diff --git a/src/Type/Generic/TemplateTypeTrait.php b/src/Type/Generic/TemplateTypeTrait.php
index d5d15a26abf..c32d463f4e0 100644
--- a/src/Type/Generic/TemplateTypeTrait.php
+++ b/src/Type/Generic/TemplateTypeTrait.php
@@ -121,6 +121,12 @@ public function isValidVariance(Type $a, Type $b, bool $strict = false): IsSuper
 	public function subtract(Type $typeToRemove): Type
 	{
 		$removedBound = TypeCombinator::remove($this->getBound(), $typeToRemove);
+		if ($removedBound instanceof NeverType) {
+			// every value the bound allows is removed, so no T is left; as a bound,
+			// never would make the factory fall back to a mixed bound
+			return $removedBound;
+		}
+
 		return TemplateTypeFactory::create(
 			$this->getScope(),
 			$this->getName(),
@@ -410,6 +416,11 @@ public function tryRemove(Type $typeToRemove): ?Type
 			return null;
 		}
 
+		if ($bound instanceof NeverType) {
+			// see subtract()
+			return $bound;
+		}
+
 		return TemplateTypeFactory::create(
 			$this->getScope(),
 			$this->getName(),
diff --git a/tests/PHPStan/Analyser/nsrt/template-never-bound.php b/tests/PHPStan/Analyser/nsrt/template-never-bound.php
new file mode 100644
index 00000000000..15e8fca7980
--- /dev/null
+++ b/tests/PHPStan/Analyser/nsrt/template-never-bound.php
@@ -0,0 +1,95 @@
+<?php declare(strict_types = 1);
+
+namespace TemplateNeverBound;
+
+use function PHPStan\Testing\assertType;
+
+/**
+ * @template T of int
+ * @param T $t
+ * @return T
+ */
+function nested(int $t): int
+{
+	if ($t > 0) {
+		if ($t >= 0) {
+			assertType('T of int<1, max> (function TemplateNeverBound\nested(), argument)', $t);
+		} else {
+			assertType('*NEVER*', $t);
+		}
+
+		assertType('T of int<1, max> (function TemplateNeverBound\nested(), argument)', $t);
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of int
+ * @param T $t
+ * @return T
+ */
+function chain(int $t): int
+{
+	if ($t < 0) {
+		assertType('T of int<min, -1> (function TemplateNeverBound\chain(), argument)', $t);
+	} elseif ($t >= 0) {
+		assertType('T of int<0, max> (function TemplateNeverBound\chain(), argument)', $t);
+	} else {
+		assertType('*NEVER*', $t);
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of int
+ * @param T $t
+ * @return T
+ */
+function afterMerge(int $t): int
+{
+	if ($t < 0) {
+		echo 'negative';
+	}
+
+	if ($t >= 2 && $t <= 2) {
+		assertType('T of 2 (function TemplateNeverBound\afterMerge(), argument)', $t);
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of bool
+ * @param T $t
+ * @return T
+ */
+function boolean(bool $t): bool
+{
+	if ($t === true) {
+		assertType('T of bool (function TemplateNeverBound\boolean(), argument)&true', $t);
+	} elseif ($t === false) {
+		assertType('T of false (function TemplateNeverBound\boolean(), argument)&false', $t);
+	} else {
+		assertType('*NEVER*', $t);
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of string
+ * @param T $t
+ * @return T
+ */
+function str(string $t): string
+{
+	if (is_string($t)) {
+		assertType('T of string (function TemplateNeverBound\str(), argument)', $t);
+	} else {
+		assertType('*NEVER*', $t);
+	}
+
+	return $t;
+}
diff --git a/tests/PHPStan/Rules/Functions/ReturnTypeRuleTest.php b/tests/PHPStan/Rules/Functions/ReturnTypeRuleTest.php
index 55f68eca67d..434d8099be0 100644
--- a/tests/PHPStan/Rules/Functions/ReturnTypeRuleTest.php
+++ b/tests/PHPStan/Rules/Functions/ReturnTypeRuleTest.php
@@ -605,4 +605,17 @@ public function testBug15714(): void
 		]);
 	}
 
