@@ -730,9 +730,10 @@ def check_overlapping_overloads(self, defn: OverloadedFuncDef) -> None:
                 # This is to match the direction the implementation's return
                 # needs to be compatible in.
                 if impl_type.variables:
-                    impl = unify_generic_callable(
-                        impl_type,
-                        sig1,
+                    impl: CallableType | None = unify_generic_callable(
+                        # Normalize both before unifying
+                        impl_type.with_unpacked_kwargs(),
+                        sig1.with_unpacked_kwargs(),
                         ignore_return=False,
                         return_constraint_direction=SUPERTYPE_OF,
                     )
@@ -1167,7 +1168,7 @@ def check_func_def(self, defn: FuncItem, typ: CallableType, name: str | None) ->
                             # builtins.tuple[T] is typing.Tuple[T, ...]
                             arg_type = self.named_generic_type("builtins.tuple", [arg_type])
                     elif typ.arg_kinds[i] == nodes.ARG_STAR2:
-                        if not isinstance(arg_type, ParamSpecType):
+                        if not isinstance(arg_type, ParamSpecType) and not typ.unpack_kwargs:
                             arg_type = self.named_generic_type(
                                 "builtins.dict", [self.str_type(), arg_type]
                             )
@@ -1912,6 +1913,13 @@ def check_override(
 
         if fail:
             emitted_msg = False
+
+            # Normalize signatures, so we get better diagnostics.
+            if isinstance(override, (CallableType, Overloaded)):
+                override = override.with_unpacked_kwargs()
+            if isinstance(original, (CallableType, Overloaded)):
+                original = original.with_unpacked_kwargs()
+
             if (
                 isinstance(override, CallableType)
                 and isinstance(original, CallableType)
 
@@ -1322,6 +1322,8 @@ def check_callable_call(
 
         See the docstring of check_call for more information.
         """
+        # Always unpack **kwargs before checking a call.
+        callee = callee.with_unpacked_kwargs()
         if callable_name is None and callee.name:
             callable_name = callee.name
         ret_type = get_proper_type(callee.ret_type)
@@ -2057,6 +2059,8 @@ def check_overload_call(
         context: Context,
     ) -> tuple[Type, Type]:
         """Checks a call to an overloaded function."""
+        # Normalize unpacked kwargs before checking the call.
+        callee = callee.with_unpacked_kwargs()
         arg_types = self.infer_arg_types_in_empty_context(args)
         # Step 1: Filter call targets to remove ones where the argument counts don't match
         plausible_targets = self.plausible_overload_call_targets(
 
@@ -763,9 +763,13 @@ def infer_constraints_from_protocol_members(
         return res
 
     def visit_callable_type(self, template: CallableType) -> list[Constraint]:
+        # Normalize callables before matching against each other.
+        # Note that non-normalized callables can be created in annotations
+        # using e.g. callback protocols.
+        template = template.with_unpacked_kwargs()
         if isinstance(self.actual, CallableType):
             res: list[Constraint] = []
-            cactual = self.actual
+            cactual = self.actual.with_unpacked_kwargs()
             param_spec = template.param_spec()
             if param_spec is None:
                 # FIX verify argument counts
 
@@ -2,6 +2,8 @@
 
 from __future__ import annotations
 
+from typing import Tuple
+
 import mypy.typeops
 from mypy.maptype import map_instance_to_supertype
 from mypy.nodes import CONTRAVARIANT, COVARIANT, INVARIANT
@@ -141,7 +143,7 @@ def join_instances_via_supertype(self, t: Instance, s: Instance) -> ProperType:
 
 def join_simple(declaration: Type | None, s: Type, t: Type) -> ProperType:
     """Return a simple least upper bound given the declared type."""
-    # TODO: check infinite recursion for aliases here.
+    # TODO: check infinite recursion for aliases here?
     declaration = get_proper_type(declaration)
     s = get_proper_type(s)
     t = get_proper_type(t)
@@ -172,6 +174,9 @@ def join_simple(declaration: Type | None, s: Type, t: Type) -> ProperType:
     if isinstance(s, UninhabitedType) and not isinstance(t, UninhabitedType):
         s, t = t, s
 
