diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 027007fb15b62..d51ed96aa6675 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -36664,7 +36664,7 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
             const declaration = signature.parameters[i].valueDeclaration as ParameterDeclaration;
             const typeNode = getEffectiveTypeAnnotationNode(declaration);
             if (typeNode) {
-                const source = addOptionality(getTypeFromTypeNode(typeNode), /*isProperty*/ false, isOptionalDeclaration(declaration));
+                const source = addOptionality(getTypeFromTypeNode(typeNode), /*isProperty*/ false, hasInitializer(declaration) || isOptionalDeclaration(declaration));
                 const target = getTypeAtPosition(context, i);
                 inferTypes(inferenceContext.inferences, source, target);
             }
diff --git a/tests/baselines/reference/inferFromAnnotatedParameterWithInitializer.symbols b/tests/baselines/reference/inferFromAnnotatedParameterWithInitializer.symbols
new file mode 100644
index 0000000000000..35b6f88fcf3a1
--- /dev/null
+++ b/tests/baselines/reference/inferFromAnnotatedParameterWithInitializer.symbols
@@ -0,0 +1,73 @@
+//// [tests/cases/compiler/inferFromAnnotatedParameterWithInitializer.ts] ////
+
+=== inferFromAnnotatedParameterWithInitializer.ts ===
+// https://github.com/microsoft/TypeScript/issues/57706
+
+declare function infer1<T>(fn: Factory<T>): T;
+>infer1 : Symbol(infer1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 0, 0))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 24))
+>fn : Symbol(fn, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 27))
+>Factory : Symbol(Factory, Decl(inferFromAnnotatedParameterWithInitializer.ts, 3, 47))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 24))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 24))
+
+declare function infer2<T>(fn: Factory2<T>): T;
+>infer2 : Symbol(infer2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 46))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 3, 24))
+>fn : Symbol(fn, Decl(inferFromAnnotatedParameterWithInitializer.ts, 3, 27))
+>Factory2 : Symbol(Factory2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 5, 53))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 3, 24))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 3, 24))
+
+export type Factory<T> = (arg1: T, arg2: any) => any;
+>Factory : Symbol(Factory, Decl(inferFromAnnotatedParameterWithInitializer.ts, 3, 47))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 5, 20))
+>arg1 : Symbol(arg1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 5, 26))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 5, 20))
+>arg2 : Symbol(arg2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 5, 34))
+
+export type Factory2<T> = (...args: [T, any]) => any;
+>Factory2 : Symbol(Factory2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 5, 53))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 6, 21))
+>args : Symbol(args, Decl(inferFromAnnotatedParameterWithInitializer.ts, 6, 27))
+>T : Symbol(T, Decl(inferFromAnnotatedParameterWithInitializer.ts, 6, 21))
+
+const f1 = (msg: string = "hello", test: any) => {};
+>f1 : Symbol(f1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 8, 5))
+>msg : Symbol(msg, Decl(inferFromAnnotatedParameterWithInitializer.ts, 8, 12))
+>test : Symbol(test, Decl(inferFromAnnotatedParameterWithInitializer.ts, 8, 34))
