Properly expand type in generic class with Self and TypeVar with values

mypy/expandtype.py

@@ -222,6 +222,10 @@ def visit_instance(self, t: Instance) -> Type:
             return args
 
     def visit_type_var(self, t: TypeVarType) -> Type:
+        # Normally upper bounds can't contain other type variables, the only exception is
+        # special type variable Self`0 <: C[T, S], where C is the class where Self is used.
+        if t.id.raw_id == 0:
+            t = t.copy_modified(upper_bound=t.upper_bound.accept(self))
         repl = self.variables.get(t.id, t)
         if isinstance(repl, ProperType) and isinstance(repl, Instance):
             # TODO: do we really need to do this?

test-data/unit/check-selftype.test

@@ -1785,3 +1785,23 @@ class C(B, Generic[T]):
         inst = super().copy()
         reveal_type(inst)  # N: Revealed type is "Self`0"
         return inst
+
+[case testTypingSelfWithValuesExpansion]
+from typing import Self, Generic, TypeVar
+
+class A: pass
+class B: pass
+T = TypeVar("T", A, B)
+
+class C(Generic[T]):
+    val: T
+    def foo(self, x: T) -> None: ...
+    def bar(self, x: T) -> Self:
+        reveal_type(self.foo)  # N: Revealed type is "def (x: __main__.A)" \
+                               # N: Revealed type is "def (x: __main__.B)"
+        self.foo(x)
+        return self
+    def baz(self: Self, x: T) -> None:
+        reveal_type(self.val)  # N: Revealed type is "__main__.A" \
+                               # N: Revealed type is "__main__.B"
+        self.val = x