diff --git a/module/language/tree-il/peval.scm b/module/language/tree-il/peval.scm
index dcdf189a2..a6bb954e2 100644
--- a/module/language/tree-il/peval.scm
+++ b/module/language/tree-il/peval.scm
@@ -1040,7 +1040,7 @@ top-level bindings from ENV and return the resulting expression."
               (match (cons name (map for-value orig-args))
                 (('cons head tail)
                  (match tail
-                   (($ <const> src ())
+                   (($ <const> src (? (cut eq? <> '())))
                     (make-application src (make-primitive-ref #f 'list)
                                       (list head)))
                    (($ <application> src ($ <primitive-ref> _ 'list) elts)
diff --git a/test-suite/tests/tree-il.test b/test-suite/tests/tree-il.test
index de82340a4..0b00f6f8a 100644
--- a/test-suite/tests/tree-il.test
+++ b/test-suite/tests/tree-il.test
@@ -1419,6 +1419,11 @@
              (((x) #f #f #f () (_))
               (apply (toplevel top) (lexical x _)))))))
   
+  (pass-if-peval
+   ;; Constant folding: cons of #nil does not make list
+   (cons 1 #nil)
+   (apply (primitive cons) (const 1) (const '#nil)))
+  
   (pass-if-peval
     ;; Constant folding: cons
    (begin (cons 1 2) #f)