diff --git a/src/services/completions.ts b/src/services/completions.ts
index 65de51651a0f1..3291902986fa0 100644
--- a/src/services/completions.ts
+++ b/src/services/completions.ts
@@ -2666,7 +2666,7 @@ export function getCompletionEntriesFromSymbols(
     includeSymbol = false,
 ): UniqueNameSet {
     const start = timestamp();
-    const variableOrParameterDeclaration = getVariableOrParameterDeclaration(contextToken, location);
+    const closestSymbolDeclaration = getClosestSymbolDeclaration(contextToken, location);
     const useSemicolons = probablyUsesSemicolons(sourceFile);
     const typeChecker = program.getTypeChecker();
     // Tracks unique names.
@@ -2745,26 +2745,33 @@ export function getCompletionEntriesFromSymbols(
             }
             // Filter out variables from their own initializers
             // `const a = /* no 'a' here */`
-            if (tryCast(variableOrParameterDeclaration, isVariableDeclaration) && symbol.valueDeclaration === variableOrParameterDeclaration) {
+            if (tryCast(closestSymbolDeclaration, isVariableDeclaration) && symbol.valueDeclaration === closestSymbolDeclaration) {
                 return false;
             }
 
-            // Filter out parameters from their own initializers
+            // Filter out current and latter parameters from defaults
             // `function f(a = /* no 'a' and 'b' here */, b) { }` or
-            // `function f<T = /* no 'T' here */>(a: T) { }`
+            // `function f<T = /* no 'T' and 'T2' here */>(a: T, b: T2) { }`
             const symbolDeclaration = symbol.valueDeclaration ?? symbol.declarations?.[0];
-            if (
-                variableOrParameterDeclaration && symbolDeclaration && (
-                    (isTypeParameterDeclaration(variableOrParameterDeclaration) && isTypeParameterDeclaration(symbolDeclaration)) ||
-                    (isParameter(variableOrParameterDeclaration) && isParameter(symbolDeclaration))
-                )
-            ) {
-                const symbolDeclarationPos = symbolDeclaration.pos;
-                const parameters = isParameter(variableOrParameterDeclaration) ? variableOrParameterDeclaration.parent.parameters :
-                    isInferTypeNode(variableOrParameterDeclaration.parent) ? undefined :
-                    variableOrParameterDeclaration.parent.typeParameters;
-                if (symbolDeclarationPos >= variableOrParameterDeclaration.pos && parameters && symbolDeclarationPos < parameters.end) {
-                    return false;
+            if (closestSymbolDeclaration && symbolDeclaration) {
+                if (isParameter(closestSymbolDeclaration) && isParameter(symbolDeclaration)) {
+                    const parameters = closestSymbolDeclaration.parent.parameters;
+                    if (symbolDeclaration.pos >= closestSymbolDeclaration.pos && symbolDeclaration.pos < parameters.end) {
+                        return false;
+                    }
+                }
+                else if (isTypeParameterDeclaration(closestSymbolDeclaration) && isTypeParameterDeclaration(symbolDeclaration)) {
+                    if (closestSymbolDeclaration === symbolDeclaration && contextToken?.kind === SyntaxKind.ExtendsKeyword) {
+                        // filter out the directly self-recursive type parameters
+                        // `type A<K extends /* no 'K' here*/> = K`
+                        return false;
+                    }
+                    if (isInTypeParameterDefault(contextToken) && !isInferTypeNode(closestSymbolDeclaration.parent)) {
+                        const typeParameters = closestSymbolDeclaration.parent.typeParameters;
+                        if (typeParameters && symbolDeclaration.pos >= closestSymbolDeclaration.pos && symbolDeclaration.pos < typeParameters.end) {
+                            return false;
+                        }
+                    }
                 }
             }
 
@@ -6001,20 +6008,39 @@ function isModuleSpecifierMissingOrEmpty(specifier: ModuleReference | Expression
     return !tryCast(isExternalModuleReference(specifier) ? specifier.expression : specifier, isStringLiteralLike)?.text;
 }
 
-function getVariableOrParameterDeclaration(contextToken: Node | undefined, location: Node) {
+function getClosestSymbolDeclaration(contextToken: Node | undefined, location: Node) {
     if (!contextToken) return;
 
-    const possiblyParameterDeclaration = findAncestor(contextToken, node =>
+    let closestDeclaration = findAncestor(contextToken, node =>
         isFunctionBlock(node) || isArrowFunctionBody(node) || isBindingPattern(node)
             ? "quit"
             : ((isParameter(node) || isTypeParameterDeclaration(node)) && !isIndexSignatureDeclaration(node.parent)));
 
