python
@@ -215,6 +215,9 @@ Other Language Changes
   ones if configured to do so.
   (Contributed by Pedro Sousa Lacerda in :gh:`66449`.)
 
+* :ref:`annotation scope <annotation-scopes>` within class scopes can now
+  contain lambdas. (Contributed by Jelle Zijlstra in :gh:`109118`.)
+
 
 New Modules
 ===========

@@ -486,8 +486,6 @@ class C[T]:
                 {}
         """
         error_cases = [
-            "type Alias1[T] = lambda: T",
-            "type Alias2 = lambda: T",
             "type Alias3[T] = (T for _ in (1,))",
             "type Alias4 = (T for _ in (1,))",
             "type Alias5[T] = [T for _ in (1,)]",
@@ -499,6 +497,54 @@ class C[T]:
                                             r"Cannot use [a-z]+ in annotation scope within class scope"):
                     run_code(code.format(case))
 
+    def test_lambda_in_alias_in_class(self):
+        code = """
+            T = "global"
+            class C:
+                T = "class"
+                type Alias = lambda: T
+        """
+        C = run_code(code)["C"]
+        self.assertEqual(C.Alias.__value__(), "global")
+
+    def test_lambda_in_alias_in_generic_class(self):
+        code = """
+            class C[T]:
+                T = "class"
+                type Alias = lambda: T
+        """
+        C = run_code(code)["C"]
+        self.assertIs(C.Alias.__value__(), C.__type_params__[0])
+
+    def test_lambda_in_generic_alias_in_class(self):
+        # A lambda nested in the alias cannot see the class scope, but can see
+        # a surrounding annotation scope.
+        code = """
+            T = U = "global"
+            class C:
+                T = "class"
+                U = "class"
+                type Alias[T] = lambda: (T, U)
+        """
+        C = run_code(code)["C"]
+        T, U = C.Alias.__value__()
+        self.assertIs(T, C.Alias.__type_params__[0])
+        self.assertEqual(U, "global")
+
+    def test_lambda_in_generic_alias_in_generic_class(self):
+        # A lambda nested in the alias cannot see the class scope, but can see
+        # a surrounding annotation scope.
+        code = """
+            class C[T, U]:
+                T = "class"
+                U = "class"
+                type Alias[T] = lambda: (T, U)
+        """
+        C = run_code(code)["C"]
+        T, U = C.Alias.__value__()
+        self.assertIs(T, C.Alias.__type_params__[0])
+        self.assertIs(U, C.__type_params__[1])
+
 
 def make_base(arg):
     class Base:

diff --git a/Misc/NEWS.d/next/Core and Builtins/2024-04-17-17-52-32.gh-issue-109118.q9iPEI.rst b/Misc/NEWS.d/next/Core and Builtins/2024-04-17-17-52-32.gh-issue-109118.q9iPEI.rst
@@ -0,0 +1,2 @@
+:ref:`annotation scope <annotation-scopes>` within class scopes can now
+contain lambdas.
@@ -2140,17 +2140,6 @@ symtable_visit_expr(struct symtable *st, expr_ty e)
         VISIT(st, expr, e->v.UnaryOp.operand);
         break;
     case Lambda_kind: {
-        if (st->st_cur->ste_can_see_class_scope) {
-            // gh-109118
-            PyErr_Format(PyExc_SyntaxError,
-                         "Cannot use lambda in annotation scope within class scope");
-            PyErr_RangedSyntaxLocationObject(st->st_filename,
-                                              e->lineno,
-                                              e->col_offset + 1,
-                                              e->end_lineno,
-                                              e->end_col_offset + 1);
-            VISIT_QUIT(st, 0);
-        }
         if (e->v.Lambda.args->defaults)
             VISIT_SEQ(st, expr, e->v.Lambda.args->defaults);
         if (e->v.Lambda.args->kw_defaults)
Original file line number	Diff line number	Diff line change
		@@ -0,0 +1,2 @@
		:ref:`annotation scope <annotation-scopes>` within class scopes can now
		contain lambdas.