diff --git a/compiler/src/dotty/tools/dotc/typer/Typer.scala b/compiler/src/dotty/tools/dotc/typer/Typer.scala
index 11a96e5f2e76..b0fedf756683 100644
--- a/compiler/src/dotty/tools/dotc/typer/Typer.scala
+++ b/compiler/src/dotty/tools/dotc/typer/Typer.scala
@@ -1407,11 +1407,15 @@ class Typer(@constructorOnly nestingLevel: Int = 0) extends Namer
         case defn.ErasedFunctionOf(mt @ MethodTpe(_, formals, restpe)) if formals.length == defaultArity =>
           (formals, untpd.DependentTypeTree(syms => restpe.substParams(mt, syms.map(_.termRef))))
         case SAMType(mt @ MethodTpe(_, formals, restpe), _) =>
-          (formals,
-           if (mt.isResultDependent)
-             untpd.DependentTypeTree(syms => restpe.substParams(mt, syms.map(_.termRef)))
-           else
-             typeTree(restpe))
+          val tree =
+            if (mt.isResultDependent) {
+              if (formals.length != defaultArity)
+                typeTree(WildcardType)
+              else
+                untpd.DependentTypeTree(syms => restpe.substParams(mt, syms.map(_.termRef)))
+            } else
+              typeTree(restpe)
+          (formals, tree)
         case _ =>
           (List.tabulate(defaultArity)(alwaysWildcardType), untpd.TypeTree())
       }
diff --git a/tests/neg/i123577.check b/tests/neg/i123577.check
new file mode 100644
index 000000000000..6d8f1403b819
--- /dev/null
+++ b/tests/neg/i123577.check
@@ -0,0 +1,7 @@
+-- [E007] Type Mismatch Error: tests/neg/i123577.scala:11:4 ------------------------------------------------------------
+11 |    (msg: String) => ??? // error
+   |    ^^^^^^^^^^^^^^^^^^^^
+   |    Found:    String => Nothing
+   |    Required: MillRpcChannel
+   |
+   | longer explanation available when compiling with `-explain`
diff --git a/tests/neg/i123577.scala b/tests/neg/i123577.scala
new file mode 100644
index 000000000000..fe69d3477757
--- /dev/null
+++ b/tests/neg/i123577.scala
@@ -0,0 +1,13 @@
+trait MillRpcMessage {
+  type Response
+}
+
+trait MillRpcChannel {
+  def apply(requestId: Long, input: MillRpcMessage): input.Response
+}
+
+object MillRpcChannel {
+  def createChannel: MillRpcChannel = {
+    (msg: String) => ??? // error
+  }
+}