-    const possiblyVariableDeclaration = findAncestor(location, node =>
-        isFunctionBlock(node) || isArrowFunctionBody(node) || isBindingPattern(node)
-            ? "quit"
-            : isVariableDeclaration(node));
+    if (!closestDeclaration) {
+        closestDeclaration = findAncestor(location, node =>
+            isFunctionBlock(node) || isArrowFunctionBody(node) || isBindingPattern(node)
+                ? "quit"
+                : isVariableDeclaration(node));
+    }
+    return closestDeclaration as ParameterDeclaration | TypeParameterDeclaration | VariableDeclaration | undefined;
+}
+
+function isInTypeParameterDefault(contextToken: Node | undefined) {
+    if (!contextToken) {
+        return false;
+    }
 
-    return (possiblyParameterDeclaration || possiblyVariableDeclaration) as ParameterDeclaration | TypeParameterDeclaration | VariableDeclaration | undefined;
+    let node = contextToken;
+    let parent = contextToken.parent;
+    while (parent) {
+        if (isTypeParameterDeclaration(parent)) {
+            return parent.default === node || node.kind === SyntaxKind.EqualsToken;
+        }
+        node = parent;
+        parent = parent.parent;
+    }
+
+    return false;
 }
 
 function isArrowFunctionBody(node: Node) {
diff --git a/tests/cases/fourslash/completionsForLatterTypeParametersInConstraints1.ts b/tests/cases/fourslash/completionsForLatterTypeParametersInConstraints1.ts
new file mode 100644
index 0000000000000..1ef26bc74dc24
--- /dev/null
+++ b/tests/cases/fourslash/completionsForLatterTypeParametersInConstraints1.ts
@@ -0,0 +1,17 @@
+/// <reference path='fourslash.ts' />
+
+//// // https://github.com/microsoft/TypeScript/issues/56474
+//// function test<First extends S/*1*/, Second>(a: First, b: Second) {}
+//// type A1<K extends /*2*/, L> = K
+
+verify.completions({
+  marker: ["1"],
+  includes: ["Second"],
+  excludes: ["First"],
+});
+
+verify.completions({
+  marker: ["2"],
+  includes: ["L"],
+  excludes: ["K"],
+});
diff --git a/tests/cases/fourslash/completionsForSelfTypeParameterInConstraint1.ts b/tests/cases/fourslash/completionsForSelfTypeParameterInConstraint1.ts
new file mode 100644
index 0000000000000..89eb4631afc5a
--- /dev/null
+++ b/tests/cases/fourslash/completionsForSelfTypeParameterInConstraint1.ts
@@ -0,0 +1,15 @@
+/// <reference path='fourslash.ts' />
+
+//// type StateMachine<Config> = {
+////   initial?: "states" extends keyof Config ? keyof Config["states"] : never;
+////   states?: Record<string, {}>;
+//// };
+
+//// declare function createMachine<Config extends StateMachine</*1*/>>(
+////   config: Config,
+//// ): void;
+
+verify.completions({
+  marker: ["1"],
+  includes: ["Config"],
+});
diff --git a/tests/cases/fourslash/noCompletionsForCurrentOrLaterParameters.ts b/tests/cases/fourslash/noCompletionsForCurrentOrLaterParametersInDefaults.ts
similarity index 92%
rename from tests/cases/fourslash/noCompletionsForCurrentOrLaterParameters.ts
rename to tests/cases/fourslash/noCompletionsForCurrentOrLaterParametersInDefaults.ts
index 6ed833c16f428..46035a64fb388 100644
--- a/tests/cases/fourslash/noCompletionsForCurrentOrLaterParameters.ts
+++ b/tests/cases/fourslash/noCompletionsForCurrentOrLaterParametersInDefaults.ts
@@ -9,7 +9,6 @@
 //// const f5 = (a, b = (c = /*7*/, e) => { }, d = b) => { }
 ////
 //// type A1<K = /*T1*/, L> = K
-//// type A2<K extends /*T2*/, L> = K
 
 verify.completions({
     marker: ["1", "2"],
@@ -42,6 +41,6 @@ verify.completions({
 })
 
 verify.completions({
-    marker: ["T1", "T2"],
+    marker: ["T1"],
     excludes: ["K", "L"],
 })