+
+const a1 = infer1(f1);
+>a1 : Symbol(a1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 9, 5))
+>infer1 : Symbol(infer1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 0, 0))
+>f1 : Symbol(f1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 8, 5))
+
+const a2 = infer2(f1);
+>a2 : Symbol(a2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 10, 5))
+>infer2 : Symbol(infer2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 46))
+>f1 : Symbol(f1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 8, 5))
+
+const f2 = (msg: string = "hello") => {};
+>f2 : Symbol(f2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 12, 5))
+>msg : Symbol(msg, Decl(inferFromAnnotatedParameterWithInitializer.ts, 12, 12))
+
+const b1 = infer1(f2);
+>b1 : Symbol(b1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 13, 5))
+>infer1 : Symbol(infer1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 0, 0))
+>f2 : Symbol(f2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 12, 5))
+
+const b2 = infer2(f2);
+>b2 : Symbol(b2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 14, 5))
+>infer2 : Symbol(infer2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 46))
+>f2 : Symbol(f2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 12, 5))
+
+const c1 = infer1((msg: string = "hello") => {});
+>c1 : Symbol(c1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 16, 5))
+>infer1 : Symbol(infer1, Decl(inferFromAnnotatedParameterWithInitializer.ts, 0, 0))
+>msg : Symbol(msg, Decl(inferFromAnnotatedParameterWithInitializer.ts, 16, 19))
+
+const c2 = infer2((msg: string = "hello") => {});
+>c2 : Symbol(c2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 17, 5))
+>infer2 : Symbol(infer2, Decl(inferFromAnnotatedParameterWithInitializer.ts, 2, 46))
+>msg : Symbol(msg, Decl(inferFromAnnotatedParameterWithInitializer.ts, 17, 19))
+
diff --git a/tests/baselines/reference/inferFromAnnotatedParameterWithInitializer.types b/tests/baselines/reference/inferFromAnnotatedParameterWithInitializer.types
new file mode 100644
index 0000000000000..836152fe6d5a6
--- /dev/null
+++ b/tests/baselines/reference/inferFromAnnotatedParameterWithInitializer.types
@@ -0,0 +1,119 @@
+//// [tests/cases/compiler/inferFromAnnotatedParameterWithInitializer.ts] ////
+
+=== inferFromAnnotatedParameterWithInitializer.ts ===
+// https://github.com/microsoft/TypeScript/issues/57706
+
+declare function infer1<T>(fn: Factory<T>): T;
+>infer1 : <T>(fn: Factory<T>) => T
+>       : ^ ^^  ^^          ^^^^^ 
+>fn : Factory<T>
+>   : ^^^^^^^^^^
+
+declare function infer2<T>(fn: Factory2<T>): T;
+>infer2 : <T>(fn: Factory2<T>) => T
+>       : ^ ^^  ^^           ^^^^^ 
+>fn : Factory2<T>
+>   : ^^^^^^^^^^^
+
+export type Factory<T> = (arg1: T, arg2: any) => any;
+>Factory : Factory<T>
+>        : ^^^^^^^^^^
+>arg1 : T
+>     : ^
+>arg2 : any
+
+export type Factory2<T> = (...args: [T, any]) => any;
+>Factory2 : Factory2<T>
+>         : ^^^^^^^^^^^
+>args : [T, any]
+>     : ^^^^^^^^
+
+const f1 = (msg: string = "hello", test: any) => {};
+>f1 : (msg: string | undefined, test: any) => void
+>   : ^   ^^      ^^^^^^^^^^^^^^    ^^   ^^^^^^^^^
+>(msg: string = "hello", test: any) => {} : (msg: string | undefined, test: any) => void
+>                                         : ^   ^^      ^^^^^^^^^^^^^^    ^^   ^^^^^^^^^
+>msg : string
+>    : ^^^^^^
+>"hello" : "hello"
