diff --git a/compiler/src/dotty/tools/dotc/transform/PostTyper.scala b/compiler/src/dotty/tools/dotc/transform/PostTyper.scala
index 7873124d84bd..05aaa745bb18 100644
--- a/compiler/src/dotty/tools/dotc/transform/PostTyper.scala
+++ b/compiler/src/dotty/tools/dotc/transform/PostTyper.scala
@@ -302,12 +302,14 @@ class PostTyper extends MacroTransform with IdentityDenotTransformer { thisPhase
             checkNoConstructorProxy(tree)
             transformSelect(tree, Nil)
         case tree: Apply =>
-          val methType = tree.fun.tpe.widen
+          val methType = tree.fun.tpe.widen.asInstanceOf[MethodType]
           val app =
             if (methType.isErasedMethod)
               tpd.cpy.Apply(tree)(
                 tree.fun,
                 tree.args.mapConserve(arg =>
+                  if methType.isResultDependent then
+                    Checking.checkRealizable(arg.tpe, arg.srcPos, "erased argument")
                   if (methType.isImplicitMethod && arg.span.isSynthetic)
                     arg match
                       case _: RefTree | _: Apply | _: TypeApply if arg.symbol.is(Erased) =>
diff --git a/docs/_docs/reference/experimental/erased-defs-spec.md b/docs/_docs/reference/experimental/erased-defs-spec.md
index 5395a8468399..24ae89c7e28b 100644
--- a/docs/_docs/reference/experimental/erased-defs-spec.md
+++ b/docs/_docs/reference/experimental/erased-defs-spec.md
@@ -62,3 +62,9 @@ TODO: complete
 7. Overriding
    * Member definitions overriding each other must both be `erased` or not be `erased`
    * `def foo(x: T): U` cannot be overridden by `def foo(erased x: T): U` and vice-versa
+   *
+
+
+8. Type Restrictions
+   * For dependent functions, `erased` parameters are limited to realizable types, that is, types that are inhabited by non-null values.
+     This restriction stops us from using a bad bound introduced by an erased value, which leads to unsoundness (see #4060).
diff --git a/tests/neg-custom-args/erased/i4060.scala b/tests/neg-custom-args/erased/i4060.scala
new file mode 100644
index 000000000000..a1a2eee68dc0
--- /dev/null
+++ b/tests/neg-custom-args/erased/i4060.scala
@@ -0,0 +1,21 @@
+// See https://github.com/lampepfl/dotty/issues/4060#issuecomment-445808377
+
+object App {
+  trait A { type L >: Any}
+  def upcast(erased a: A)(x: Any): a.L = x
+  erased val p: A { type L <: Nothing } = p
+  def coerce(x: Any): Int = upcast(p)(x) // error
+
+  def coerceInline(x: Any): Int = upcast(compiletime.erasedValue[A {type L <: Nothing}])(x) // error
+
+  trait B { type L <: Nothing }
+  def upcast_dep_parameter(erased a: B)(x: a.L) : Int = x
+  erased val q : B { type L >: Any } = compiletime.erasedValue
+
+  def coerceInlineWithB(x: Any): Int = upcast_dep_parameter(q)(x) // error
+
+  def main(args: Array[String]): Unit = {
+    println(coerce("Uh oh!"))
+    println(coerceInlineWithB("Uh oh!"))
+  }
+}
diff --git a/tests/neg-custom-args/i4060.scala b/tests/neg-custom-args/i4060.scala
deleted file mode 100644
index 3d5c180b5d7b..000000000000
--- a/tests/neg-custom-args/i4060.scala
+++ /dev/null
@@ -1,22 +0,0 @@
-class X { type R }
-class T(erased val a: X)(val value: a.R)
-
-object App {
-  def coerce[U, V](u: U): V = {
-    trait X { type R >: U }
-    trait Y { type R = V }
-
-    class T[A <: X](erased val a: A)(val value: a.R) // error
-
-    object O { lazy val x : Y & X = ??? }
-
-    val a = new T[Y & X](O.x)(u)
-    a.value
-  }
-
-  def main(args: Array[String]): Unit = {
-    val x: Int = coerce[String, Int]("a")
-    println(x + 1)
-
-  }
-}