+	public function testTemplateNeverBound(): void
+	{
+		$this->checkNullables = true;
+		$this->checkExplicitMixed = true;
+		$this->analyse([__DIR__ . '/data/template-never-bound.php'], [
+			[
+				'Function TemplateNeverBoundReturnType\\stillReported() should return T of int but returns int.',
+				86,
+				'Type int is not always the same as T. It breaks the contract for some argument types, typically subtypes.',
+			],
+		]);
+	}
+
 }
diff --git a/tests/PHPStan/Rules/Functions/data/template-never-bound.php b/tests/PHPStan/Rules/Functions/data/template-never-bound.php
new file mode 100644
index 00000000000..83a8c973d83
--- /dev/null
+++ b/tests/PHPStan/Rules/Functions/data/template-never-bound.php
@@ -0,0 +1,91 @@
+<?php declare(strict_types = 1);
+
+namespace TemplateNeverBoundReturnType;
+
+/**
+ * @template T of int
+ * @param T $t
+ * @return T
+ */
+function nested(int $t): int
+{
+	if ($t > 0) {
+		if ($t >= 0) {
+			echo 'x';
+		} else {
+			echo 'never';
+		}
+
+		return $t;
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of int
+ * @param T $t
+ * @return T
+ */
+function chain(int $t): int
+{
+	if ($t < 0) {
+		echo 'negative';
+	} elseif ($t >= 0) {
+		echo 'non-negative';
+	} else {
+		echo 'never';
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of int
+ * @param T $t
+ * @return T
+ */
+function afterMerge(int $t): int
+{
+	if ($t < 0) {
+		echo 'negative';
+	}
+	if ($t >= 2 && $t <= 2) {
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of bool
+ * @param T $t
+ * @return T
+ */
+function boolean(bool $t): bool
+{
+	if ($t === true) {
+		echo 'true';
+	} elseif ($t === false) {
+		echo 'false';
+	} else {
+		echo 'never';
+	}
+
+	return $t;
+}
+
+/**
+ * @template T of int
+ * @param T $t
+ * @return T
+ */
+function stillReported(int $t, int $other): int
+{
+	if ($t > 0) {
+		if ($t >= 0) {
+			return $other;
+		}
+	}
+
+	return $t;
+}
diff --git a/turbo-ext/src/TypeTraits.cpp b/turbo-ext/src/TypeTraits.cpp
index 1388f09f2d5..f77a40c3303 100644
--- a/turbo-ext/src/TypeTraits.cpp
+++ b/turbo-ext/src/TypeTraits.cpp
@@ -4273,16 +4273,24 @@ class TemplateTypeTrait
 		return pt_type_call(Z_OBJ_P(variance), PT_LC("isvalidvariance"), 4, args);
 	}
 
-	/* the rebuild over TypeCombinator::remove($this->getBound(), $typeToRemove) */
+	/* the rebuild over TypeCombinator::remove($this->getBound(), $typeToRemove),
+	 * or that never itself when it removes the whole bound */
 	zv::Val subtract(zval *typeToRemove) const
 	{
 		zv::Val bound = thisGetBound();
 		if (UNEXPECTED(bound.isUndef())) return zv::Val();
 		zv::Val removedBound = pt_type_combinator_remove(bound.raw(), typeToRemove);
 		if (UNEXPECTED(removedBound.isUndef())) return zv::Val();
+		if (isNever(removedBound.raw())) return removedBound;
 		return recreateKeepingDefault(removedBound.raw());
 	}
 
+	/* $type instanceof NeverType */
+	static bool isNever(zval *type)
+	{
+		return Z_TYPE_P(type) == IS_OBJECT && instanceof_function(Z_OBJCE_P(type), pt_ce_never_type);
+	}
+
 	/* $bound instanceof SubtractableType; false = pending exception */
 	[[nodiscard]] static bool isSubtractable(zval *bound, bool &out)
 	{
@@ -4798,6 +4806,7 @@ class TemplateTypeTrait
 		zv::Val equal = pt_type_op(Z_OBJ_P(boundOnceMore.raw()), PT_OP_EQUALS, 1, removed.raw());
 		if (UNEXPECTED(equal.isUndef())) return zv::Val();
 		if (zend_is_true(equal.raw())) return zv::Val::null();
+		if (isNever(removed.raw())) return removed;
 		return recreateKeepingDefault(removed.raw());
 	}