diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index d47a77a744..4c6973f304 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -281,6 +281,7 @@ namespace ts {
 
         const noConstraintType = createAnonymousType(undefined, emptySymbols, emptyArray, emptyArray, undefined, undefined);
         const circularConstraintType = createAnonymousType(undefined, emptySymbols, emptyArray, emptyArray, undefined, undefined);
+        const resolvingDefaultType = createAnonymousType(undefined, emptySymbols, emptyArray, emptyArray, undefined, undefined);
 
         const markerSuperType = <TypeParameter>createType(TypeFlags.TypeParameter);
         const markerSubType = <TypeParameter>createType(TypeFlags.TypeParameter);
@@ -6055,27 +6056,51 @@ namespace ts {
             return type.resolvedApparentType || (type.resolvedApparentType = getTypeWithThisArgument(type, type));
         }
 
+        function getResolvedTypeParameterDefault(typeParameter: TypeParameter): Type | undefined {
+            if (!typeParameter.default) {
+                if (typeParameter.target) {
+                    const targetDefault = getResolvedTypeParameterDefault(typeParameter.target);
+                    typeParameter.default = targetDefault ? instantiateType(targetDefault, typeParameter.mapper) : noConstraintType;
+                }
+                else {
+                    // To block recursion, set the initial value to the resolvingDefaultType.
+                    typeParameter.default = resolvingDefaultType;
+                    const defaultDeclaration = typeParameter.symbol && forEach(typeParameter.symbol.declarations, decl => isTypeParameterDeclaration(decl) && decl.default);
+                    const defaultType = defaultDeclaration ? getTypeFromTypeNode(defaultDeclaration) : noConstraintType;
+                    if (typeParameter.default === resolvingDefaultType) {
+                        // If we have not been called recursively, set the correct default type.
+                        typeParameter.default = defaultType;
+                    }
+                }
+            }
+            else if (typeParameter.default === resolvingDefaultType) {
+                // If we are called recursively for this type parameter, mark the default as circular.
+                typeParameter.default = circularConstraintType;
+            }
+            return typeParameter.default;
+        }
+
         /**
          * Gets the default type for a type parameter.
          *
          * If the type parameter is the result of an instantiation, this gets the instantiated
-         * default type of its target. If the type parameter has no default type, `undefined`
-         * is returned.
-         *
-         * This function *does not* perform a circularity check.
+         * default type of its target. If the type parameter has no default type or the default is
+         * circular, `undefined` is returned.
          */
         function getDefaultFromTypeParameter(typeParameter: TypeParameter): Type | undefined {
-            if (!typeParameter.default) {
-                if (typeParameter.target) {
-                    const targetDefault = getDefaultFromTypeParameter(typeParameter.target);
-                    typeParameter.default = targetDefault ? instantiateType(targetDefault, typeParameter.mapper) : noConstraintType;
-                }
-                else {
-                    const defaultDeclaration = typeParameter.symbol && forEach(typeParameter.symbol.declarations, decl => isTypeParameterDeclaration(decl) && decl.default);
-                    typeParameter.default = defaultDeclaration ? getTypeFromTypeNode(defaultDeclaration) : noConstraintType;
-                }
-            }
-            return typeParameter.default === noConstraintType ? undefined : typeParameter.default;
+            const defaultType = getResolvedTypeParameterDefault(typeParameter);
+            return defaultType !== noConstraintType && defaultType !== circularConstraintType ? defaultType : undefined;
+        }
+
+        function hasNonCircularTypeParameterDefault(typeParameter: TypeParameter) {
+            return getResolvedTypeParameterDefault(typeParameter) !== circularConstraintType;
+        }
+
+        /**
+         * Indicates whether the declaration of a typeParameter has a default type.
+         */
+        function hasTypeParameterDefault(typeParameter: TypeParameter): boolean {
+            return !!(typeParameter.symbol && forEach(typeParameter.symbol.declarations, decl => isTypeParameterDeclaration(decl) && decl.default));
         }
 
