diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 267eb30d8b70c..f99034acb07d9 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -39560,11 +39560,14 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
             texts.push(span.literal.text);
             types.push(isTypeAssignableTo(type, templateConstraintType) ? type : stringType);
         }
+        const evaluated = node.parent.kind !== SyntaxKind.TaggedTemplateExpression && evaluate(node).value;
+        if (evaluated) {
+            return getFreshTypeOfLiteralType(getStringLiteralType(evaluated));
+        }
         if (isConstContext(node) || isTemplateLiteralContext(node) || someType(getContextualType(node, /*contextFlags*/ undefined) || unknownType, isTemplateLiteralContextualType)) {
             return getTemplateLiteralType(texts, types);
         }
-        const evaluated = node.parent.kind !== SyntaxKind.TaggedTemplateExpression && evaluate(node).value;
-        return evaluated ? getFreshTypeOfLiteralType(getStringLiteralType(evaluated)) : stringType;
+        return stringType;
     }
 
     function isTemplateLiteralContextualType(type: Type): boolean {
diff --git a/tests/baselines/reference/templateLiteralConstantEvaluation.symbols b/tests/baselines/reference/templateLiteralConstantEvaluation.symbols
new file mode 100644
index 0000000000000..5a99b099db153
--- /dev/null
+++ b/tests/baselines/reference/templateLiteralConstantEvaluation.symbols
@@ -0,0 +1,36 @@
+//// [tests/cases/compiler/templateLiteralConstantEvaluation.ts] ////
+
+=== templateLiteralConstantEvaluation.ts ===
+// https://github.com/microsoft/TypeScript/issues/58494
+
+function fn<T>(arg: T): T {
+>fn : Symbol(fn, Decl(templateLiteralConstantEvaluation.ts, 0, 0))
+>T : Symbol(T, Decl(templateLiteralConstantEvaluation.ts, 2, 12))
+>arg : Symbol(arg, Decl(templateLiteralConstantEvaluation.ts, 2, 15))
+>T : Symbol(T, Decl(templateLiteralConstantEvaluation.ts, 2, 12))
+>T : Symbol(T, Decl(templateLiteralConstantEvaluation.ts, 2, 12))
+
+    return arg;
+>arg : Symbol(arg, Decl(templateLiteralConstantEvaluation.ts, 2, 15))
+}
+
+const a = '1';
+>a : Symbol(a, Decl(templateLiteralConstantEvaluation.ts, 6, 5))
+
+const b = a + ' 2';
+>b : Symbol(b, Decl(templateLiteralConstantEvaluation.ts, 7, 5))
+>a : Symbol(a, Decl(templateLiteralConstantEvaluation.ts, 6, 5))
+
+const c = `${b} 3`;
+>c : Symbol(c, Decl(templateLiteralConstantEvaluation.ts, 8, 5))
+>b : Symbol(b, Decl(templateLiteralConstantEvaluation.ts, 7, 5))
+
+const d = `${b} 3` as const;
+>d : Symbol(d, Decl(templateLiteralConstantEvaluation.ts, 9, 5))
+>b : Symbol(b, Decl(templateLiteralConstantEvaluation.ts, 7, 5))
+>const : Symbol(const)
+
+fn(`${b} 3`);
+>fn : Symbol(fn, Decl(templateLiteralConstantEvaluation.ts, 0, 0))
+>b : Symbol(b, Decl(templateLiteralConstantEvaluation.ts, 7, 5))
+
diff --git a/tests/baselines/reference/templateLiteralConstantEvaluation.types b/tests/baselines/reference/templateLiteralConstantEvaluation.types
new file mode 100644
index 0000000000000..dea989381be97
--- /dev/null
+++ b/tests/baselines/reference/templateLiteralConstantEvaluation.types
@@ -0,0 +1,60 @@
+//// [tests/cases/compiler/templateLiteralConstantEvaluation.ts] ////
+
+=== templateLiteralConstantEvaluation.ts ===
+// https://github.com/microsoft/TypeScript/issues/58494
+
+function fn<T>(arg: T): T {
+>fn : <T>(arg: T) => T
+>   : ^ ^^   ^^ ^^^^^ 
+>arg : T
+>    : ^
+
+    return arg;
+>arg : T
+>    : ^
+}
+
+const a = '1';
+>a : "1"
+>  : ^^^
+>'1' : "1"
+>    : ^^^
+
+const b = a + ' 2';
+>b : string
+>  : ^^^^^^
+>a + ' 2' : string
+>         : ^^^^^^
+>a : "1"
+>  : ^^^
+>' 2' : " 2"
+>     : ^^^^
+
+const c = `${b} 3`;
+>c : "1 2 3"
+>  : ^^^^^^^
+>`${b} 3` : "1 2 3"
+>         : ^^^^^^^
+>b : string
+>  : ^^^^^^
+
+const d = `${b} 3` as const;
+>d : "1 2 3"
+>  : ^^^^^^^
+>`${b} 3` as const : "1 2 3"
+>                  : ^^^^^^^
+>`${b} 3` : "1 2 3"
+>         : ^^^^^^^
+>b : string
+>  : ^^^^^^
+
+fn(`${b} 3`);
+>fn(`${b} 3`) : "1 2 3"
+>             : ^^^^^^^
+>fn : <T>(arg: T) => T
+>   : ^ ^^   ^^ ^^^^^^
+>`${b} 3` : "1 2 3"
+>         : ^^^^^^^
+>b : string
+>  : ^^^^^^
+
diff --git a/tests/cases/compiler/templateLiteralConstantEvaluation.ts b/tests/cases/compiler/templateLiteralConstantEvaluation.ts
new file mode 100644
index 0000000000000..479e6dba827c9
--- /dev/null
+++ b/tests/cases/compiler/templateLiteralConstantEvaluation.ts
@@ -0,0 +1,15 @@
+// @strict: true
+// @noEmit: true
+
+// https://github.com/microsoft/TypeScript/issues/58494
+
+function fn<T>(arg: T): T {
+    return arg;
+}
+
+const a = '1';
+const b = a + ' 2';
+const c = `${b} 3`;
+const d = `${b} 3` as const;
+
+fn(`${b} 3`);