diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 16bfd7fa7e253..2089b76171026 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -15159,7 +15159,7 @@ namespace ts {
          * element is not a class element, or the class element type cannot be determined, returns 'undefined'.
          * For example, in the element <MyClass>, the element instance type is `MyClass` (not `typeof MyClass`).
          */
-        function getJsxElementInstanceType(node: JsxOpeningLikeElement, valueType: Type, sourceAttributesType: Type) {
+        function getJsxElementInstanceType(node: JsxOpeningLikeElement, valueType: Type, sourceAttributesType: Type | undefined) {
             Debug.assert(!(valueType.flags & TypeFlags.Union));
             if (isTypeAny(valueType)) {
                 // Short-circuit if the class tag is using an element type 'any'
@@ -15178,20 +15178,27 @@ namespace ts {
                 }
             }
 
-            const instantiatedSignatures = [];
-            for (const signature of signatures) {
-                if (signature.typeParameters) {
-                    const isJavascript = isInJavaScriptFile(node);
-                    const inferenceContext = createInferenceContext(signature, /*flags*/ isJavascript ? InferenceFlags.AnyDefault : 0);
-                    const typeArguments = inferJsxTypeArguments(signature, sourceAttributesType, inferenceContext);
-                    instantiatedSignatures.push(getSignatureInstantiation(signature, typeArguments, isJavascript));
-                }
-                else {
-                    instantiatedSignatures.push(signature);
+            if (sourceAttributesType) {
+                // Instantiate in context of source type
+                const instantiatedSignatures = [];
+                for (const signature of signatures) {
+                    if (signature.typeParameters) {
+                        const isJavascript = isInJavaScriptFile(node);
+                        const inferenceContext = createInferenceContext(signature, /*flags*/ isJavascript ? InferenceFlags.AnyDefault : 0);
+                        const typeArguments = inferJsxTypeArguments(signature, sourceAttributesType, inferenceContext);
+                        instantiatedSignatures.push(getSignatureInstantiation(signature, typeArguments, isJavascript));
+                    }
+                    else {
+                        instantiatedSignatures.push(signature);
+                    }
                 }
-            }
 
-            return getUnionType(map(instantiatedSignatures, getReturnTypeOfSignature), UnionReduction.Subtype);
+                return getUnionType(map(instantiatedSignatures, getReturnTypeOfSignature), UnionReduction.Subtype);
+            }
+            else {
+                // Do not instantiate if no source type is provided - type parameters and their constraints will be used by contextual typing
+                return getUnionType(map(signatures, getReturnTypeOfSignature), UnionReduction.Subtype);
+            }
         }
 
         /**
@@ -15415,7 +15422,7 @@ namespace ts {
             }
 
             // Get the element instance type (the result of newing or invoking this tag)
-            const elemInstanceType = getJsxElementInstanceType(openingLikeElement, elementType, sourceAttributesType || emptyObjectType);
+            const elemInstanceType = getJsxElementInstanceType(openingLikeElement, elementType, sourceAttributesType);
 