         /**
@@ -6361,7 +6386,7 @@ namespace ts {
             let minTypeArgumentCount = 0;
             if (typeParameters) {
                 for (let i = 0; i < typeParameters.length; i++) {
-                    if (!getDefaultFromTypeParameter(typeParameters[i])) {
+                    if (!hasTypeParameterDefault(typeParameters[i])) {
                         minTypeArgumentCount = i + 1;
                     }
                 }
@@ -18478,6 +18503,9 @@ namespace ts {
             if (!hasNonCircularBaseConstraint(typeParameter)) {
                 error(node.constraint, Diagnostics.Type_parameter_0_has_a_circular_constraint, typeToString(typeParameter));
             }
+            if (!hasNonCircularTypeParameterDefault(typeParameter)) {
+                error(node.default, Diagnostics.Type_parameter_0_has_a_circular_default, typeToString(typeParameter));
+            }
             const constraintType = getConstraintOfTypeParameter(typeParameter);
             const defaultType = getDefaultFromTypeParameter(typeParameter);
             if (constraintType && defaultType) {
diff --git a/src/compiler/diagnosticMessages.json b/src/compiler/diagnosticMessages.json
index 91ad9e52bf..3389bc1063 100644
--- a/src/compiler/diagnosticMessages.json
+++ b/src/compiler/diagnosticMessages.json
@@ -2224,6 +2224,10 @@
         "category": "Error",
         "code": 2715
     },
+    "Type parameter '{0}' has a circular default.": {
+        "category": "Error",
+        "code": 2716
+    },
 
     "Import declaration '{0}' is using private name '{1}'.": {
         "category": "Error",
diff --git a/tests/baselines/reference/genericDefaults.js b/tests/baselines/reference/genericDefaults.js
index 06503b89d5..be6b76ea43 100644
--- a/tests/baselines/reference/genericDefaults.js
+++ b/tests/baselines/reference/genericDefaults.js
@@ -487,7 +487,10 @@ const t03c00 = (<t03<number>>x).a;
 const t03c01 = (<t03<1>>x).a;
 const t03c02 = (<t03<number, number>>x).a;
 const t03c03 = (<t03<1, 1>>x).a;
-const t03c04 = (<t03<number, 1>>x).a;
+const t03c04 = (<t03<number, 1>>x).a;
+
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference<string>> {}
 
 //// [genericDefaults.js]
 // no inference
@@ -1024,3 +1027,5 @@ declare const t03c01: [1, 1];
 declare const t03c02: [number, number];
 declare const t03c03: [1, 1];
 declare const t03c04: [number, 1];
+interface SelfReference<T = SelfReference<string>> {
+}
diff --git a/tests/baselines/reference/genericDefaults.symbols b/tests/baselines/reference/genericDefaults.symbols
index 6c9e97b265..755a34c7a6 100644
--- a/tests/baselines/reference/genericDefaults.symbols
+++ b/tests/baselines/reference/genericDefaults.symbols
@@ -2291,3 +2291,9 @@ const t03c04 = (<t03<number, 1>>x).a;
 >x : Symbol(x, Decl(genericDefaults.ts, 13, 13))
 >a : Symbol(a, Decl(genericDefaults.ts, 483, 47))
 
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference<string>> {}
+>SelfReference : Symbol(SelfReference, Decl(genericDefaults.ts, 488, 37))
+>T : Symbol(T, Decl(genericDefaults.ts, 491, 24))
+>SelfReference : Symbol(SelfReference, Decl(genericDefaults.ts, 488, 37))
+
diff --git a/tests/baselines/reference/genericDefaults.types b/tests/baselines/reference/genericDefaults.types
index 739588badb..0013daefd8 100644
--- a/tests/baselines/reference/genericDefaults.types
+++ b/tests/baselines/reference/genericDefaults.types
@@ -2643,3 +2643,9 @@ const t03c04 = (<t03<number, 1>>x).a;
 >x : any
 >a : [number, 1]
 
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference<string>> {}
+>SelfReference : SelfReference<T>
+>T : T
+>SelfReference : SelfReference<T>
+
diff --git a/tests/baselines/reference/genericDefaultsErrors.errors.txt b/tests/baselines/reference/genericDefaultsErrors.errors.txt
index 6200046c49..762bb92535 100644
--- a/tests/baselines/reference/genericDefaultsErrors.errors.txt
+++ b/tests/baselines/reference/genericDefaultsErrors.errors.txt
@@ -21,9 +21,10 @@ tests/cases/compiler/genericDefaultsErrors.ts(33,15): error TS2707: Generic type
 tests/cases/compiler/genericDefaultsErrors.ts(36,15): error TS2707: Generic type 'i09<T, U, V>' requires between 2 and 3 type arguments.
 tests/cases/compiler/genericDefaultsErrors.ts(38,20): error TS2304: Cannot find name 'T'.
 tests/cases/compiler/genericDefaultsErrors.ts(38,20): error TS4033: Property 'x' of exported interface has or is using private name 'T'.
+tests/cases/compiler/genericDefaultsErrors.ts(42,29): error TS2715: Type parameter 'T' has a circular default.
 
