diff --git a/src/transformation/visitors/call.ts b/src/transformation/visitors/call.ts
index 1f9fb521b..d37561910 100644
--- a/src/transformation/visitors/call.ts
+++ b/src/transformation/visitors/call.ts
@@ -159,7 +159,7 @@ export function transformContextualCallExpression(
             );
             return lua.createCallExpression(expression, transformedArguments, node);
         }
-    } else if (ts.isIdentifier(left)) {
+    } else if (ts.isIdentifier(left) || ts.isCallExpression(left)) {
         const callContext = context.isStrict ? ts.factory.createNull() : ts.factory.createIdentifier("_G");
         let expression: lua.Expression;
         [expression, transformedArguments] = transformCallWithArguments(
diff --git a/test/unit/templateLiterals.spec.ts b/test/unit/templateLiterals.spec.ts
index d5dc519a5..318804ee9 100644
--- a/test/unit/templateLiterals.spec.ts
+++ b/test/unit/templateLiterals.spec.ts
@@ -83,3 +83,26 @@ test.each(["string", "'string literal type'", "string & unknown"])(
             .expectToMatchJsResult();
     }
 );
+
+// https://github.com/TypeScriptToLua/TypeScriptToLua/issues/1637
+test("tagged template literal returned from function call (#1637)", () => {
+    util.testModule`
+        function templateFactory() {
+            return (template: TemplateStringsArray) => {
+                return "bar";
+            }
+        }
+        export let result = templateFactory()\`foo\`;
+    `.expectToEqual({ result: "bar" });
+});
+
+test("tagged template literal returned from function call, explicit no context (#1637)", () => {
+    util.testModule`
+        function templateFactory() {
+            return function(this: void, template: TemplateStringsArray) {
+                return "bar";
+            }
+        }
+        export let result = templateFactory()\`foo\`;
+    `.expectToEqual({ result: "bar" });
+});