diff --git a/clang/include/clang/AST/DeclContextInternals.h b/clang/include/clang/AST/DeclContextInternals.h
index c4734ab5789538..42cc677f82135e 100644
--- a/clang/include/clang/AST/DeclContextInternals.h
+++ b/clang/include/clang/AST/DeclContextInternals.h
@@ -160,12 +160,16 @@ class StoredDeclsList {
 
   void replaceExternalDecls(ArrayRef<NamedDecl*> Decls) {
     // Remove all declarations that are either external or are replaced with
-    // external declarations.
+    // external declarations with higher visibilities.
     erase_if([Decls](NamedDecl *ND) {
       if (ND->isFromASTFile())
         return true;
+      // FIXME: Can we get rid of this loop completely?
       for (NamedDecl *D : Decls)
-        if (D->declarationReplaces(ND, /*IsKnownNewer=*/false))
+        // Only replace the local declaration if the external declaration has
+        // higher visibilities.
+        if (D->getModuleOwnershipKind() <= ND->getModuleOwnershipKind() &&
+            D->declarationReplaces(ND, /*IsKnownNewer=*/false))
           return true;
       return false;
     });
diff --git a/clang/test/Modules/pr88400.cppm b/clang/test/Modules/pr88400.cppm
new file mode 100644
index 00000000000000..ff69137a0b9040
--- /dev/null
+++ b/clang/test/Modules/pr88400.cppm
@@ -0,0 +1,61 @@
+// RUN: rm -rf %t
+// RUN: mkdir -p %t
+// RUN: split-file %s %t
+//
+// RUN: %clang_cc1 -std=c++20 %t/bar.cppm -emit-module-interface -o %t/bar.pcm
+// RUN: %clang_cc1 -std=c++20 %t/foo.cc -fmodule-file=bar=%t/bar.pcm -fsyntax-only -verify
+// RUN: %clang_cc1 -std=c++20 %t/bar.cc -fmodule-file=bar=%t/bar.pcm -fsyntax-only -verify
+//
+// RUN: %clang_cc1 -std=c++20 %t/bar.cppm -emit-reduced-module-interface -o %t/bar.pcm
+// RUN: %clang_cc1 -std=c++20 %t/foo.cc -fmodule-file=bar=%t/bar.pcm -fsyntax-only -verify
+// RUN: %clang_cc1 -std=c++20 %t/bar.cc -fmodule-file=bar=%t/bar.pcm -fsyntax-only -verify
+
+//--- header.h
+#pragma once
+
+namespace N {
+    template<typename T>
+    concept X = true;
+
+    template<X T>
+    class Y {
+    public:
+        template<X U>
+        friend class Y;
+    };
+
+    inline Y<int> x;
+}
+
+//--- bar.cppm
+module;
+
+#include "header.h"
+
+export module bar;
+
+namespace N {
+    // To make sure N::Y won't get elided.
+    using N::x;
+}
+
+//--- foo.cc
+// expected-no-diagnostics
+#include "header.h"
+
+import bar;
+
+void y() {
+    N::Y<int> y{};
+};
+
+//--- bar.cc
+// expected-no-diagnostics
+import bar;
+
+#include "header.h"
+
+void y() {
+    N::Y<int> y{};
+};
+