 
-==== tests/cases/compiler/genericDefaultsErrors.ts (21 errors) ====
+==== tests/cases/compiler/genericDefaultsErrors.ts (22 errors) ====
     declare const x: any;
     
     declare function f03<T extends string = number>(): void; // error
@@ -106,4 +107,9 @@ tests/cases/compiler/genericDefaultsErrors.ts(38,20): error TS4033: Property 'x'
 !!! error TS2304: Cannot find name 'T'.
                        ~
 !!! error TS4033: Property 'x' of exported interface has or is using private name 'T'.
-    interface i10<T = number> {}
\ No newline at end of file
+    interface i10<T = number> {}
+    
+    // https://github.com/Microsoft/TypeScript/issues/16221
+    interface SelfReference<T = SelfReference> {}
+                                ~~~~~~~~~~~~~
+!!! error TS2715: Type parameter 'T' has a circular default.
\ No newline at end of file
diff --git a/tests/baselines/reference/genericDefaultsErrors.js b/tests/baselines/reference/genericDefaultsErrors.js
index c737644e99..19201172b2 100644
--- a/tests/baselines/reference/genericDefaultsErrors.js
+++ b/tests/baselines/reference/genericDefaultsErrors.js
@@ -37,7 +37,10 @@ type i09t03 = i09<1, 2, 3>; // ok
 type i09t04 = i09<1, 2, 3, 4>; // error
 
 interface i10 { x: T; } // error
-interface i10<T = number> {}
+interface i10<T = number> {}
+
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference> {}
 
 //// [genericDefaultsErrors.js]
 f11(); // ok
diff --git a/tests/baselines/reference/genericDefaultsErrors.symbols b/tests/baselines/reference/genericDefaultsErrors.symbols
index 495b56ea25..e6e5cb8606 100644
--- a/tests/baselines/reference/genericDefaultsErrors.symbols
+++ b/tests/baselines/reference/genericDefaultsErrors.symbols
@@ -136,3 +136,9 @@ interface i10<T = number> {}
 >i10 : Symbol(i10, Decl(genericDefaultsErrors.ts, 35, 30), Decl(genericDefaultsErrors.ts, 37, 23))
 >T : Symbol(T, Decl(genericDefaultsErrors.ts, 38, 14))
 
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference> {}
+>SelfReference : Symbol(SelfReference, Decl(genericDefaultsErrors.ts, 38, 28))
+>T : Symbol(T, Decl(genericDefaultsErrors.ts, 41, 24))
+>SelfReference : Symbol(SelfReference, Decl(genericDefaultsErrors.ts, 38, 28))
+
diff --git a/tests/baselines/reference/genericDefaultsErrors.types b/tests/baselines/reference/genericDefaultsErrors.types
index 46bae67bc2..87e9af0bb0 100644
--- a/tests/baselines/reference/genericDefaultsErrors.types
+++ b/tests/baselines/reference/genericDefaultsErrors.types
@@ -145,3 +145,9 @@ interface i10<T = number> {}
 >i10 : i10<T>
 >T : T
 
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference> {}
+>SelfReference : SelfReference<T>
+>T : T
+>SelfReference : SelfReference<T>
+
diff --git a/tests/cases/compiler/genericDefaults.ts b/tests/cases/compiler/genericDefaults.ts
index 624b44c082..e7b9c95ede 100644
--- a/tests/cases/compiler/genericDefaults.ts
+++ b/tests/cases/compiler/genericDefaults.ts
@@ -487,4 +487,7 @@ const t03c00 = (<t03<number>>x).a;
 const t03c01 = (<t03<1>>x).a;
 const t03c02 = (<t03<number, number>>x).a;
 const t03c03 = (<t03<1, 1>>x).a;
-const t03c04 = (<t03<number, 1>>x).a;
\ No newline at end of file
+const t03c04 = (<t03<number, 1>>x).a;
+
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference<string>> {}
\ No newline at end of file
diff --git a/tests/cases/compiler/genericDefaultsErrors.ts b/tests/cases/compiler/genericDefaultsErrors.ts
index 4ea42beb3d..9cdba88832 100644
--- a/tests/cases/compiler/genericDefaultsErrors.ts
+++ b/tests/cases/compiler/genericDefaultsErrors.ts
@@ -38,4 +38,7 @@ type i09t03 = i09<1, 2, 3>; // ok
 type i09t04 = i09<1, 2, 3, 4>; // error
 
 interface i10 { x: T; } // error
-interface i10<T = number> {}
\ No newline at end of file
+interface i10<T = number> {}
+
+// https://github.com/Microsoft/TypeScript/issues/16221
+interface SelfReference<T = SelfReference> {}
\ No newline at end of file