diff --git a/mypy/typeops.py b/mypy/typeops.py
index 3b5ca73f8713..1760e9c00503 100644
--- a/mypy/typeops.py
+++ b/mypy/typeops.py
@@ -367,7 +367,8 @@ def make_simplified_union(items: Sequence[Type],
             # Keep track of the truishness info for deleted subtypes which can be relevant
             cbt = cbf = False
             for j, tj in enumerate(items):
-                if i != j and is_proper_subtype(tj, ti, keep_erased_types=keep_erased):
+                if i != j and is_proper_subtype(tj, ti, keep_erased_types=keep_erased) and \
+                        is_redundant_literal_instance(ti, tj):
                     # We found a redundant item in the union.
                     removed.add(j)
                     cbt = cbt or tj.can_be_true
@@ -805,3 +806,14 @@ def custom_special_method(typ: Type, name: str, check_all: bool = False) -> bool
         return True
     # TODO: support other types (see ExpressionChecker.has_member())?
     return False
+
+
+def is_redundant_literal_instance(general: ProperType, specific: ProperType) -> bool:
+    if not isinstance(general, Instance) or general.last_known_value is None:
+        return True
+    if isinstance(specific, Instance) and specific.last_known_value == general.last_known_value:
+        return True
+    if isinstance(specific, UninhabitedType):
+        return True
+
+    return False
diff --git a/test-data/unit/check-python38.test b/test-data/unit/check-python38.test
index 1e9b6ea66f28..ee2f0721ab62 100644
--- a/test-data/unit/check-python38.test
+++ b/test-data/unit/check-python38.test
@@ -268,7 +268,7 @@ def f(x: int = (c := 4)) -> int:
     f(x=(y7 := 3))
     reveal_type(y7)  # N: Revealed type is "builtins.int"
 
-    reveal_type((lambda: (y8 := 3) and y8)())  # N: Revealed type is "Literal[3]?"
+    reveal_type((lambda: (y8 := 3) and y8)())  # N: Revealed type is "builtins.int"
     y8  # E: Name "y8" is not defined
 
     y7 = 1.0  # E: Incompatible types in assignment (expression has type "float", variable has type "int")