diff --git a/packages/pyright-internal/src/analyzer/checker.ts b/packages/pyright-internal/src/analyzer/checker.ts
index 7e1b83fda91b..21c1e5170dbb 100644
--- a/packages/pyright-internal/src/analyzer/checker.ts
+++ b/packages/pyright-internal/src/analyzer/checker.ts
@@ -3797,7 +3797,9 @@ export class Checker extends ParseTreeWalker {
                     break;
 
                 case TypeCategory.Function:
-                    isSupported = TypeBase.isInstantiable(subtype);
+                    if (!TypeBase.isInstantiable(subtype) || subtype.isCallableWithTypeArgs) {
+                        isSupported = false;
+                    }
                     break;
 
                 case TypeCategory.Union:
diff --git a/packages/pyright-internal/src/analyzer/typeEvaluator.ts b/packages/pyright-internal/src/analyzer/typeEvaluator.ts
index 8e10fae3f3f0..e20431c8f04f 100644
--- a/packages/pyright-internal/src/analyzer/typeEvaluator.ts
+++ b/packages/pyright-internal/src/analyzer/typeEvaluator.ts
@@ -14255,6 +14255,8 @@ export function createTypeEvaluator(importLookup: ImportLookup, evaluatorOptions
         functionType.details.typeVarScopeId = ParseTreeUtils.getScopeIdForNode(errorNode);
 
         if (typeArgs && typeArgs.length > 0) {
+            functionType.isCallableWithTypeArgs = true;
+
             if (typeArgs[0].typeList) {
                 const typeList = typeArgs[0].typeList;
                 let sawUnpacked = false;
diff --git a/packages/pyright-internal/src/analyzer/types.ts b/packages/pyright-internal/src/analyzer/types.ts
index bfc606d51112..233ff8ad4b3a 100644
--- a/packages/pyright-internal/src/analyzer/types.ts
+++ b/packages/pyright-internal/src/analyzer/types.ts
@@ -1454,6 +1454,11 @@ export interface FunctionType extends TypeBase {
     // for that call and any other signatures that were passed as
     // arguments to it.
     trackedSignatures?: SignatureWithOffsets[];
+
+    // If this function is created with a "Callable" annotation with
+    // type arguments? This allows us to detect and report an error
+    // when this is used in an isinstance call.
+    isCallableWithTypeArgs?: boolean;
 }
 
 export namespace FunctionType {
diff --git a/packages/pyright-internal/src/tests/samples/isinstance3.py b/packages/pyright-internal/src/tests/samples/isinstance3.py
index 8e40b5657cc3..05c1240edded 100644
--- a/packages/pyright-internal/src/tests/samples/isinstance3.py
+++ b/packages/pyright-internal/src/tests/samples/isinstance3.py
@@ -4,7 +4,7 @@
 
 
 from abc import abstractmethod
-from typing import Any, Generic, Sequence, Tuple, Type, TypeVar, Union
+from typing import Any, Callable, Generic, Sequence, Tuple, Type, TypeVar, Union
 
 
 _T = TypeVar("_T", int, str)
@@ -55,3 +55,15 @@ def execute(self, var: Union[_T, Tuple[_T]]) -> None:
 
 def func1(exceptions: Sequence[type[BaseException]], exception: Exception):
     return isinstance(exception, tuple(exceptions))
+
+
+if isinstance(a, Callable):
+    ...
+
+# This should generate an error because a subscripted Callable
+# will result in a runtime exception.
+if isinstance(a, Callable[[], Any]):
+    ...
+
+if isinstance(a, type(len)):
+    ...
diff --git a/packages/pyright-internal/src/tests/typeEvaluator2.test.ts b/packages/pyright-internal/src/tests/typeEvaluator2.test.ts
index 9745e6dcaf4d..db701bcc5425 100644
--- a/packages/pyright-internal/src/tests/typeEvaluator2.test.ts
+++ b/packages/pyright-internal/src/tests/typeEvaluator2.test.ts
@@ -285,11 +285,11 @@ test('isInstance3', () => {
 
     configOptions.defaultPythonVersion = PythonVersion.V3_9;
     const analysisResults1 = TestUtils.typeAnalyzeSampleFiles(['isinstance3.py'], configOptions);
-    TestUtils.validateResults(analysisResults1, 1);
+    TestUtils.validateResults(analysisResults1, 2);
 
     configOptions.defaultPythonVersion = PythonVersion.V3_10;
     const analysisResults2 = TestUtils.typeAnalyzeSampleFiles(['isinstance3.py'], configOptions);
-    TestUtils.validateResults(analysisResults2, 1);
+    TestUtils.validateResults(analysisResults2, 2);
 });
 
 test('isInstance4', () => {