diff --git a/pyrefly/lib/alt/function.rs b/pyrefly/lib/alt/function.rs
index 078fd1ddcb..caf46328d6 100644
--- a/pyrefly/lib/alt/function.rs
+++ b/pyrefly/lib/alt/function.rs
@@ -2569,13 +2569,47 @@ impl<'ctx, 'answer, Ans: LookupAnswer> AnswersSolver<'ctx, 'answer, Ans> {
         self.bind_bound_method_type(&m.func, &m.obj, skip_instantiation, is_subset)
     }
 
+    /// Bind `__new__` to `cls`, dropping overloads whose first parameter (`cls`) cannot accept
+    /// the class object. Type parameters are treated as `Any` on both sides, so overloads that
+    /// depend on their own type parameters, or on the free type parameters of a bare generic
+    /// class, are kept. If every overload would be dropped, the original overload is kept so
+    /// that the callable stays usable.
     pub fn bind_dunder_new(&self, t: &Type, cls: ClassType) -> Option<Type> {
-        self.bind_function(
-            t,
-            &self.heap.mk_type_of(self.heap.mk_class_type(cls)),
-            false,
-            &mut |a, b| self.is_subset_eq(a, b),
-        )
+        let cls_type = self.heap.mk_type_of(self.heap.mk_class_type(cls));
+        let any = self.heap.mk_any_implicit();
+        let erase_tparams = |ty: &Type| {
+            let mut qs = SmallSet::new();
+            ty.collect_quantifieds(&mut qs);
+            ty.clone().subst(&qs.iter().map(|q| (*q, &any)).collect())
+        };
+        let t = match t {
+            Type::Overload(overload) => {
+                let receiver = erase_tparams(&cls_type);
+                let applicable: Vec<_> = overload
+                    .signatures
+                    .iter()
+                    .filter(|sig| {
+                        let func = match sig {
+                            OverloadType::Function(f) => f,
+                            OverloadType::Forall(forall) => &forall.body,
+                        };
+                        func.signature.get_first_param().is_none_or(|cls_param| {
+                            self.is_subset_eq(&receiver, &erase_tparams(cls_param))
+                        })
+                    })
+                    .cloned()
+                    .collect();
+                match Vec1::try_from_vec(applicable) {
+                    Ok(signatures) => self.heap.mk_overload(Overload {
+                        signatures,
+                        metadata: overload.metadata.clone(),
+                    }),
+                    Err(_) => t.clone(),
+                }
+            }
+            _ => t.clone(),
+        };
+        self.bind_function(&t, &cls_type, false, &mut |a, b| self.is_subset_eq(a, b))
     }
 
     /// Bind a `__init__` method for constructor callable conversion.
diff --git a/pyrefly/lib/test/constructors.rs b/pyrefly/lib/test/constructors.rs
index 194cb80ce0..80df8c0c26 100644
--- a/pyrefly/lib/test/constructors.rs
+++ b/pyrefly/lib/test/constructors.rs
@@ -1406,3 +1406,79 @@ class Foo:
 Foo(untyped(1), "bad")  # E: Argument `Literal['bad']` is not assignable to parameter `b` with type `int`
 "#,
 );
+
+// https://github.com/facebook/pyrefly/issues/5053
+testcase!(
+    test_overloaded_new_cls_annotation_as_callable,
+    r#"
+from collections.abc import Callable
+from functools import partial
+from typing import Any, assert_type, overload
+
+class C[T]:
+    @overload
+    def __new__(cls: type[C[int]], x: object) -> C[int]: ...
+    @overload
+    def __new__(cls: type[C[str]], x: str) -> C[str]: ...
+    def __new__(cls: type[Any], x: object) -> C[int] | C[str]:
+        raise NotImplementedError
+
+ok: Callable[[str], C[str]] = C[str]
+wrong: Callable[[str], C[int]] = C[str]  # E: `type[C[str]]` is not assignable to `(str) -> C[int]`
+assert_type(partial(C[str], "x")(), C[str])
+    "#,
+);
+
+testcase!(
+    test_overloaded_new_cls_annotation_as_callable_variants,
+    r#"
+from collections.abc import Callable
+from typing import Any, assert_type, overload
+
+# Overloads without a `cls` annotation are all kept.
+class NoAnnotation[T]:
+    @overload
+    def __new__(cls, x: int) -> "NoAnnotation[int]": ...
+    @overload
+    def __new__(cls, x: str) -> "NoAnnotation[str]": ...
+    def __new__(cls, x: Any) -> Any: ...
+
+a: Callable[[int], NoAnnotation[int]] = NoAnnotation
+b: Callable[[str], NoAnnotation[str]] = NoAnnotation
+
+# A bare generic class keeps every overload, since its type parameter is not yet solved.
+class C[T]:
+    @overload
+    def __new__(cls: type[C[int]], x: object) -> C[int]: ...
+    @overload
+    def __new__(cls: type[C[str]], x: str) -> C[str]: ...
+    def __new__(cls: type[Any], x: object) -> C[int] | C[str]: ...
+
+bare: Callable[[str], C[str]] = C
+
+# Both overloads match `C[Any]`.
+def f(c: type[C[Any]]):
+    g: Callable[[str], C[str]] = c
+
+# A `cls` annotation that is a type variable accepts every specialization.
+class Generic_[T]:
+    @overload
+    def __new__[S](cls: type[S], x: int) -> S: ...
+    @overload
+    def __new__[S](cls: type[S], x: str) -> S: ...
+    def __new__[S](cls: type[S], x: Any) -> S: ...
+
+h: Callable[[int], Generic_[str]] = Generic_[str]
+i: Callable[[str], Generic_[str]] = Generic_[str]
+
+# `__init__`-only classes are unaffected.
+class InitOnly[T]:
+    def __init__(self, x: T) -> None: ...
+
+j: Callable[[int], InitOnly[int]] = InitOnly[int]
+
+# Inherited overloaded `__new__` is filtered against the subclass.
+class D(C[str]): ...
+k: Callable[[str], C[str]] = D
+    "#,
+);