+    # Meets/joins require callable type normalization.
+    s, t = normalize_callables(s, t)
+
     value = t.accept(TypeJoinVisitor(s))
     if declaration is None or is_subtype(value, declaration):
         return value
@@ -229,6 +234,9 @@ def join_types(s: Type, t: Type, instance_joiner: InstanceJoiner | None = None)
     elif isinstance(t, PlaceholderType):
         return AnyType(TypeOfAny.from_error)
 
+    # Meets/joins require callable type normalization.
+    s, t = normalize_callables(s, t)
+
     # Use a visitor to handle non-trivial cases.
     return t.accept(TypeJoinVisitor(s, instance_joiner))
 
@@ -528,6 +536,14 @@ def is_better(t: Type, s: Type) -> bool:
     return False
 
 
+def normalize_callables(s: ProperType, t: ProperType) -> Tuple[ProperType, ProperType]:
+    if isinstance(s, (CallableType, Overloaded)):
+        s = s.with_unpacked_kwargs()
+    if isinstance(t, (CallableType, Overloaded)):
+        t = t.with_unpacked_kwargs()
+    return s, t
+
+
 def is_similar_callables(t: CallableType, s: CallableType) -> bool:
     """Return True if t and s have identical numbers of
     arguments, default arguments and varargs.
 
@@ -78,6 +78,10 @@ def meet_types(s: Type, t: Type) -> ProperType:
         return t
     if isinstance(s, UnionType) and not isinstance(t, UnionType):
         s, t = t, s
+
+    # Meets/joins require callable type normalization.
+    s, t = join.normalize_callables(s, t)
+
     return t.accept(TypeMeetVisitor(s))
 
 
 
@@ -2392,7 +2392,10 @@ def [T <: int] f(self, x: int, y: T) -> None
         name = tp.arg_names[i]
         if name:
             s += name + ": "
-        s += format_type_bare(tp.arg_types[i])
+        type_str = format_type_bare(tp.arg_types[i])
+        if tp.arg_kinds[i] == ARG_STAR2 and tp.unpack_kwargs:
+            type_str = f"Unpack[{type_str}]"
+        s += type_str
         if tp.arg_kinds[i].is_optional():
             s += " = ..."
         if (
 
@@ -263,6 +263,7 @@
     TypeVarLikeType,
     TypeVarType,
     UnboundType,
+    UnpackType,
     get_proper_type,
     get_proper_types,
     invalid_recursive_alias,
@@ -830,6 +831,8 @@ def analyze_func_def(self, defn: FuncDef) -> None:
                     self.defer(defn)
                     return
                 assert isinstance(result, ProperType)
+                if isinstance(result, CallableType):
+                    result = self.remove_unpack_kwargs(defn, result)
                 defn.type = result
                 self.add_type_alias_deps(analyzer.aliases_used)
                 self.check_function_signature(defn)
@@ -872,6 +875,29 @@ def analyze_func_def(self, defn: FuncDef) -> None:
                 defn.type = defn.type.copy_modified(ret_type=ret_type)
                 self.wrapped_coro_return_types[defn] = defn.type
 
+    def remove_unpack_kwargs(self, defn: FuncDef, typ: CallableType) -> CallableType:
+        if not typ.arg_kinds or typ.arg_kinds[-1] is not ArgKind.ARG_STAR2:
+            return typ
+        last_type = get_proper_type(typ.arg_types[-1])
+        if not isinstance(last_type, UnpackType):
+            return typ
+        last_type = get_proper_type(last_type.type)
+        if not isinstance(last_type, TypedDictType):
+            self.fail("Unpack item in ** argument must be a TypedDict", defn)
+            new_arg_types = typ.arg_types[:-1] + [AnyType(TypeOfAny.from_error)]
+            return typ.copy_modified(arg_types=new_arg_types)
+        overlap = set(typ.arg_names) & set(last_type.items)
+        # It is OK for TypedDict to have a key named 'kwargs'.
+        overlap.discard(typ.arg_names[-1])
+        if overlap:
+            overlapped = ", ".join([f'"{name}"' for name in overlap])
+            self.fail(f"Overlap between argument names and ** TypedDict items: {overlapped}", defn)
+            new_arg_types = typ.arg_types[:-1] + [AnyType(TypeOfAny.from_error)]
+            return typ.copy_modified(arg_types=new_arg_types)
+        # OK, everything looks right now, mark the callable type as using unpack.
+        new_arg_types = typ.arg_types[:-1] + [last_type]
+        return typ.copy_modified(arg_types=new_arg_types, unpack_kwargs=True)
+
     def prepare_method_signature(self, func: FuncDef, info: TypeInfo) -> None:
         """Check basic signature validity and tweak annotation of self/cls argument."""
         # Only non-static methods are special.
 
