diff --git a/index.js b/index.js
index 81475eb7..e78025c0 100644
--- a/index.js
+++ b/index.js
@@ -162,37 +162,49 @@ function monkeypatch() {
     if (node.typeAnnotation) {
       visitTypeAnnotation.call(this, node.typeAnnotation);
     } else if (node.type === "Identifier") {
-      // exception for polymorphic types: <T>, <A>, etc
-      if (node.name.length === 1 && node.name === node.name.toUpperCase()) {
-        return;
-      }
       this.visit(node);
     } else {
       visitTypeAnnotation.call(this, node);
     }
   }
 
+  function nestTypeParamScope(manager, node) {
+    var parentScope = manager.__currentScope;
+    var scope = new escope.Scope(manager, "type-parameters", parentScope, node, false);
+    manager.__nestScope(scope);
+    for (var j = 0; j < node.typeParameters.params.length; j++) {
+      var name = node.typeParameters.params[j];
+      scope.__define(name, new Definition("TypeParameter", name, name));
+    }
+    scope.__define = function() {
+      return parentScope.__define.apply(parentScope, arguments);
+    }
+    return scope;
+  }
+
   // visit decorators that are in: ClassDeclaration / ClassExpression
   var visitClass = referencer.prototype.visitClass;
   referencer.prototype.visitClass = function(node) {
     visitDecorators.call(this, node);
+    var typeParamScope;
+    if (node.typeParameters) {
+      typeParamScope = nestTypeParamScope(this.scopeManager, node);
+    }
     // visit flow type: ClassImplements
     if (node.implements) {
       for (var i = 0; i < node.implements.length; i++) {
         checkIdentifierOrVisit.call(this, node.implements[i]);
       }
     }
-    if (node.typeParameters) {
-      for (var j = 0; j < node.typeParameters.params.length; j++) {
-        checkIdentifierOrVisit.call(this, node.typeParameters.params[j]);
-      }
-    }
     if (node.superTypeParameters) {
       for (var k = 0; k < node.superTypeParameters.params.length; k++) {
         checkIdentifierOrVisit.call(this, node.superTypeParameters.params[k]);
       }
     }
     visitClass.call(this, node);
+    if (typeParamScope) {
+      this.close(node);
+    }
   };
     // visit decorators that are in: Property / MethodDefinition
   var visitProperty = referencer.prototype.visitProperty;
@@ -207,6 +219,10 @@ function monkeypatch() {
   // visit flow type in FunctionDeclaration, FunctionExpression, ArrowFunctionExpression
   var visitFunction = referencer.prototype.visitFunction;
   referencer.prototype.visitFunction = function(node) {
+    var typeParamScope;
+    if (node.typeParameters) {
+      typeParamScope = nestTypeParamScope(this.scopeManager, node);
+    }
     if (node.returnType) {
       checkIdentifierOrVisit.call(this, node.returnType);
     }
@@ -218,12 +234,10 @@ function monkeypatch() {
         }
       }
     }
-    if (node.typeParameters) {
-      for (var j = 0; j < node.typeParameters.params.length; j++) {
-        checkIdentifierOrVisit.call(this, node.typeParameters.params[j]);
-      }
-    }
     visitFunction.call(this, node);
+    if (typeParamScope) {
+      this.close(node);
+    }
   };
 
   // visit flow type in VariableDeclaration
@@ -261,13 +275,15 @@ function monkeypatch() {
 
   referencer.prototype.TypeAlias = function(node) {
     createScopeVariable.call(this, node, node.id);
+    var typeParamScope;
+    if (node.typeParameters) {
+      typeParamScope = nestTypeParamScope(this.scopeManager, node);
+    }
     if (node.right) {
       visitTypeAnnotation.call(this, node.right);
     }
-    if (node.typeParameters) {
-      for (var i = 0; i < node.typeParameters.params.length; i++) {
-        checkIdentifierOrVisit.call(this, node.typeParameters.params[i]);
-      }
+    if (typeParamScope) {
+      this.close(node);
     }
   };
 
diff --git a/test/non-regression.js b/test/non-regression.js
index a0b149c2..de0bfbf6 100644
--- a/test/non-regression.js
+++ b/test/non-regression.js
@@ -169,8 +169,8 @@ describe("verify", function () {
       verifyAndAssertMessages([
           "import type Foo from 'foo';",
           "import type Foo2 from 'foo';",
-          "function log<Foo, Foo2>() {}",
-          "log();"
+          "function log<T1, T2>(a: T1, b: T2) { return a + b; }",
+          "log<Foo, Foo2>(1, 2);"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []
@@ -276,9 +276,8 @@ describe("verify", function () {
     it("type alias with type parameters", function () {
       verifyAndAssertMessages([
           "import type Bar from 'foo';",
-          "import type Foo2 from 'foo';",
           "import type Foo3 from 'foo';",
-          "type Foo<Foo2> = Bar<Foo3>",
+          "type Foo<T> = Bar<T, Foo3>",
           "var x : Foo = 1; x;"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
@@ -316,6 +315,62 @@ describe("verify", function () {
       );
     });
 
