diff --git a/compiler/src/dotty/tools/dotc/cc/Capability.scala b/compiler/src/dotty/tools/dotc/cc/Capability.scala
index 41a084a5d87e..77c67dff5a00 100644
--- a/compiler/src/dotty/tools/dotc/cc/Capability.scala
+++ b/compiler/src/dotty/tools/dotc/cc/Capability.scala
@@ -898,7 +898,9 @@ object Capabilities:
         case t @ AnnotatedType(parent, ann) =>
           val parent1 = this(parent)
           if ann.symbol.isRetains && ann.tree.toCaptureSet.containsCap then
-            this(CapturingType(parent1, ann.tree.toCaptureSet))
+            // Applying `this` can cause infinite recursion in some cases during printing.
+            // scalac -Xprint:all tests/pos/i23885/S_1.scala tests/pos/i23885/S_2.scala
+            mapOver(CapturingType(parent1, ann.tree.toCaptureSet))
           else
             t.derivedAnnotatedType(parent1, ann)
         case defn.RefinedFunctionOf(_) =>
diff --git a/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala b/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala
index d5f8b635fa58..420e6e1ab253 100644
--- a/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala
+++ b/compiler/src/dotty/tools/dotc/cc/CaptureOps.scala
@@ -14,6 +14,7 @@ import Annotations.Annotation
 import CaptureSet.VarState
 import Capabilities.*
 import StdNames.nme
+import config.Feature
 
 /** Attachment key for capturing type trees */
 private val Captures: Key[CaptureSet] = Key()
@@ -634,13 +635,18 @@ extension (tp: AnnotatedType)
     case ann: CaptureAnnotation => ann.boxed
     case _ => false
 
-/** Drop retains annotations in the type. */
+/** Drop retains annotations in the inferred type if CC is not enabled
+ *  or transform them into RetainingTypes if CC is enabled.
+ */
 class CleanupRetains(using Context) extends TypeMap:
-  def apply(tp: Type): Type =
-    tp match
-      case AnnotatedType(tp, annot) if annot.symbol == defn.RetainsAnnot || annot.symbol == defn.RetainsByNameAnnot =>
-        RetainingType(tp, defn.NothingType, byName = annot.symbol == defn.RetainsByNameAnnot)
-      case _ => mapOver(tp)
+  def apply(tp: Type): Type = tp match
+    case AnnotatedType(parent, annot) if annot.symbol.isRetainsLike =>
+      if Feature.ccEnabled then
+        if annot.symbol == defn.RetainsAnnot || annot.symbol == defn.RetainsByNameAnnot then
+          RetainingType(parent, defn.NothingType, byName = annot.symbol == defn.RetainsByNameAnnot)
+        else mapOver(tp)
+      else apply(parent)
+    case _ => mapOver(tp)
 
 /** A base class for extractors that match annotated types with a specific
  *  Capability annotation.
diff --git a/compiler/src/dotty/tools/dotc/typer/Checking.scala b/compiler/src/dotty/tools/dotc/typer/Checking.scala
index 990eb01b999e..493a4207717d 100644
--- a/compiler/src/dotty/tools/dotc/typer/Checking.scala
+++ b/compiler/src/dotty/tools/dotc/typer/Checking.scala
@@ -771,8 +771,9 @@ object Checking {
           !(symBoundary.isContainedIn(otherBoundary) ||
             otherLinkedBoundary.exists && symBoundary.isContainedIn(otherLinkedBoundary))
         }
-        && !(inCaptureSet && other.isAllOf(LocalParamAccessor))
-            // class parameters in capture sets are not treated as leaked since in
+        && !(inCaptureSet && (!Feature.ccEnabled || other.isAllOf(LocalParamAccessor)))
+            // All references are skipped in capture sets when CC is not enabled.
+            // Class parameters in capture sets are not treated as leaked since in
             // phase CheckCaptures these are treated as normal vals.
 
       def apply(tp: Type): Type = tp match {
diff --git a/tests/pos/i23885/S_1.scala b/tests/pos/i23885/S_1.scala
new file mode 100644
index 000000000000..85b5dad758c4
--- /dev/null
+++ b/tests/pos/i23885/S_1.scala
@@ -0,0 +1,4 @@
+import language.experimental.captureChecking
+
+class A:
+  def f(x: A^): A^{this, x} = ???
diff --git a/tests/pos/i23885/S_2.scala b/tests/pos/i23885/S_2.scala
new file mode 100644
index 000000000000..651f8f7f5330
--- /dev/null
+++ b/tests/pos/i23885/S_2.scala
@@ -0,0 +1,3 @@
+class B:
+  private val a: A = ???
+  def g(b: A) = a.f(b)