diff --git a/compiler/astdef.nim b/compiler/astdef.nim
index b9a8aab3e1..242cdf3ef6 100644
--- a/compiler/astdef.nim
+++ b/compiler/astdef.nim
@@ -202,7 +202,11 @@ type
     tySequence,
     tyProc,
     tyPointer, tyOpenArray,
-    tyString, tyCstring, tyForward,
+    tyString, tyCstring,
+    tyForward,
+      # a type not yet semchecked
+      # When semcheck a type section, all types defined in it are initialized to tyForward
+
     tyInt, tyInt8, tyInt16, tyInt32, tyInt64, # signed integers
     tyFloat, tyFloat32, tyFloat64, tyFloat128,
     tyUInt, tyUInt8, tyUInt16, tyUInt32, tyUInt64,
diff --git a/compiler/semtypes.nim b/compiler/semtypes.nim
index 1a4bd24965..94435886a9 100644
--- a/compiler/semtypes.nim
+++ b/compiler/semtypes.nim
@@ -1739,6 +1739,7 @@ proc semGeneric(c: PContext, n: PNode, s: PSym, prev: PType): PType =
     var isConcrete = true
     let rType = m.call[0].typ
     let mIndex = if rType != nil: rType.len - 1 else: -1
+    var hasForwardTypeParam = false
     for i in 1..<m.call.len:
       var typ = m.call[i].typ
       # is this a 'typedesc' *parameter*? If so, use the typedesc type,
@@ -1755,13 +1756,36 @@ proc semGeneric(c: PContext, n: PNode, s: PSym, prev: PType): PType =
           skip = false
         addToResult(typ, skip)
 
+      if typ.kind == tyForward:
+        hasForwardTypeParam = true
+
     if isConcrete:
       if s.ast == nil and s.typ.kind != tyCompositeTypeClass:
         # XXX: What kind of error is this? is it still relevant?
         localError(c.config, n.info, errCannotInstantiateX % s.name.s)
         result = newOrPrevType(tyError, prev, c)
-      elif containsGenericInvocationWithForward(n[0]):
+      elif containsGenericInvocationWithForward(n[0]) or hasForwardTypeParam:
+        # isConcrete == false means this generic type is not instanciated here because it invoked with generic parameters.
+        # Even if isConcrete == true, don't instanciate it now if there are any `tyForward` type params.
+        # Such `tyForward` type params will be semchecked later and we can instanciate this next time.
+        # Some generic types like std/options.Option[T] needs a type kinds of the given type argument.
+
+        # return `tyForward` instead of `tyGenericInvocation` because:
+        # ```nim
+        #   type Foo = object
+        #     x: Option[Foo]
+        # ```
+        # returning `tyGenericInvocation` makes `Option[Foo]` to `tyGenericInvocation` and
+        # next time `semGeneric` is called with `Option[Foo]`, containsGenericType(typeof(`Foo`)) == true
+        # and `isConcrete == false`.
+        if prev == nil:
+          result = newTypeS(tyForward, c)
+          result.sym = s
+        else:
+          assignType(result, newTypeS(tyForward, c))
+          result.sym = s
         c.forwardTypeUpdates.add (result, n) #fixes 1500
+        return
       else:
         result = instGenericContainer(c, n.info, result,
                                       allowMetaTypes = false)
diff --git a/tests/generics/tself_type.nim b/tests/generics/tself_type.nim
new file mode 100644
index 0000000000..c108fc594a
--- /dev/null
+++ b/tests/generics/tself_type.nim
@@ -0,0 +1,48 @@
+# issue 16754
+
+type
+  Opt[T] = object
+    when T is ref:
+      val: T
+      x: int
+    else:
+      val: T
+      x: string
+
+type
+  Foo = ref object
+    x: Opt[Foo]
+
+  Bar = object
+    x: ref Opt[Bar]
+
+var f = Foo()
+assert f.x.x is int
+var b = Bar()
+assert b.x.x is string
+
+type
+  BazG[T] = object
+    x: int
+
+  BazGRef[T] = ref object
+    x: T
+
+  Baz = object
+    x: Opt[BazG[Baz]]
+    y: Opt[BazGRef[Baz]]
+
+var z = Baz()
+assert z.x.x is string
+assert z.y.x is int
+
+import options
+
+type
+  Person = ref object
+    parent: Option[Person]
+
+proc newPerson(parent: Option[Person]): Person =
+  Person(parent: parent)
+
+var person = newPerson(none(Person))