diff --git a/clang/docs/ReleaseNotes.rst b/clang/docs/ReleaseNotes.rst
index 019a54698b5543..7d18f4793a1507 100644
--- a/clang/docs/ReleaseNotes.rst
+++ b/clang/docs/ReleaseNotes.rst
@@ -279,6 +279,9 @@ C++20 Feature Support
   macros and is not affected by these changes. The ``<stdatomic.h>`` diagnostic
   can be disabled by defining the ``_CLANG_DISABLE_CRT_DEPRECATION_WARNINGS``
   macro prior to including the header.
+- No longer attempt to evaluate a consteval UDL function call at runtime when
+  it is called through a template instantiation. This fixes
+  `Issue 54578 <https://github.com/llvm/llvm-project/issues/54578>`_.
 
 C++2b Feature Support
 ^^^^^^^^^^^^^^^^^^^^^
diff --git a/clang/lib/Sema/TreeTransform.h b/clang/lib/Sema/TreeTransform.h
index 5c37fcaaea13d9..ad18d27bebe06f 100644
--- a/clang/lib/Sema/TreeTransform.h
+++ b/clang/lib/Sema/TreeTransform.h
@@ -10460,9 +10460,7 @@ TreeTransform<Derived>::TransformCharacterLiteral(CharacterLiteral *E) {
 template<typename Derived>
 ExprResult
 TreeTransform<Derived>::TransformUserDefinedLiteral(UserDefinedLiteral *E) {
-  if (FunctionDecl *FD = E->getDirectCallee())
-    SemaRef.MarkFunctionReferenced(E->getBeginLoc(), FD);
-  return SemaRef.MaybeBindToTemporary(E);
+  return getDerived().TransformCallExpr(E);
 }
 
 template<typename Derived>
diff --git a/clang/test/CodeGenCXX/cxx20-consteval-crash.cpp b/clang/test/CodeGenCXX/cxx20-consteval-crash.cpp
index 19f02c4cf41d06..d37505b769bbcf 100644
--- a/clang/test/CodeGenCXX/cxx20-consteval-crash.cpp
+++ b/clang/test/CodeGenCXX/cxx20-consteval-crash.cpp
@@ -24,3 +24,35 @@ void f() { g(); }
 // CHECK:  ret void
 // CHECK: }
 }
+
+namespace Issue54578 {
+inline consteval unsigned char operator""_UC(const unsigned long long n) {
+  return static_cast<unsigned char>(n);
+}
+
+inline constexpr char f1(const auto octet) {
+  return 4_UC;
+}
+
+template <typename Ty>
+inline constexpr char f2(const Ty octet) {
+  return 4_UC;
+}
+
+int foo() {
+  return f1('a') + f2('a');
+}
+
+// Because the consteval functions are inline (implicitly as well as
+// explicitly), we need to defer the CHECK lines until this point to get the
+// order correct. We want to ensure there is no definition of the consteval
+// UDL function, and that the constexpr f1 and f2 functions both return a
+// constant value.
+
+// CHECK-NOT: define{{.*}} zeroext i8 @_ZN10Issue54578li3_UCEy
+// CHECK: define{{.*}} i32 @_ZN10Issue545783fooEv(
+// CHECK: define{{.*}} signext i8 @_ZN10Issue545782f1IcEEcT_(
+// CHECK: ret i8 4
+// CHECK: define{{.*}} signext i8 @_ZN10Issue545782f2IcEEcT_(
+// CHECK: ret i8 4
+}
diff --git a/clang/test/SemaCXX/cxx2a-consteval.cpp b/clang/test/SemaCXX/cxx2a-consteval.cpp
index e909f2f3037641..44a0365026800f 100644
--- a/clang/test/SemaCXX/cxx2a-consteval.cpp
+++ b/clang/test/SemaCXX/cxx2a-consteval.cpp
@@ -8,7 +8,7 @@ consteval int f1(int i) {
   return i;
 }
 
-consteval constexpr int f2(int i) { 
+consteval constexpr int f2(int i) {
   //expected-error@-1 {{cannot combine}}
   return i;
 }
@@ -195,7 +195,7 @@ auto ptr = ret1(0);
 struct A {
   consteval int f(int) {
     // expected-note@-1+ {{declared here}}
-    return 0;    
+    return 0;
   }
 };
 
@@ -239,7 +239,7 @@ constexpr int f_c(int i) {
   int t = f(i);
 // expected-error@-1 {{is not a constant expression}}
 // expected-note@-2 {{function parameter}}
-  return f(0);  
+  return f(0);
 }
 
 consteval int f_eval(int i) {
@@ -255,7 +255,7 @@ auto l1 = [](int i) constexpr {
   int t = f(i);
 // expected-error@-1 {{is not a constant expression}}
 // expected-note@-2 {{function parameter}}
-  return f(0);  
+  return f(0);
 };
 
 }
@@ -663,3 +663,27 @@ struct A {
   }
 };
 } // PR48235
+
+namespace Issue54578 {
+// We expect the user-defined literal to be resovled entirely at compile time
+// despite being instantiated through a template.
+inline consteval unsigned char operator""_UC(const unsigned long long n) {
+  return static_cast<unsigned char>(n);
+}
+
+inline constexpr char f1(const auto octet) {
+  return 4_UC;
+}
+
+template <typename Ty>
+inline constexpr char f2(const Ty octet) {
+  return 4_UC;
+}
+
+void test() {
+  static_assert(f1('a') == 4);
+  static_assert(f2('a') == 4);
+  constexpr int c = f1('a') + f2('a');
+  static_assert(c == 8);
+}
+}