diff --git a/mypy/exprtotype.py b/mypy/exprtotype.py
index b82d35607ef1..5f0ef79acbd7 100644
--- a/mypy/exprtotype.py
+++ b/mypy/exprtotype.py
@@ -196,6 +196,8 @@ def expr_to_unanalyzed_type(
     elif isinstance(expr, EllipsisExpr):
         return EllipsisType(expr.line)
     elif allow_unpack and isinstance(expr, StarExpr):
-        return UnpackType(expr_to_unanalyzed_type(expr.expr, options, allow_new_syntax))
+        return UnpackType(
+            expr_to_unanalyzed_type(expr.expr, options, allow_new_syntax), from_star_syntax=True
+        )
     else:
         raise TypeTranslationError()
diff --git a/mypy/fastparse.py b/mypy/fastparse.py
index a96e697d40bf..fe158d468ce8 100644
--- a/mypy/fastparse.py
+++ b/mypy/fastparse.py
@@ -2041,7 +2041,7 @@ def visit_Attribute(self, n: Attribute) -> Type:
 
     # Used for Callable[[X *Ys, Z], R]
     def visit_Starred(self, n: ast3.Starred) -> Type:
-        return UnpackType(self.visit(n.value))
+        return UnpackType(self.visit(n.value), from_star_syntax=True)
 
     # List(expr* elts, expr_context ctx)
     def visit_List(self, n: ast3.List) -> Type:
diff --git a/mypy/semanal_typeargs.py b/mypy/semanal_typeargs.py
index 3e11951376c9..ed04b30e90ba 100644
--- a/mypy/semanal_typeargs.py
+++ b/mypy/semanal_typeargs.py
@@ -214,7 +214,9 @@ def visit_unpack_type(self, typ: UnpackType) -> None:
             # Avoid extra errors if there were some errors already. Also interpret plain Any
             # as tuple[Any, ...] (this is better for the code in type checker).
             self.fail(
-                message_registry.INVALID_UNPACK.format(format_type(proper_type, self.options)), typ
+                message_registry.INVALID_UNPACK.format(format_type(proper_type, self.options)),
+                typ.type,
+                code=codes.VALID_TYPE,
             )
         typ.type = self.named_type("builtins.tuple", [AnyType(TypeOfAny.from_error)])
 
diff --git a/mypy/typeanal.py b/mypy/typeanal.py
index e297f2bf1631..385c5d35d67f 100644
--- a/mypy/typeanal.py
+++ b/mypy/typeanal.py
@@ -961,7 +961,7 @@ def visit_unpack_type(self, t: UnpackType) -> Type:
         if not self.allow_unpack:
             self.fail(message_registry.INVALID_UNPACK_POSITION, t.type, code=codes.VALID_TYPE)
             return AnyType(TypeOfAny.from_error)
-        return UnpackType(self.anal_type(t.type))
+        return UnpackType(self.anal_type(t.type), from_star_syntax=t.from_star_syntax)
 
     def visit_parameters(self, t: Parameters) -> Type:
         raise NotImplementedError("ParamSpec literals cannot have unbound TypeVars")
@@ -969,6 +969,7 @@ def visit_parameters(self, t: Parameters) -> Type:
     def visit_callable_type(self, t: CallableType, nested: bool = True) -> Type:
         # Every Callable can bind its own type variables, if they're not in the outer scope
         with self.tvar_scope_frame():
+            unpacked_kwargs = False
             if self.defining_alias:
                 variables = t.variables
             else:
@@ -996,6 +997,15 @@ def visit_callable_type(self, t: CallableType, nested: bool = True) -> Type:
                         )
                         validated_args.append(AnyType(TypeOfAny.from_error))
                     else:
+                        if nested and isinstance(at, UnpackType) and i == star_index:
+                            # TODO: it would be better to avoid this get_proper_type() call.
+                            p_at = get_proper_type(at.type)
+                            if isinstance(p_at, TypedDictType) and not at.from_star_syntax:
+                                # Automatically detect Unpack[Foo] in Callable as backwards
+                                # compatible syntax for **Foo, if Foo is a TypedDict.
+                                at = p_at
+                                arg_kinds[i] = ARG_STAR2
+                                unpacked_kwargs = True
                         validated_args.append(at)
                 arg_types = validated_args
             # If there were multiple (invalid) unpacks, the arg types list will become shorter,
@@ -1013,6 +1023,7 @@ def visit_callable_type(self, t: CallableType, nested: bool = True) -> Type:
                 fallback=(t.fallback if t.fallback.type else self.named_type("builtins.function")),
                 variables=self.anal_var_defs(variables),
                 type_guard=special,
+                unpack_kwargs=unpacked_kwargs,
             )
         return ret
 
diff --git a/mypy/types.py b/mypy/types.py
index 04d90c9dc124..22fcd601d6a0 100644
--- a/mypy/types.py
+++ b/mypy/types.py
@@ -1053,11 +1053,14 @@ class UnpackType(ProperType):
     wild west, technically anything can be present in the wrapped type.
     """
 
-    __slots__ = ["type"]
+    __slots__ = ["type", "from_star_syntax"]
 
-    def __init__(self, typ: Type, line: int = -1, column: int = -1) -> None:
+    def __init__(
+        self, typ: Type, line: int = -1, column: int = -1, from_star_syntax: bool = False
+    ) -> None:
         super().__init__(line, column)
         self.type = typ
+        self.from_star_syntax = from_star_syntax
 
     def accept(self, visitor: TypeVisitor[T]) -> T:
         return visitor.visit_unpack_type(self)
diff --git a/test-data/unit/check-varargs.test b/test-data/unit/check-varargs.test
index ef2c3c57fad5..41668e991972 100644
--- a/test-data/unit/check-varargs.test
+++ b/test-data/unit/check-varargs.test
@@ -1079,3 +1079,18 @@ class C:
 class D:
     def __init__(self, **kwds: Unpack[int, str]) -> None: ...  # E: Unpack[...] requires exactly one type argument
 [builtins fixtures/dict.pyi]
+
+[case testUnpackInCallableType]
+from typing import Callable
+from typing_extensions import Unpack, TypedDict
+
+class TD(TypedDict):
+    key: str
+    value: str
+
+foo: Callable[[Unpack[TD]], None]
+foo(key="yes", value=42)  # E: Argument "value" has incompatible type "int"; expected "str"
+foo(key="yes", value="ok")
+
+bad: Callable[[*TD], None]  # E: "TD" cannot be unpacked (must be tuple or TypeVarTuple)
+[builtins fixtures/dict.pyi]