diff --git a/src/share/classes/com/sun/tools/javac/comp/Infer.java b/src/share/classes/com/sun/tools/javac/comp/Infer.java
index 216cf3cad71bd02bfba9258bb2606f2d0e33295c..fb61b61b8b0246c76bb896ee9be47667c75a3e80 100644
--- a/src/share/classes/com/sun/tools/javac/comp/Infer.java
+++ b/src/share/classes/com/sun/tools/javac/comp/Infer.java
@@ -1216,7 +1216,7 @@ public class Infer {
                  * created, effectively replacing the original cyclic nodes.
              */
             void initNodes() {
-                ArrayList<Node> nodes = new ArrayList<Node>();
+                nodes = new ArrayList<Node>();
                 for (Type t : inferenceContext.restvars()) {
                     nodes.add(new Node(t));
                 }
@@ -1235,7 +1235,7 @@ public class Infer {
                         }
                     }
                 }
-                this.nodes = new ArrayList<Node>();
+                ArrayList<Node> acyclicNodes = new ArrayList<Node>();
                 for (List<? extends Node> conSubGraph : GraphUtils.tarjan(nodes)) {
                     if (conSubGraph.length() > 1) {
                         Node root = conSubGraph.head;
@@ -1244,8 +1244,9 @@ public class Infer {
                             notifyUpdate(n, root);
                         }
                     }
-                    this.nodes.add(conSubGraph.head);
+                    acyclicNodes.add(conSubGraph.head);
                 }
+                nodes = acyclicNodes;
             }
 
             /**
diff --git a/test/tools/javac/lambda/TargetType65.java b/test/tools/javac/lambda/TargetType65.java
new file mode 100644
index 0000000000000000000000000000000000000000..62248488a6f66958641a243885ff85769deff626
--- /dev/null
+++ b/test/tools/javac/lambda/TargetType65.java
@@ -0,0 +1,58 @@
+/*
+ * Copyright (c) 2013, Oracle and/or its affiliates. All rights reserved.
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS FILE HEADER.
+ *
+ * This code is free software; you can redistribute it and/or modify it
+ * under the terms of the GNU General Public License version 2 only, as
+ * published by the Free Software Foundation.
+ *
+ * This code is distributed in the hope that it will be useful, but WITHOUT
+ * ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or
+ * FITNESS FOR A PARTICULAR PURPOSE.  See the GNU General Public License
+ * version 2 for more details (a copy is included in the LICENSE file that
+ * accompanied this code).
+ *
+ * You should have received a copy of the GNU General Public License version
+ * 2 along with this work; if not, write to the Free Software Foundation,
+ * Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301 USA.
+ *
+ * Please contact Oracle, 500 Oracle Parkway, Redwood Shores, CA 94065 USA
+ * or visit www.oracle.com if you need additional information or have any
+ * questions.
+ */
+
+/*
+ * @test
+ * @bug 8008723
+ * @summary Graph Inference: bad graph calculation leads to assertion error
+ * @compile TargetType65.java
+ */
+class TargetType65 {
+    interface Predicate<X> {
+        boolean accepts(X x);
+    }
+
+    static class Optional<T> {
+        public boolean isPresent() { return false; }
+        public static<E> Optional<E> empty() { return null; }
+    }
+
+    interface Supplier<X> {
+        X make();
+    }
+
+    static class Sink<O, T> { }
+
+    static class SubSink<R> extends Sink<R, Optional<R>> {  }
+
+    static class Tester<T, O> {
+        public static <F> Tester<F, Optional<F>> makeRef() {
+            return new Tester<>(Optional.empty(), Optional::isPresent, SubSink::new);
+        }
+
+        private Tester(O emptyValue,
+                       Predicate<O> presentPredicate,
+                       Supplier<Sink<T, O>> sinkSupplier) {
+        }
+    }
+}