diff --git a/source/paths.d.ts b/source/paths.d.ts
index 7b6afb1f2..d0edfbaf9 100644
--- a/source/paths.d.ts
+++ b/source/paths.d.ts
@@ -213,13 +213,15 @@ type InternalPaths<T, Options extends Required<PathsOptions>, CurrentDepth exten
 			? ((Options['leavesOnly'] extends true
 				? Options['maxRecursionDepth'] extends CurrentDepth
 					? TransformedKey
-					: T[Key] extends infer Value // For distributing `T[Key]`
-						? (Value extends readonly [] | NonRecursiveType | Exclude<MapsSetsOrArrays, UnknownArray>
-							? TransformedKey
-							: IsNever<keyof Value> extends true // Check for empty object & `unknown`, because `keyof unknown` is `never`.
+					: IsNever<T[Key]> extends true
+						? TransformedKey
+						: T[Key] extends infer Value // For distributing `T[Key]`
+							? (Value extends readonly [] | NonRecursiveType | Exclude<MapsSetsOrArrays, UnknownArray>
 								? TransformedKey
-								: never)
-						: never // Should never happen
+								: IsNever<keyof Value> extends true // Check for empty object & `unknown`, because `keyof unknown` is `never`.
+									? TransformedKey
+									: never)
+							: never // Should never happen
 				: TransformedKey
 			) extends infer _TransformedKey
 				// If `depth` is provided, the condition becomes truthy only when it matches `CurrentDepth`.
diff --git a/test-d/paths.ts b/test-d/paths.ts
index 5ad90882c..c127e1f63 100644
--- a/test-d/paths.ts
+++ b/test-d/paths.ts
@@ -295,6 +295,9 @@ expectType<'a.b'>(unknownLeaves);
 declare const anyLeaves: Paths<{a: {b: any}}, {leavesOnly: true}>;
 expectType<'a.b'>(anyLeaves);
 
+declare const neverLeaves: Paths<{a: {b: never}}, {leavesOnly: true}>;
+expectType<'a.b'>(neverLeaves);
+
 // -- depth option --
 declare const zeroDepth: Paths<DeepObject, {depth: 0}>;
 expectType<'a'>(zeroDepth);