diff --git a/gcc/cp/pt.cc b/gcc/cp/pt.cc
index cb3164d4914..769e7999dac 100644
--- a/gcc/cp/pt.cc
+++ b/gcc/cp/pt.cc
@@ -7951,7 +7951,9 @@ coerce_template_template_parm (tree parm, tree arg, tsubst_flags_t complain,
 	 i.e. the parameter list of TT depends on earlier parameters.  */
       if (!uses_template_parms (TREE_TYPE (arg)))
 	{
+	  ++processing_template_decl;
 	  tree t = tsubst (TREE_TYPE (parm), outer_args, complain, in_decl);
+	  --processing_template_decl;
 	  if (!uses_template_parms (t)
 	      && !same_type_p (t, TREE_TYPE (arg)))
 	    return false;
diff --git a/gcc/testsuite/g++.dg/template/ttp44.C b/gcc/testsuite/g++.dg/template/ttp44.C
new file mode 100644
index 00000000000..2a412975243
--- /dev/null
+++ b/gcc/testsuite/g++.dg/template/ttp44.C
@@ -0,0 +1,13 @@
+// PR c++/96097
+// { dg-do compile }
+
+template <template <typename T, typename T::type TT> class X>
+void func() {}
+
+template <typename U, int I>
+struct Y {};
+
+void test()
+{
+  func<Y>();
+}