diff --git a/packages/pyright-internal/src/analyzer/typeEvaluator.ts b/packages/pyright-internal/src/analyzer/typeEvaluator.ts
index 41fcd8f5cb3c..be7d84686b5c 100644
--- a/packages/pyright-internal/src/analyzer/typeEvaluator.ts
+++ b/packages/pyright-internal/src/analyzer/typeEvaluator.ts
@@ -4532,39 +4532,30 @@ export function createTypeEvaluator(importLookup: ImportLookup, evaluatorOptions
     }
 
     // If the type is a TypeVar and we're not expecting a type, convert
-    // a TypeVar or TypeVarTuple into a runtime type. We don't currently
-    // do this for ParamSpec (although we arguably should) because it's
-    // problematic for handling P.args and P.kwargs.
+    // a TypeVar, TypeVarTuple or ParamSpec into a runtime type.
     function convertTypeVarToRuntimeInstance(node: ExpressionNode, type: Type, flags: EvaluatorFlags) {
-        if (
-            node.nodeType === ParseNodeType.Name &&
-            isTypeVar(type) &&
-            node.value === type.details.name &&
-            !type.isVariadicInUnion &&
-            (flags & EvaluatorFlags.ExpectingInstantiableType) === 0
-        ) {
-            if ((flags & EvaluatorFlags.SkipConvertParamSpecToRuntimeObject) !== 0 && type.details.isParamSpec) {
-                return type;
-            }
+        if (!type.specialForm || type.typeAliasInfo) {
+            return type;
+        }
 
-            // Handle the special case of a PEP 604 union. These can appear within
-            // an implied type alias where we are not expecting a type.
-            const isPep604Union =
-                node.parent?.nodeType === ParseNodeType.BinaryOperation &&
-                node.parent.operator === OperatorType.BitwiseOr;
+        if (!isTypeVar(type) || type.isVariadicInUnion || (flags & EvaluatorFlags.ExpectingInstantiableType) !== 0) {
+            return type;
+        }
 
-            if (!isPep604Union) {
-                // A TypeVar in contexts where we're not expecting a type is
-                // simply a runtime object.
-                if (type.details.runtimeClass) {
-                    type = ClassType.cloneAsInstance(type.details.runtimeClass);
-                } else {
-                    type = UnknownType.create();
-                }
-            }
+        if ((flags & EvaluatorFlags.SkipConvertParamSpecToRuntimeObject) !== 0 && type.details.isParamSpec) {
+            return TypeBase.cloneAsSpecialForm(type, undefined);
         }
 
-        return type;
+        // Handle the special case of a PEP 604 union. These can appear within
+        // an implied type alias where we are not expecting a type.
+        const isPep604Union =
+            node.parent?.nodeType === ParseNodeType.BinaryOperation && node.parent.operator === OperatorType.BitwiseOr;
+
+        if (isPep604Union) {
+            return TypeBase.cloneAsSpecialForm(type, undefined);
+        }
+
+        return ClassType.cloneAsInstance(type.specialForm);
     }
 
     // Handles the case where a variable or parameter is defined in an outer
@@ -12145,7 +12136,10 @@ export function createTypeEvaluator(importLookup: ImportLookup, evaluatorOptions
             addError(LocMessage.typeVarFirstArg(), firstArg.valueExpression || errorNode);
         }
 
-        const typeVar = TypeVarType.createInstantiable(typeVarName, /* isParamSpec */ false, classType);
+        const typeVar = TypeBase.cloneAsSpecialForm(
+            TypeVarType.createInstantiable(typeVarName, /* isParamSpec */ false),
+            ClassType.cloneAsInstance(classType)
+        );
 
         // Parse the remaining parameters.
         const paramNameMap = new Map<string, string>();
@@ -12313,7 +12307,10 @@ export function createTypeEvaluator(importLookup: ImportLookup, evaluatorOptions
             addError(LocMessage.typeVarFirstArg(), firstArg.valueExpression || errorNode);
         }
 
-        const typeVar = TypeVarType.createInstantiable(typeVarName, /* isParamSpec */ false, classType);
+        const typeVar = TypeBase.cloneAsSpecialForm(
+            TypeVarType.createInstantiable(typeVarName, /* isParamSpec */ false),
+            ClassType.cloneAsInstance(classType)
+        );
         typeVar.details.isVariadic = true;
 
         // Parse the remaining parameters.
@@ -12384,7 +12381,10 @@ export function createTypeEvaluator(importLookup: ImportLookup, evaluatorOptions
             addError(LocMessage.paramSpecFirstArg(), firstArg.valueExpression || errorNode);
         }
 
-        const paramSpec = TypeVarType.createInstantiable(paramSpecName, /* isParamSpec */ true, classType);
+        const paramSpec = TypeBase.cloneAsSpecialForm(
+            TypeVarType.createInstantiable(paramSpecName, /* isParamSpec */ true),
+            ClassType.cloneAsInstance(classType)
+        );
 
