diff --git a/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala b/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala
index cf5386ea65e2..64ac05a6882f 100644
--- a/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala
+++ b/compiler/src/dotty/tools/dotc/transform/GenericSignatures.scala
@@ -49,25 +49,31 @@ object GenericSignatures {
     val builder = new StringBuilder(64)
     val isTraitSignature = sym0.enclosingClass.is(Trait)
 
-    // Collect class-level type parameter names to avoid conflicts with method-level type parameters
-    val usedNames = collection.mutable.Set.empty[String]
+    // Collect class-level type parameter names from all enclosing classes to avoid conflicts with method-level type parameters
+    val usedNames = collection.mutable.Map.empty[String, Name]
     if(sym0.is(Method)) {
-      sym0.enclosingClass.typeParams.foreach { tp =>
-        usedNames += sanitizeName(tp.name)
+      var enclosing = sym0.enclosingClass
+      while (enclosing.exists) {
+        enclosing.typeParams.foreach { tp =>
+          usedNames(sanitizeName(tp.name)) = tp.name
+        }
+        enclosing = enclosing.owner.enclosingClass
       }
     }
-    val methodTypeParamRenaming = collection.mutable.Map.empty[String, String]
-    def freshTypeParamName(sanitizedName: String): String = {
-      if !usedNames.contains(sanitizedName) then sanitizedName
+    val methodTypeParamRenaming = collection.mutable.Map.empty[Name, Name]
+    def freshTypeParamName(originalName: Name): Name = {
+      val sanitizedName = sanitizeName(originalName)
+      if !usedNames.contains(sanitizedName) then originalName
       else {
         var i = 1
         var newName = sanitizedName + i
         while usedNames.contains(newName) do
           i += 1
           newName = sanitizedName + i
-        methodTypeParamRenaming(sanitizedName) = newName
-        usedNames += newName
-        newName
+        val freshName = newName.toTypeName
+        methodTypeParamRenaming(originalName) = freshName
+        usedNames(newName) = freshName
+        freshName
       }
     }
 
@@ -161,8 +167,8 @@ object GenericSignatures {
             Right(parent))
 
     def tparamSig(param: TypeParamInfo): Unit = {
-      val freshName = freshTypeParamName(sanitizeName(param.paramName.lastPart))
-      builder.append(freshName)
+      val freshName = freshTypeParamName(param.paramName.lastPart)
+      builder.append(sanitizeName(freshName))
       boundsSig(hiBounds(param.paramInfo.bounds))
     }
 
@@ -179,12 +185,6 @@ object GenericSignatures {
       builder.append(';')
     }
 
-    def typeParamSigWithName(sanitizedName: String): Unit = {
-      builder.append(ClassfileConstants.TVAR_TAG)
-      builder.append(sanitizedName)
-      builder.append(';')
-    }
-
     def methodResultSig(restpe: Type): Unit = {
       val finalType = restpe.finalResultType
       val sym = finalType.typeSymbol
@@ -274,9 +274,9 @@ object GenericSignatures {
           if erasedUnderlying.isPrimitiveValueType then
             jsig(erasedUnderlying, toplevel = toplevel, unboxedVCs = unboxedVCs)
           else {
-            val name = sanitizeName(ref.paramName.lastPart)
+            val name = ref.paramName.lastPart
             val nameToUse = methodTypeParamRenaming.getOrElse(name, name)
-            typeParamSigWithName(nameToUse)
+            typeParamSig(nameToUse)
           }
 
         case ref: TermRef if ref.symbol.isGetter =>
diff --git a/compiler/test/dotc/pos-test-pickling.excludelist b/compiler/test/dotc/pos-test-pickling.excludelist
index c9a5b86eb0fe..31febe48e6c0 100644
--- a/compiler/test/dotc/pos-test-pickling.excludelist
+++ b/compiler/test/dotc/pos-test-pickling.excludelist
@@ -34,6 +34,7 @@ i11982a.scala
 i17255
 i17735.scala
 i24134
+i24134-nested
 
 # Tree is huge and blows stack for printing Text
 i7034.scala
diff --git a/tests/pos/i24134-nested/JavaPartialFunction.scala b/tests/pos/i24134-nested/JavaPartialFunction.scala
new file mode 100644
index 000000000000..069b534a41cf
--- /dev/null
+++ b/tests/pos/i24134-nested/JavaPartialFunction.scala
@@ -0,0 +1,2 @@
+class Container[A]:
+  abstract class JavaPartialFunction[B] extends PartialFunction[A, B]
diff --git a/tests/pos/i24134-nested/Main.java b/tests/pos/i24134-nested/Main.java
new file mode 100644
index 000000000000..8e03c2de5045
--- /dev/null
+++ b/tests/pos/i24134-nested/Main.java
@@ -0,0 +1,15 @@
+public class Main {
+    public static void main(String[] args) {
+        Container<String> container = new Container<>();
+        Container<String>.JavaPartialFunction<Integer> pf = container.new JavaPartialFunction<Integer>() {
+            @Override
+            public boolean isDefinedAt(String x) {
+                return x != null && !x.isEmpty();
+            }
+            @Override
+            public Integer apply(String x) {
+                return x.length();
+            }
+        };
+    }
+}