diff --git a/typed-racket-lib/typed-racket/typecheck/tc-funapp.rkt b/typed-racket-lib/typed-racket/typecheck/tc-funapp.rkt
index 113ee1da..4f655a94 100644
--- a/typed-racket-lib/typed-racket/typecheck/tc-funapp.rkt
+++ b/typed-racket-lib/typed-racket/typecheck/tc-funapp.rkt
@@ -153,6 +153,8 @@
       [_ (tc-error/expr
            "Wrong number of arguments to parameter - expected 0 or 1, got ~a"
            (length argtys))])]
+    [(Distinction: _ _ t)
+     (tc/funapp f-stx args-stx t args-res expected)]
     ;; resolve names, polymorphic apps, mu, etc
     [(? needs-resolving?)
      (tc/funapp f-stx args-stx (resolve-once f-type) args-res expected)]
diff --git a/typed-racket-test/succeed/define-new-subtype-function.rkt b/typed-racket-test/succeed/define-new-subtype-function.rkt
new file mode 100644
index 00000000..2a75e168
--- /dev/null
+++ b/typed-racket-test/succeed/define-new-subtype-function.rkt
@@ -0,0 +1,8 @@
+#lang typed/racket
+
+(define-new-subtype F (make-F (-> Real Real)))
+
+(: app : F Real -> Real)
+(define (app f x)
+  (f x))
+