+    it("polymorphpic/generic types for class #123", function () {
+      verifyAndAssertMessages([
+          "class Box<T> {",
+            "value: T;",
+          "}",
+          "var box = new Box();",
+          "console.log(box.value);"
+        ].join("\n"),
+        { "no-unused-vars": 1, "no-undef": 1 },
+        []
+      );
+    });
+
+    it("polymorphpic/generic types for function #123", function () {
+      verifyAndAssertMessages([
+          "export function identity<T>(value) {",
+            "var a: T = value; a;",
+          "}"
+        ].join("\n"),
+        { "no-unused-vars": 1, "no-undef": 1 },
+        []
+      );
+    });
+
+    it("polymorphpic/generic types for type alias #123", function () {
+      verifyAndAssertMessages([
+          "import Bar from './Bar';",
+          "type Foo<T> = Bar<T>; var x: Foo = 1; x++"
+        ].join("\n"),
+        { "no-unused-vars": 1, "no-undef": 1 },
+        []
+      );
+    });
+
+    it("polymorphpic/generic types - outside of fn scope #123", function () {
+      verifyAndAssertMessages([
+          "export function foo<T>(value) {",
+          "};",
+          "var b: T = 1; b;"
+        ].join("\n"),
+        { "no-unused-vars": 1, "no-undef": 1 },
+        [ '1:20 T is defined but never used no-unused-vars',
+          '3:7 "T" is not defined. no-undef' ]
+      );
+    });
+
+    it("polymorphpic/generic types - extending unknown #123", function () {
+      verifyAndAssertMessages([
+          "import Bar from 'bar';",
+          "export class Foo extends Bar<T> {}",
+        ].join("\n"),
+        { "no-unused-vars": 1, "no-undef": 1 },
+        [ '2:29 "T" is not defined. no-undef' ]
+      );
+    });
+
     it("1", function () {
       verifyAndAssertMessages(
         [
@@ -413,9 +468,7 @@ describe("verify", function () {
     it("9", function () {
       verifyAndAssertMessages(
         [
-          "import type Foo from 'foo';",
-          "import type Foo2 from 'foo';",
-          "export default function <Foo, Foo2>() {}"
+          "export default function <T1, T2>(a: T1, b: T2) {}"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []
@@ -425,9 +478,7 @@ describe("verify", function () {
     it("10", function () {
       verifyAndAssertMessages(
         [
-          "import type Foo from 'foo';",
-          "import type Foo2 from 'foo';",
-          "var a=function<Foo,Foo2>() {}; a;"
+          "var a=function<T1,T2>(a: T1, b: T2) {return a + b;}; a;"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []
@@ -437,10 +488,7 @@ describe("verify", function () {
     it("11", function () {
       verifyAndAssertMessages(
         [
-          "import type Foo from 'foo';",
-          "import type Foo2 from 'foo';",
-          "import type Foo3 from 'foo';",
-          "var a={*id<Foo>(x: Foo2): Foo3 { x; }}; a;"
+          "var a={*id<T>(x: T): T { x; }}; a;"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []
@@ -450,10 +498,7 @@ describe("verify", function () {
     it("12", function () {
       verifyAndAssertMessages(
         [
-          "import type Foo from 'foo';",
-          "import type Foo2 from 'foo';",
-          "import type Foo3 from 'foo';",
-          "var a={async id<Foo>(x: Foo2): Foo3 { x; }}; a;"
+          "var a={async id<T>(x: T): T { x; }}; a;"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []
@@ -463,10 +508,7 @@ describe("verify", function () {
     it("13", function () {
       verifyAndAssertMessages(
         [
-          "import type Foo from 'foo';",
-          "import type Foo2 from 'foo';",
-          "import type Foo3 from 'foo';",
-          "var a={123<Foo>(x: Foo2): Foo3 { x; }}; a;"
+          "var a={123<T>(x: T): T { x; }}; a;"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []
@@ -597,10 +639,8 @@ describe("verify", function () {
     it("24", function () {
       verifyAndAssertMessages(
         [
-          "import type Foo from 'foo';",
-          "import type Foo2 from 'foo';",
-          "import Baz from 'foo';",
-          "export default class Bar<Foo> extends Baz<Foo2> { };"
+          "import type Baz from 'baz';",
+          "export default class Bar<T> extends Baz<T> { };"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []
@@ -610,10 +650,7 @@ describe("verify", function () {
     it("25", function () {
       verifyAndAssertMessages(
         [
-          "import type Foo from 'foo';",
-          "import type Foo2 from 'foo';",
-          "import type Foo3 from 'foo';",
-          "export default class Bar<Foo> { bar<Foo2>():Foo3 { return 42; }}"
+          "export default class Bar<T> { bar(): T { return 42; }}"
         ].join("\n"),
         { "no-unused-vars": 1, "no-undef": 1 },
         []