diff --git a/pyrefly/lib/solver/subset.rs b/pyrefly/lib/solver/subset.rs
index 20f62ecb5b..e899bd979c 100644
--- a/pyrefly/lib/solver/subset.rs
+++ b/pyrefly/lib/solver/subset.rs
@@ -149,6 +149,26 @@ impl SubsetWithSnapshotResult {
 }
 
 impl<'a, Ans: LookupAnswer> Subset<'a, Ans> {
+    fn is_subset_overload_candidate(
+        &mut self,
+        got: &Type,
+        want: &Type,
+    ) -> Result<(), SubsetError> {
+        let vars = got
+            .collect_maybe_placeholder_vars()
+            .into_iter()
+            .chain(want.collect_maybe_placeholder_vars())
+            .collect::<Vec<_>>();
+        match self.with_snapshot(&vars, |me| me.is_subset_eq(got, want)) {
+            SubsetWithSnapshotResult::Ok => Ok(()),
+            SubsetWithSnapshotResult::InstantiationErrors(snapshot) => {
+                self.solver.restore_vars(snapshot);
+                Ok(())
+            }
+            SubsetWithSnapshotResult::Err(e) => Err(e),
+        }
+    }
+
     /// Can a function with l_args be called as a function with u_args?
     fn is_subset_param_list(
         &mut self,
@@ -1136,7 +1156,7 @@ impl<'a, Ans: LookupAnswer> Subset<'a, Ans> {
 
     fn is_subset_overload(&mut self, overload: &Overload, want: &Type) -> Result<(), SubsetError> {
         if any(overload.signatures.iter(), |l| {
-            self.is_subset_eq(&l.as_type(), want)
+            self.is_subset_overload_candidate(&l.as_type(), want)
         })
         .is_ok()
         {
@@ -1188,7 +1208,7 @@ impl<'a, Ans: LookupAnswer> Subset<'a, Ans> {
                         ret.clone(),
                     )));
                     any(overload.signatures.iter(), |l| {
-                        self.is_subset_eq(&l.as_type(), &callable)
+                        self.is_subset_overload_candidate(&l.as_type(), &callable)
                     })
                 })
                 .is_ok()
@@ -1640,8 +1660,15 @@ impl<'a, Ans: LookupAnswer> Subset<'a, Ans> {
                     metadata: _,
                 }),
             ) => {
-                self.is_subset_params(&l.params, &u.params)?;
-                self.is_subset_eq(&l.ret, &u.ret)
+                let want_has_vars =
+                    Type::Callable(Box::new(u.clone())).may_contain_placeholder_var();
+                if want_has_vars {
+                    self.is_subset_eq(&l.ret, &u.ret)?;
+                    self.is_subset_params(&l.params, &u.params)
+                } else {
+                    self.is_subset_params(&l.params, &u.params)?;
+                    self.is_subset_eq(&l.ret, &u.ret)
+                }
             }
             (Type::TypedDict(TypedDict::Anonymous(got)), Type::TypedDict(want)) => {
                 self.is_subset_anonymous_typed_dict(got, want)
diff --git a/pyrefly/lib/test/overload.rs b/pyrefly/lib/test/overload.rs
index b44b6a8381..8bdd4e46e6 100644
--- a/pyrefly/lib/test/overload.rs
+++ b/pyrefly/lib/test/overload.rs
@@ -441,6 +441,23 @@ bar: Callable[[int, bytes | str], int] = foo
     "#,
 );
 
+testcase!(
+    test_bound_method_overload_assignable_to_callable,
+    r#"
+from typing import Callable, assert_type
+import itertools
+
+_FORMAT_PATH = "{}/{}".format
+_DIRECT: Callable[[str, str], str] = _FORMAT_PATH
+
+def get_paths(path: str) -> list[str]:
+    parts = path.split("/")
+    result = list(itertools.accumulate(parts, _FORMAT_PATH))
+    assert_type(result, list[str])
+    return result
+    "#,
+);
+
 testcase!(
     test_overload_assignable_to_callable_return_supertype,
     r#"