diff --git a/changelog.md b/changelog.md
index c9375a4cd..ea12c7f0b 100644
--- a/changelog.md
+++ b/changelog.md
@@ -6,6 +6,7 @@
 * `FIX` Deduplicate documentation bindings for parameters
 * `FIX` Correct `math.type` meta return annotation to use `nil` instead of the string literal `'nil'`
 * `FIX` Fix initial `nameStyle.config` not getting loaded in the appropriate workspace.
+* `FIX` Fix method-level generic return type being overwritten by receiver class generic resolution [#3438](https://github.com/LuaLS/lua-language-server/discussions/3438)
 
 ## 3.18.2
 * `CHG` `duplicate-set-field` diagnostic now supports linked suppression: when any occurrence of a duplicate field is suppressed with `---@diagnostic disable` or `---@diagnostic disable-next-line`, all warnings for that field name will be suppressed
diff --git a/script/vm/compiler.lua b/script/vm/compiler.lua
index 5a673e5fa..f90ed7d9c 100644
--- a/script/vm/compiler.lua
+++ b/script/vm/compiler.lua
@@ -1752,13 +1752,25 @@ local function bindReturnOfFunction(source, mfunc, index, args)
                                     if doc.type == 'doc.return' then
                                         for _, rtn in ipairs(doc.returns) do
                                             if rtn.returnIndex == index then
-                                                local newRtn = vm.cloneObject(rtn, genericMap)
-                                                if newRtn then
-                                                    returnNode = vm.compileNode(newRtn)
-                                                    for rnode in returnNode:eachObject() do
-                                                        if rnode.type == 'generic' then
-                                                            returnNode = rnode:resolve(guide.getUri(source), args)
-                                                            break
+                                                -- Only clone if the return type only references class-level generics
+                                                -- (i.e. generics that exist in the genericMap from the receiver).
+                                                -- Method-level generics (e.g. V not in {T=string}) are
+                                                -- already resolved correctly in the first round above.
+                                                local onlyClassGenerics = true
+                                                guide.eachSourceType(rtn, 'doc.generic.name', function(src)
+                                                    if not genericMap[src[1]] then
+                                                        onlyClassGenerics = false
+                                                    end
+                                                end)
+                                                if onlyClassGenerics then
+                                                    local newRtn = vm.cloneObject(rtn, genericMap)
+                                                    if newRtn then
+                                                        returnNode = vm.compileNode(newRtn)
+                                                        for rnode in returnNode:eachObject() do
+                                                            if rnode.type == 'generic' then
+                                                                returnNode = rnode:resolve(guide.getUri(source), args)
+                                                                break
+                                                            end
                                                         end
                                                     end
                                                 end
diff --git a/test/type_inference/common.lua b/test/type_inference/common.lua
index bd2de1ea5..48453bcbb 100644
--- a/test/type_inference/common.lua
+++ b/test/type_inference/common.lua
@@ -5215,3 +5215,21 @@ local mylist
 
 local <?result?> = mylist:identity()
 ]]
+
+-- Discussion #3438: Method-level generic return type not clobbered by receiver block
+-- When a generic class method has @return R where R is method-only (not in class genericMap),
+-- the receiver block should not overwrite Round 1's correct resolution.
+TEST 'integer' [[
+---@class MyClass<T>
+local MyClass = {}
+
+---@generic R
+---@param val R
+---@return R
+function MyClass:pass(val) return val end
+
+---@type MyClass<string>
+local myClass
+
+local <?result?> = myClass:pass(42)
+]]