diff --git a/org.eclipse.jdt.core.compiler.batch/src/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java b/org.eclipse.jdt.core.compiler.batch/src/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java
index e5f6ffa46a2..08e20333b9e 100644
--- a/org.eclipse.jdt.core.compiler.batch/src/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java
+++ b/org.eclipse.jdt.core.compiler.batch/src/org/eclipse/jdt/internal/compiler/lookup/BinaryTypeBinding.java
@@ -245,6 +245,11 @@ public static TypeBinding resolveType(TypeBinding type, LookupEnvironment enviro
 	return type;
 }
 
+private static TypeBinding resolveType(TypeBinding type, LookupEnvironment environment, boolean convertGenericToRawType, boolean convertRawToGenericType) {
+	TypeBinding retVal = resolveType(type, environment, convertGenericToRawType);
+	return convertRawToGenericType ? retVal.actualType() : retVal;
+}
+
 /**
  * Default empty constructor for subclasses only.
  */
@@ -2552,7 +2557,7 @@ public ReferenceBinding[] permittedTypes() {
 		return this.permittedTypes = this.prototype.permittedTypes();
 	}
 	for (int i = this.permittedTypes.length; --i >= 0;)
-		this.permittedTypes[i] = (ReferenceBinding) resolveType(this.permittedTypes[i], this.environment, false); // re-resolution seems harmless
+		this.permittedTypes[i] = (ReferenceBinding) resolveType(this.permittedTypes[i], this.environment, false, true); // re-resolution seems harmless; while permitted classes/interfaces cannot be parameterized with type arguments, they are not raw either
 
 	return this.permittedTypes;
 }
diff --git a/org.eclipse.jdt.core.tests.builder/src/org/eclipse/jdt/core/tests/builder/IncrementalTests.java b/org.eclipse.jdt.core.tests.builder/src/org/eclipse/jdt/core/tests/builder/IncrementalTests.java
index b6b56c65508..e8156913b02 100644
--- a/org.eclipse.jdt.core.tests.builder/src/org/eclipse/jdt/core/tests/builder/IncrementalTests.java
+++ b/org.eclipse.jdt.core.tests.builder/src/org/eclipse/jdt/core/tests/builder/IncrementalTests.java
@@ -667,10 +667,10 @@ public void testMemberTypeOfOtherProject() throws JavaModelException {
 
 	//https://bugs.eclipse.org/bugs/show_bug.cgi?id=377401
 	public void test$InTypeName() throws JavaModelException {
-		IPath projectPath1 = env.addProject("Project1", CompilerOptions.getFirstSupportedJavaVersion()); //$NON-NLS-1$ //$NON-NLS-2$
+		IPath projectPath1 = env.addProject("Project1", CompilerOptions.getFirstSupportedJavaVersion()); //$NON-NLS-1$
 		env.addExternalJars(projectPath1, Util.getJavaClassLibs());
 
-		IPath projectPath2 = env.addProject("Project2", CompilerOptions.getFirstSupportedJavaVersion()); //$NON-NLS-1$ //$NON-NLS-2$
+		IPath projectPath2 = env.addProject("Project2", CompilerOptions.getFirstSupportedJavaVersion()); //$NON-NLS-1$
 		env.addExternalJars(projectPath2, Util.getJavaClassLibs());
 
 		// remove old package fragment root so that names don't collide
@@ -1725,4 +1725,60 @@ static E getE() {
 		env.removeProject(projectPath);
 	}
 
+	// https://github.com/eclipse-jdt/eclipse.jdt.core/issues/3488
+	// [Sealed types] Proper sealing of hierarchy rejected in incremental builds if permitted class is generic
+	public void testIssue3488() throws JavaModelException {
+		IPath projectPath = env.addProject("Project", "19");
+		env.addExternalJars(projectPath, Util.getJavaClassLibs());
+
+		// remove old package fragment root so that names don't collide
+		env.removePackageFragmentRoot(projectPath, "");
+
+		IPath root = env.addPackageFragmentRoot(projectPath, "src");
+		env.setOutputFolder(projectPath, "bin");
+
+		env.addClass(root, "", "Message",
+				"""
+				public sealed abstract class Message permits Request {
+				    public final String id;
+
+				    protected Message(String id) {
+				        this.id = id;
+				    }
+				}
+				""");
+
+		env.addClass(root, "", "Request",
+				"""
+				public final class Request<T> extends Message {  // Error here
+				    public final T payload;
+
+				    public Request(String id, T payload) {
+				        super(id);
+				        this.payload = payload;
+				    }
+				}
+				""");
+
+		fullBuild(projectPath);
+		expectingNoProblems();
+
+		env.addClass(root, "", "Request",
+				"""
+				public final class Request<T> extends Message {  // Error here
+				    public final T payload;
+
+				    public Request(String id, T payload) {
+				        super(id);
+				        this.payload = payload;
+				    }
+				}
+				""");
+
+		incrementalBuild(projectPath);
+		expectingNoProblems();
+
+		env.removeProject(projectPath);
+	}
+
 }