+>        : ^^^^^^^
+>test : any
+
+const a1 = infer1(f1);
+>a1 : string | undefined
+>   : ^^^^^^^^^^^^^^^^^^
+>infer1(f1) : string | undefined
+>           : ^^^^^^^^^^^^^^^^^^
+>infer1 : <T>(fn: Factory<T>) => T
+>       : ^ ^^  ^^          ^^^^^^
+>f1 : (msg: string | undefined, test: any) => void
+>   : ^   ^^      ^^^^^^^^^^^^^^    ^^   ^^^^^^^^^
+
+const a2 = infer2(f1);
+>a2 : string | undefined
+>   : ^^^^^^^^^^^^^^^^^^
+>infer2(f1) : string | undefined
+>           : ^^^^^^^^^^^^^^^^^^
+>infer2 : <T>(fn: Factory2<T>) => T
+>       : ^ ^^  ^^           ^^^^^^
+>f1 : (msg: string | undefined, test: any) => void
+>   : ^   ^^      ^^^^^^^^^^^^^^    ^^   ^^^^^^^^^
+
+const f2 = (msg: string = "hello") => {};
+>f2 : (msg?: string) => void
+>   : ^   ^^^      ^^^^^^^^^
+>(msg: string = "hello") => {} : (msg?: string) => void
+>                              : ^   ^^^      ^^^^^^^^^
+>msg : string
+>    : ^^^^^^
+>"hello" : "hello"
+>        : ^^^^^^^
+
+const b1 = infer1(f2);
+>b1 : string | undefined
+>   : ^^^^^^^^^^^^^^^^^^
+>infer1(f2) : string | undefined
+>           : ^^^^^^^^^^^^^^^^^^
+>infer1 : <T>(fn: Factory<T>) => T
+>       : ^ ^^  ^^          ^^^^^^
+>f2 : (msg?: string) => void
+>   : ^   ^^^      ^^^^^^^^^
+
+const b2 = infer2(f2);
+>b2 : string | undefined
+>   : ^^^^^^^^^^^^^^^^^^
+>infer2(f2) : string | undefined
+>           : ^^^^^^^^^^^^^^^^^^
+>infer2 : <T>(fn: Factory2<T>) => T
+>       : ^ ^^  ^^           ^^^^^^
+>f2 : (msg?: string) => void
+>   : ^   ^^^      ^^^^^^^^^
+
+const c1 = infer1((msg: string = "hello") => {});
+>c1 : string | undefined
+>   : ^^^^^^^^^^^^^^^^^^
+>infer1((msg: string = "hello") => {}) : string | undefined
+>                                      : ^^^^^^^^^^^^^^^^^^
+>infer1 : <T>(fn: Factory<T>) => T
+>       : ^ ^^  ^^          ^^^^^^
+>(msg: string = "hello") => {} : (msg?: string) => void
+>                              : ^   ^^^      ^^^^^^^^^
+>msg : string
+>    : ^^^^^^
+>"hello" : "hello"
+>        : ^^^^^^^
+
+const c2 = infer2((msg: string = "hello") => {});
+>c2 : string | undefined
+>   : ^^^^^^^^^^^^^^^^^^
+>infer2((msg: string = "hello") => {}) : string | undefined
+>                                      : ^^^^^^^^^^^^^^^^^^
+>infer2 : <T>(fn: Factory2<T>) => T
+>       : ^ ^^  ^^           ^^^^^^
+>(msg: string = "hello") => {} : (msg?: string) => void
+>                              : ^   ^^^      ^^^^^^^^^
+>msg : string
+>    : ^^^^^^
+>"hello" : "hello"
+>        : ^^^^^^^
+
diff --git a/tests/cases/compiler/inferFromAnnotatedParameterWithInitializer.ts b/tests/cases/compiler/inferFromAnnotatedParameterWithInitializer.ts
new file mode 100644
index 0000000000000..b7628aa30a525
--- /dev/null
+++ b/tests/cases/compiler/inferFromAnnotatedParameterWithInitializer.ts
@@ -0,0 +1,21 @@
+// @strict: true
+// @noEmit: true
+
+// https://github.com/microsoft/TypeScript/issues/57706
+
+declare function infer1<T>(fn: Factory<T>): T;
+declare function infer2<T>(fn: Factory2<T>): T;
+
+export type Factory<T> = (arg1: T, arg2: any) => any;
+export type Factory2<T> = (...args: [T, any]) => any;
+
+const f1 = (msg: string = "hello", test: any) => {};
+const a1 = infer1(f1);
+const a2 = infer2(f1);
+
+const f2 = (msg: string = "hello") => {};
+const b1 = infer1(f2);
+const b2 = infer2(f2);
+
+const c1 = infer1((msg: string = "hello") => {});
+const c2 = infer2((msg: string = "hello") => {});