         // Parse the remaining parameters.
         for (let i = 1; i < argList.length; i++) {
@@ -16002,9 +16002,14 @@ export function createTypeEvaluator(importLookup: ImportLookup, evaluatorOptions
                         getTypeOfExpression(arg.valueExpression);
                         argType = UnknownType.create();
                     } else {
-                        argType = makeTopLevelTypeVarsConcrete(
-                            getTypeOfExpression(arg.valueExpression, exprFlags).type
-                        );
+                        argType = getTypeOfExpression(arg.valueExpression, exprFlags).type;
+
+                        if (isTypeVar(argType) && argType.specialForm && TypeBase.isInstance(argType.specialForm)) {
+                            addDiagnostic(DiagnosticRule.reportGeneralTypeIssues, LocMessage.baseClassInvalid(), arg);
+                            argType = UnknownType.create();
+                        }
+
+                        argType = makeTopLevelTypeVarsConcrete(argType);
                     }
 
                     // In some stub files, classes are conditionally defined (e.g. based
@@ -20566,9 +20571,11 @@ export function createTypeEvaluator(importLookup: ImportLookup, evaluatorOptions
 
         let typeVar = TypeVarType.createInstantiable(
             node.name.value,
-            node.typeParamCategory === TypeParameterCategory.ParamSpec,
-            runtimeClass
+            node.typeParamCategory === TypeParameterCategory.ParamSpec
         );
+        if (runtimeClass) {
+            typeVar = TypeBase.cloneAsSpecialForm(typeVar, ClassType.cloneAsInstance(runtimeClass));
+        }
         typeVar.details.isTypeParamSyntax = true;
 
         if (node.typeParamCategory === TypeParameterCategory.TypeVarTuple) {
diff --git a/packages/pyright-internal/src/analyzer/types.ts b/packages/pyright-internal/src/analyzer/types.ts
index 7465714e1dca..57b6aac45fa5 100644
--- a/packages/pyright-internal/src/analyzer/types.ts
+++ b/packages/pyright-internal/src/analyzer/types.ts
@@ -199,10 +199,16 @@ export namespace TypeBase {
         return clone;
     }
 
-    export function cloneAsSpecialForm<T extends TypeBase>(type: T, specialForm: ClassType): T {
+    export function cloneAsSpecialForm<T extends TypeBase>(type: T, specialForm: ClassType | undefined): T {
         const clone = { ...type };
         delete clone.cached;
-        clone.specialForm = specialForm;
+
+        if (specialForm) {
+            clone.specialForm = specialForm;
+        } else {
+            delete clone.specialForm;
+        }
+
         return clone;
     }
 
@@ -2448,7 +2454,6 @@ export interface TypeVarDetails {
     constraints: Type[];
     boundType?: Type | undefined;
     defaultType?: Type | undefined;
-    runtimeClass?: ClassType | undefined;
 
     isParamSpec: boolean;
     isVariadic: boolean;
@@ -2525,8 +2530,8 @@ export namespace TypeVarType {
         return create(name, /* isParamSpec */ false, TypeFlags.Instance);
     }
 
-    export function createInstantiable(name: string, isParamSpec = false, runtimeClass?: ClassType) {
-        return create(name, isParamSpec, TypeFlags.Instantiable, runtimeClass);
+    export function createInstantiable(name: string, isParamSpec = false) {
+        return create(name, isParamSpec, TypeFlags.Instantiable);
     }
 
     export function cloneAsInstance(type: TypeVarType): TypeVarType {
@@ -2657,7 +2662,7 @@ export namespace TypeVarType {
         return `${name}.${scopeId}`;
     }
 
-    function create(name: string, isParamSpec: boolean, typeFlags: TypeFlags, runtimeClass?: ClassType): TypeVarType {
+    function create(name: string, isParamSpec: boolean, typeFlags: TypeFlags): TypeVarType {
         const newTypeVarType: TypeVarType = {
             category: TypeCategory.TypeVar,
             details: {
@@ -2667,7 +2672,6 @@ export namespace TypeVarType {
                 isParamSpec,
                 isVariadic: false,
                 isSynthesized: false,
-                runtimeClass,
             },
             flags: typeFlags,
         };
diff --git a/packages/pyright-internal/src/tests/samples/classes1.py b/packages/pyright-internal/src/tests/samples/classes1.py
index 45ffe6e6e994..5c2f506283b7 100644
--- a/packages/pyright-internal/src/tests/samples/classes1.py
+++ b/packages/pyright-internal/src/tests/samples/classes1.py
@@ -2,7 +2,10 @@
 # handle various class definition cases.
 
 
-from typing import Any
+from typing import Any, TypeVar
+
+
+T = TypeVar("T")
 
 
 class A:
@@ -60,3 +63,17 @@ class Y(x):
         pass
 
     return Y()
+
+
+# This should generate an error because a TypeVar can't be used as a base class.
+class K(T):
+    pass
+
+
+class L(type[T]):
+    pass
+
+
+def func2(cls: type[T]):
+    class M(cls):
+        pass
diff --git a/packages/pyright-internal/src/tests/typeEvaluator3.test.ts b/packages/pyright-internal/src/tests/typeEvaluator3.test.ts
index 567db4517fa2..990f54b64ed3 100644
--- a/packages/pyright-internal/src/tests/typeEvaluator3.test.ts
+++ b/packages/pyright-internal/src/tests/typeEvaluator3.test.ts
@@ -766,7 +766,7 @@ test('RecursiveTypeAlias14', () => {
 test('Classes1', () => {
     const analysisResults = TestUtils.typeAnalyzeSampleFiles(['classes1.py']);
 
-    TestUtils.validateResults(analysisResults, 1);
+    TestUtils.validateResults(analysisResults, 2);
 });
 
 test('Classes3', () => {