diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 981380c70de8e..4d309681bb31f 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -10783,10 +10783,32 @@ namespace ts {
             return type === typeParameter || type.flags & TypeFlags.UnionOrIntersection && forEach((<UnionOrIntersectionType>type).types, t => isTypeParameterAtTopLevel(t, typeParameter));
         }
 
-        // Infer a suitable input type for a homomorphic mapped type { [P in keyof T]: X }. We construct
-        // an object type with the same set of properties as the source type, where the type of each
-        // property is computed by inferring from the source property type to X for the type
-        // variable T[P] (i.e. we treat the type T[P] as the type variable we're inferring for).
+        /** Create an object with properties named in the string literal type. Every property has type `{}` */
+        function createEmptyObjectTypeFromStringLiteral(type: Type) {
+            const members = createSymbolTable();
+            forEachType(type, t => {
+                if (!(t.flags & TypeFlags.StringLiteral)) {
+                    return;
+                }
+                const name = escapeLeadingUnderscores((t as StringLiteralType).value);
+                const literalProp = createSymbol(SymbolFlags.Property, name);
+                literalProp.type = emptyObjectType;
+                if (t.symbol) {
+                    literalProp.declarations = t.symbol.declarations;
+                    literalProp.valueDeclaration = t.symbol.valueDeclaration;
+                }
+                members.set(name, literalProp);
+            });
+            const indexInfo = type.flags & TypeFlags.String ? createIndexInfo(emptyObjectType, /*isReadonly*/ false) : undefined;
+            return createAnonymousType(undefined, members, emptyArray, emptyArray, indexInfo, undefined);
+        }
+
+        /**
+         * Infer a suitable input type for a homomorphic mapped type { [P in keyof T]: X }. We construct
+         * an object type with the same set of properties as the source type, where the type of each
+         * property is computed by inferring from the source property type to X for the type
+         * variable T[P] (i.e. we treat the type T[P] as the type variable we're inferring for).
+         */
         function inferTypeForHomomorphicMappedType(source: Type, target: MappedType): Type {
             const properties = getPropertiesOfType(source);
             let indexInfo = getIndexInfoOfType(source, IndexKind.String);
@@ -10942,7 +10964,15 @@ namespace ts {
                     }
                 }
                 else if (source.flags & TypeFlags.Index && target.flags & TypeFlags.Index) {
+                    priority ^= InferencePriority.Contravariant;
                     inferFromTypes((<IndexType>source).type, (<IndexType>target).type);
+                    priority ^= InferencePriority.Contravariant;
+                }
+                else if ((isLiteralType(source) || source.flags & TypeFlags.String) && target.flags & TypeFlags.Index) {
+                    const empty = createEmptyObjectTypeFromStringLiteral(source);
+                    priority ^= InferencePriority.Contravariant;
+                    inferFromTypes(empty, (target as IndexType).type);
+                    priority ^= InferencePriority.Contravariant;
                 }
                 else if (source.flags & TypeFlags.IndexedAccess && target.flags & TypeFlags.IndexedAccess) {
                     inferFromTypes((<IndexedAccessType>source).objectType, (<IndexedAccessType>target).objectType);
diff --git a/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.js b/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.js
new file mode 100644
index 0000000000000..6a9a081ae6056
--- /dev/null
+++ b/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.js
@@ -0,0 +1,8 @@
+//// [inferObjectTypeFromStringLiteralToKeyof.ts]
+declare function inference<T>(target: T, name: keyof T): void;
+declare var two: "a" | "d";
+inference({ a: 1, b: 2, c: 3, d(n) { return n } }, two);
+
+
+//// [inferObjectTypeFromStringLiteralToKeyof.js]
+inference({ a: 1, b: 2, c: 3, d: function (n) { return n; } }, two);
diff --git a/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.symbols b/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.symbols
new file mode 100644
index 0000000000000..aa3c9e89f9a42
--- /dev/null
+++ b/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.symbols
@@ -0,0 +1,22 @@
+=== tests/cases/compiler/inferObjectTypeFromStringLiteralToKeyof.ts ===
+declare function inference<T>(target: T, name: keyof T): void;
+>inference : Symbol(inference, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 0, 0))
+>T : Symbol(T, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 0, 27))
+>target : Symbol(target, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 0, 30))
+>T : Symbol(T, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 0, 27))
+>name : Symbol(name, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 0, 40))
+>T : Symbol(T, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 0, 27))
+
+declare var two: "a" | "d";
+>two : Symbol(two, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 1, 11))
+
+inference({ a: 1, b: 2, c: 3, d(n) { return n } }, two);
+>inference : Symbol(inference, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 0, 0))
+>a : Symbol(a, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 2, 11))
+>b : Symbol(b, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 2, 17))
+>c : Symbol(c, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 2, 23))
+>d : Symbol(d, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 2, 29))
+>n : Symbol(n, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 2, 32))
+>n : Symbol(n, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 2, 32))
+>two : Symbol(two, Decl(inferObjectTypeFromStringLiteralToKeyof.ts, 1, 11))
+
diff --git a/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.types b/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.types
new file mode 100644
index 0000000000000..39c4bb84196b8
--- /dev/null
+++ b/tests/baselines/reference/inferObjectTypeFromStringLiteralToKeyof.types
@@ -0,0 +1,27 @@
+=== tests/cases/compiler/inferObjectTypeFromStringLiteralToKeyof.ts ===
+declare function inference<T>(target: T, name: keyof T): void;
+>inference : <T>(target: T, name: keyof T) => void
+>T : T
+>target : T
+>T : T
+>name : keyof T
+>T : T
+
+declare var two: "a" | "d";
+>two : "a" | "d"
+
+inference({ a: 1, b: 2, c: 3, d(n) { return n } }, two);
+>inference({ a: 1, b: 2, c: 3, d(n) { return n } }, two) : void
+>inference : <T>(target: T, name: keyof T) => void
+>{ a: 1, b: 2, c: 3, d(n) { return n } } : { a: number; b: number; c: number; d(n: any): any; }
+>a : number
+>1 : 1
+>b : number
+>2 : 2
+>c : number
+>3 : 3
+>d : (n: any) => any
+>n : any
+>n : any
+>two : "a" | "d"
+
diff --git a/tests/cases/compiler/inferObjectTypeFromStringLiteralToKeyof.ts b/tests/cases/compiler/inferObjectTypeFromStringLiteralToKeyof.ts
new file mode 100644
index 0000000000000..86acbf93a70e8
--- /dev/null
+++ b/tests/cases/compiler/inferObjectTypeFromStringLiteralToKeyof.ts
@@ -0,0 +1,3 @@
+declare function inference<T>(target: T, name: keyof T): void;
+declare var two: "a" | "d";
+inference({ a: 1, b: 2, c: 3, d(n) { return n } }, two);