff --git a/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala b/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala
index 77f4f76c33ba..88297e88ce7d 100644
--- a/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala
+++ b/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala
@@ -258,7 +258,7 @@ object GenericSignatures {
           if (sym == defn.PairClass && tupleArity(tp) > Definitions.MaxTupleArity)
             jsig(defn.TupleXXLClass.typeRef)
           else if (isTypeParameterInSig(sym, sym0)) {
-            assert(!sym.isAliasType, "Unexpected alias type: " + sym)
+            assert(!sym.isAliasType || sym.info.isLambdaSub, "Unexpected alias type: " + sym)
             typeParamSig(sym.name.lastPart)
           }
           else if (defn.specialErasure.contains(sym))
@@ -407,7 +407,6 @@ object GenericSignatures {
 
 
   // only refer to type params that will actually make it into the sig, this excludes:
-  // * higher-order type parameters
   // * type parameters appearing in method parameters
   // * type members not visible in an enclosing template
   private def isTypeParameterInSig(sym: Symbol, initialSymbol: Symbol)(using Context) =
diff --git a/tests/pos/i18769.scala b/tests/pos/i18769.scala
new file mode 100644
index 000000000000..be5db80b7727
--- /dev/null
+++ b/tests/pos/i18769.scala
@@ -0,0 +1,9 @@
+trait Arb[Fx[_]] {
+  def pure[A](x: A): Fx[A]
+}
+
+class PfOps(private val self: Int) extends AnyVal {
+  def pf[Fy[_]](m: Arb[Fy]): PartialFunction[Int, Fy[Int]] = {
+    case x => m.pure(x)
+  }
+}