diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index a619238c90fdc..8466e06dde2b4 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -17668,9 +17668,16 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
         }
     }
 
-    function removeStringLiteralsMatchedByTemplateLiterals(types: Type[]) {
+    function removeStringLiteralsMatchedByTemplateLiterals(types: Type[]): Type[] | undefined {
         const templates = filter(types, isPatternLiteralType) as (TemplateLiteralType | StringMappingType)[];
         if (templates.length) {
+            const estimatedCount = templates.length * countWhere(types, t => !!(t.flags & TypeFlags.StringLiteral));
+            if (estimatedCount > 1000000) {
+                tracing?.instant(tracing.Phase.CheckTypes, "removeStringLiteralsMatchedByTemplateLiterals_DepthLimit", { typeIds: types.map(t => t.id) });
+                error(currentNode, Diagnostics.Expression_produces_a_union_type_that_is_too_complex_to_represent);
+                return undefined;
+            }
+
             let i = types.length;
             while (i > 0) {
                 i--;
@@ -17680,6 +17687,7 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
                 }
             }
         }
+        return types;
     }
 
     function isTypeMatchedByTemplateLiteralOrStringMapping(type: Type, template: TemplateLiteralType | StringMappingType) {
@@ -17804,7 +17812,10 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
                 removeRedundantLiteralTypes(typeSet, includes, !!(unionReduction & UnionReduction.Subtype));
             }
             if (includes & TypeFlags.StringLiteral && includes & (TypeFlags.TemplateLiteral | TypeFlags.StringMapping)) {
-                removeStringLiteralsMatchedByTemplateLiterals(typeSet);
+                typeSet = removeStringLiteralsMatchedByTemplateLiterals(typeSet);
+                if (!typeSet) {
+                    return errorType;
+                }
             }
             if (includes & TypeFlags.IncludesConstrainedTypeVariable) {
                 removeConstrainedTypeVariables(typeSet);
diff --git a/tests/baselines/reference/templateLiteralTypes1.errors.txt b/tests/baselines/reference/templateLiteralTypes1.errors.txt
index ed921a5dbfe66..bfdad709c9c26 100644
--- a/tests/baselines/reference/templateLiteralTypes1.errors.txt
+++ b/tests/baselines/reference/templateLiteralTypes1.errors.txt
@@ -6,10 +6,11 @@ templateLiteralTypes1.ts(165,15): error TS1338: 'infer' declarations are only pe
 templateLiteralTypes1.ts(197,16): error TS2590: Expression produces a union type that is too complex to represent.
 templateLiteralTypes1.ts(201,16): error TS2590: Expression produces a union type that is too complex to represent.
 templateLiteralTypes1.ts(205,16): error TS2590: Expression produces a union type that is too complex to represent.
+templateLiteralTypes1.ts(251,7): error TS2590: Expression produces a union type that is too complex to represent.
 templateLiteralTypes1.ts(252,7): error TS2590: Expression produces a union type that is too complex to represent.
 
 
-==== templateLiteralTypes1.ts (7 errors) ====
+==== templateLiteralTypes1.ts (8 errors) ====
     // Template types example from #12754
     
     const createScopedActionType = <S extends string>(scope: S) => <T extends string>(type: T) => `${scope}/${type}` as `${S}/${T}`;
@@ -276,6 +277,8 @@ templateLiteralTypes1.ts(252,7): error TS2590: Expression produces a union type
     export type SpacingShorthand =
         | `${Spacing} ${Spacing}`
         | `${Spacing} ${Spacing} ${Spacing}`
+          ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
+!!! error TS2590: Expression produces a union type that is too complex to represent.
         | `${Spacing} ${Spacing} ${Spacing} ${Spacing}`;
           ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
 !!! error TS2590: Expression produces a union type that is too complex to represent.