@@ -38,6 +38,7 @@
     Instance,
     LiteralType,
     NoneType,
+    NormalizedCallableType,
     Overloaded,
     Parameters,
     ParamSpecType,
@@ -626,8 +627,10 @@ def visit_unpack_type(self, left: UnpackType) -> bool:
         return False
 
     def visit_parameters(self, left: Parameters) -> bool:
-        right = self.right
-        if isinstance(right, Parameters) or isinstance(right, CallableType):
+        if isinstance(self.right, Parameters) or isinstance(self.right, CallableType):
+            right = self.right
+            if isinstance(right, CallableType):
+                right = right.with_unpacked_kwargs()
             return are_parameters_compatible(
                 left,
                 right,
@@ -671,7 +674,7 @@ def visit_callable_type(self, left: CallableType) -> bool:
         elif isinstance(right, Parameters):
             # this doesn't check return types.... but is needed for is_equivalent
             return are_parameters_compatible(
-                left,
+                left.with_unpacked_kwargs(),
                 right,
                 is_compat=self._is_subtype,
                 ignore_pos_arg_names=self.subtype_context.ignore_pos_arg_names,
@@ -1249,6 +1252,10 @@ def g(x: int) -> int: ...
         If the 'some_check' function is also symmetric, the two calls would be equivalent
         whether or not we check the args covariantly.
     """
+    # Normalize both types before comparing them.
+    left = left.with_unpacked_kwargs()
+    right = right.with_unpacked_kwargs()
+
     if is_compat_return is None:
         is_compat_return = is_compat
 
@@ -1313,8 +1320,8 @@ def g(x: int) -> int: ...
 
 
 def are_parameters_compatible(
-    left: Parameters | CallableType,
-    right: Parameters | CallableType,
+    left: Parameters | NormalizedCallableType,
+    right: Parameters | NormalizedCallableType,
     *,
     is_compat: Callable[[Type, Type], bool],
     ignore_pos_arg_names: bool = False,
@@ -1535,11 +1542,11 @@ def new_is_compat(left: Type, right: Type) -> bool:
 
 
 def unify_generic_callable(
-    type: CallableType,
-    target: CallableType,
+    type: NormalizedCallableType,
+    target: NormalizedCallableType,
     ignore_return: bool,
     return_constraint_direction: int | None = None,
-) -> CallableType | None:
+) -> NormalizedCallableType | None:
     """Try to unify a generic callable type with another callable type.
 
     Return unified CallableType if successful; otherwise, return None.
@@ -1576,7 +1583,7 @@ def report(*args: Any) -> None:
     )
     if had_errors:
         return None
-    return applied
+    return cast(NormalizedCallableType, applied)
 
 
 def try_restrict_literal_union(t: UnionType, s: Type) -> list[Type] | None:
 
@@ -538,7 +538,7 @@ def try_analyze_special_unbound_type(self, t: UnboundType, fullname: str) -> Typ
         elif fullname in ("typing.Unpack", "typing_extensions.Unpack"):
             # We don't want people to try to use this yet.
             if not self.options.enable_incomplete_features:
-                self.fail('"Unpack" is not supported by mypy yet', t)
+                self.fail('"Unpack" is not supported yet, use --enable-incomplete-features', t)
                 return AnyType(TypeOfAny.from_error)
             return UnpackType(self.anal_type(t.args[0]), line=t.line, column=t.column)
         return None