diff --git a/compiler/src/dotty/tools/dotc/core/Types.scala b/compiler/src/dotty/tools/dotc/core/Types.scala
index 4f627c815073..55f6c6e06662 100644
--- a/compiler/src/dotty/tools/dotc/core/Types.scala
+++ b/compiler/src/dotty/tools/dotc/core/Types.scala
@@ -673,10 +673,17 @@ object Types {
           pdenot.asSingleDenotation.derivedSingleDenotation(pdenot.symbol, jointInfo)
         }
         else
-          pdenot & (
+          val joint = pdenot & (
             new JointRefDenotation(NoSymbol, rinfo, Period.allInRun(ctx.runId), pre),
             pre,
             safeIntersection = ctx.base.pendingMemberSearches.contains(name))
+          joint match
+            case joint: SingleDenotation
+            if rinfo.isInstanceOf[MethodOrPoly] && rinfo <:< joint.info =>
+              // use `rinfo` to keep the right parameter names for named args. See i8516.scala.
+              joint.derivedSingleDenotation(joint.symbol, rinfo)
+            case _ =>
+              joint
       }
 
       def goApplied(tp: AppliedType, tycon: HKTypeLambda) =
diff --git a/tests/pos/i8516.scala b/tests/pos/i8516.scala
new file mode 100644
index 000000000000..9e95e3e4eb02
--- /dev/null
+++ b/tests/pos/i8516.scala
@@ -0,0 +1,3 @@
+val x: Function1[Int, Int] { def apply(arg: Int): Int } = x => x
+val x1 = x
+val y = x.apply(arg = 1)
\ No newline at end of file