diff --git a/mypy/typeanal.py b/mypy/typeanal.py
index 125cba219dc5..d5c8de14cea4 100644
--- a/mypy/typeanal.py
+++ b/mypy/typeanal.py
@@ -2150,6 +2150,9 @@ def instantiate_type_alias(
         and act_len == 0
         and not (empty_tuple_index and node.tvar_tuple_index is not None)
     ):
+        if node.python_3_12_type_alias:
+            # Pass original type variables to preserve genericity in the alias reference
+            return TypeAliasType(node, list(node.alias_tvars), line=ctx.line, column=ctx.column)
         # Interpret bare Alias same as normal generic, i.e., Alias[Any, Any, ...]
         return set_any_tvars(
             node,
@@ -2167,7 +2170,6 @@ def instantiate_type_alias(
             # Note: this is the only case where we use an eager expansion. See more info about
             # no_args aliases like L = List in the docstring for TypeAlias class.
             return Instance(node.target.type, [], line=ctx.line, column=ctx.column)
-        return TypeAliasType(node, [], line=ctx.line, column=ctx.column)
     if (
         max_tv_count == 0
         and act_len > 0
diff --git a/pytest b/pytest
new file mode 100644
index 000000000000..ef5571d4af18
--- /dev/null
+++ b/pytest
@@ -0,0 +1 @@
+PATH=C:\Program Files\Microsoft SDKs\Azure\CLI2\wbin;C:\Program Files (x86)\Common Files\Oracle\Java\javapath;C:\WINDOWS\system32;C:\WINDOWS;C:\WINDOWS\System32\Wbem;C:\WINDOWS\System32\WindowsPowerShell\v1.0\;C:\WINDOWS\System32\OpenSSH\;C:\Program Files\Microsoft SQL Server\150\Tools\Binn\;C:\Program Files (x86)\PDFtk\bin\;C:\Program Files\Microsoft SQL Server\Client SDK\ODBC\170\Tools\Binn\;C:\Program Files (x86)\Microsoft SQL Server\160\Tools\Binn\;C:\Program Files\Microsoft SQL Server\160\Tools\Binn\;C:\Program Files\Microsoft SQL Server\160\DTS\Binn\;C:\Program Files\dotnet\;E:\flutter\bin;C:\Program Files (x86)\Google\Cloud SDK\google-cloud-sdk\bin;C:\ProgramData\chocolatey\bin;E:\Git\cmd;C:\Program Files\GTK3-Runtime Win64\bin;C:\Users\Admin\AppData\Local\nvm;C:\nvm4w\nodejs;C:\Users\Admin\AppData\Local\Microsoft\WindowsApps;C:\Users\Admin\AppData\Local\Programs\Microsoft VS Code\bin;C:\Users\Admin\.dotnet\tools;E:\python\;E:\python\Scripts\;E:\flutter\bin;C:\Users\Admin\AppData\Local\Android\Sdk\platform-tools;C:\Users\Admin\AppData\Local\Android\Sdk\cmdline-tools\latest\bin;E:\PyCharm 2025.2.2\bin;E:\pycharm\PyCharm Community Edition 2024.3.5\bin;;C:\Users\Admin\AppData\Roaming\npm;C:\Users\Admin\AppData\Local\nvm;C:\nvm4w\nodejs  mypy/test/testcheck.py -k testPep695GenericTypeAliasReassignment\PATH.txt
diff --git a/test-data/unit/check-python312.test b/test-data/unit/check-python312.test
index a67ed4abcffa..5ccc2d82db05 100644
--- a/test-data/unit/check-python312.test
+++ b/test-data/unit/check-python312.test
@@ -1479,7 +1479,7 @@ class D(C): pass
 
 type A[T: C] = list[T]
 a1: A
-reveal_type(a1)  # N: Revealed type is "builtins.list[Any]"
+reveal_type(a1)  # N: Revealed type is "builtins.list[T`1]"
 a2: A[Any]
 a3: A[C]
 a4: A[D]
@@ -1491,7 +1491,7 @@ x2 = cast(A[None], a1)  # E: Type argument "None" of "A" must be a subtype of "C
 
 type A2[T: (int, C)] = list[T]
 b1: A2
-reveal_type(b1)  # N: Revealed type is "builtins.list[Any]"
+reveal_type(b1)  # N: Revealed type is "builtins.list[T`1]"
 b2: A2[Any]
 b3: A2[int]
 b4: A2[C]
@@ -2237,3 +2237,24 @@ class D[*Ts](Generic[Unpack[Us]]):  # E: Generic[...] base class is redundant \
                                     # E: Can only use one type var tuple in a class def
     pass
 [builtins fixtures/tuple.pyi]
+
+[case testPep695GenericTypeAliasReassignmentAndUsage]
+import types
+from typing import reveal_type
+
+type A[T] = list[T] | str
+
+# 1. Assignment (The Fix)
+B = A
+reveal_type(B)  # N: Revealed type is "types.UnionType[builtins.list[T`1], builtins.str]"
+
+# 2. Usage (The Regression Check)
+def foo(x: B[int]) -> None:  # E: Bad number of arguments for type alias, expected 0, given 1
+    reveal_type(x)  # N: Revealed type is "Union[builtins.list[T`1], builtins.str]"
+
+[file types.pyi]
+class UnionType: ...
+class GenericAlias: ...
+
+[builtins fixtures/list.pyi]
+[typing fixtures/typing-full.pyi]
diff --git a/test-data/unit/check-python313.test b/test-data/unit/check-python313.test
index 117d20ceaf0b..070668a6637d 100644
--- a/test-data/unit/check-python313.test
+++ b/test-data/unit/check-python313.test
@@ -215,7 +215,7 @@ def func_a1(
     c: TA1[float, float],
     d: TA1[float, float, float],  # E: Bad number of arguments for type alias, expected between 0 and 2, given 3
 ) -> None:
-    reveal_type(a)  # N: Revealed type is "builtins.dict[builtins.int, builtins.str]"
+    reveal_type(a)  # N: Revealed type is "builtins.dict[T2`1 = builtins.int, T3`2 = builtins.str]"
     reveal_type(b)  # N: Revealed type is "builtins.dict[builtins.float, builtins.str]"
     reveal_type(c)  # N: Revealed type is "builtins.dict[builtins.float, builtins.float]"
     reveal_type(d)  # N: Revealed type is "builtins.dict[builtins.int, builtins.str]"
@@ -234,7 +234,7 @@ def func_b1(
     c: TB1[[float], [float]],
     d: TB1[[float], [float], [float]],  # E: Bad number of arguments for type alias, expected between 0 and 2, given 3
 ) -> None:
-    reveal_type(a)  # N: Revealed type is "__main__.ClassB1[[builtins.int, builtins.str], [*Any, **Any]]"
+    reveal_type(a)  # N: Revealed type is "__main__.ClassB1[P2`1 = [builtins.int, builtins.str], P3`2 = ...]"
     reveal_type(b)  # N: Revealed type is "__main__.ClassB1[[builtins.float], [*Any, **Any]]"
     reveal_type(c)  # N: Revealed type is "__main__.ClassB1[[builtins.float], [builtins.float]]"
     reveal_type(d)  # N: Revealed type is "__main__.ClassB1[[builtins.int, builtins.str], [*Any, **Any]]"