             // If we should include all stateless attributes type, then get all attributes type from all stateless function signature.
             // Otherwise get only attributes type from the signature picked by choose-overload logic.
diff --git a/tests/baselines/reference/jsxHasLiteralType.js b/tests/baselines/reference/jsxHasLiteralType.js
new file mode 100644
index 0000000000000..491f58eebb1bb
--- /dev/null
+++ b/tests/baselines/reference/jsxHasLiteralType.js
@@ -0,0 +1,32 @@
+//// [jsxHasLiteralType.tsx]
+import * as React from "react";
+
+interface Props {
+    x?: "a" | "b";
+}
+class MyComponent<P extends Props = Props> extends React.Component<P, {}> {}
+const m = <MyComponent x="a"/>
+
+
+//// [jsxHasLiteralType.js]
+"use strict";
+var __extends = (this && this.__extends) || (function () {
+    var extendStatics = Object.setPrototypeOf ||
+        ({ __proto__: [] } instanceof Array && function (d, b) { d.__proto__ = b; }) ||
+        function (d, b) { for (var p in b) if (b.hasOwnProperty(p)) d[p] = b[p]; };
+    return function (d, b) {
+        extendStatics(d, b);
+        function __() { this.constructor = d; }
+        d.prototype = b === null ? Object.create(b) : (__.prototype = b.prototype, new __());
+    };
+})();
+exports.__esModule = true;
+var React = require("react");
+var MyComponent = /** @class */ (function (_super) {
+    __extends(MyComponent, _super);
+    function MyComponent() {
+        return _super !== null && _super.apply(this, arguments) || this;
+    }
+    return MyComponent;
+}(React.Component));
+var m = React.createElement(MyComponent, { x: "a" });
diff --git a/tests/baselines/reference/jsxHasLiteralType.symbols b/tests/baselines/reference/jsxHasLiteralType.symbols
new file mode 100644
index 0000000000000..a7106f2699e72
--- /dev/null
+++ b/tests/baselines/reference/jsxHasLiteralType.symbols
@@ -0,0 +1,25 @@
+=== tests/cases/compiler/jsxHasLiteralType.tsx ===
+import * as React from "react";
+>React : Symbol(React, Decl(jsxHasLiteralType.tsx, 0, 6))
+
+interface Props {
+>Props : Symbol(Props, Decl(jsxHasLiteralType.tsx, 0, 31))
+
+    x?: "a" | "b";
+>x : Symbol(Props.x, Decl(jsxHasLiteralType.tsx, 2, 17))
+}
+class MyComponent<P extends Props = Props> extends React.Component<P, {}> {}
+>MyComponent : Symbol(MyComponent, Decl(jsxHasLiteralType.tsx, 4, 1))
+>P : Symbol(P, Decl(jsxHasLiteralType.tsx, 5, 18))
+>Props : Symbol(Props, Decl(jsxHasLiteralType.tsx, 0, 31))
+>Props : Symbol(Props, Decl(jsxHasLiteralType.tsx, 0, 31))
+>React.Component : Symbol(React.Component, Decl(react.d.ts, 158, 55), Decl(react.d.ts, 161, 66))
+>React : Symbol(React, Decl(jsxHasLiteralType.tsx, 0, 6))
+>Component : Symbol(React.Component, Decl(react.d.ts, 158, 55), Decl(react.d.ts, 161, 66))
+>P : Symbol(P, Decl(jsxHasLiteralType.tsx, 5, 18))
+
+const m = <MyComponent x="a"/>
+>m : Symbol(m, Decl(jsxHasLiteralType.tsx, 6, 5))
+>MyComponent : Symbol(MyComponent, Decl(jsxHasLiteralType.tsx, 4, 1))
+>x : Symbol(x, Decl(jsxHasLiteralType.tsx, 6, 22))
+
diff --git a/tests/baselines/reference/jsxHasLiteralType.types b/tests/baselines/reference/jsxHasLiteralType.types
new file mode 100644
index 0000000000000..61120edcea679
--- /dev/null
+++ b/tests/baselines/reference/jsxHasLiteralType.types
@@ -0,0 +1,26 @@
+=== tests/cases/compiler/jsxHasLiteralType.tsx ===
+import * as React from "react";
+>React : typeof React
+
+interface Props {
+>Props : Props
+
+    x?: "a" | "b";
+>x : "a" | "b" | undefined
+}
+class MyComponent<P extends Props = Props> extends React.Component<P, {}> {}
+>MyComponent : MyComponent<P>
+>P : P
+>Props : Props
+>Props : Props
+>React.Component : React.Component<P, {}>
+>React : typeof React
+>Component : typeof React.Component
+>P : P
+
+const m = <MyComponent x="a"/>
+>m : JSX.Element
+><MyComponent x="a"/> : JSX.Element
+>MyComponent : typeof MyComponent
+>x : "a"
+
diff --git a/tests/cases/compiler/jsxHasLiteralType.tsx b/tests/cases/compiler/jsxHasLiteralType.tsx
new file mode 100644
index 0000000000000..17132fdad40fd
--- /dev/null
+++ b/tests/cases/compiler/jsxHasLiteralType.tsx
@@ -0,0 +1,11 @@
+// @strictNullChecks: true
+// @jsx: react
+// @skipLibCheck: true
+// @libFiles: lib.d.ts,react.d.ts
+import * as React from "react";
+
+interface Props {
+    x?: "a" | "b";
+}
+class MyComponent<P extends Props = Props> extends React.Component<P, {}> {}
+const m = <MyComponent x="a"/>