diff --git a/compiler/src/dotty/tools/dotc/reporting/ErrorMessageID.scala b/compiler/src/dotty/tools/dotc/reporting/ErrorMessageID.scala
index 2f1fe0e1c058..69b70e0a1720 100644
--- a/compiler/src/dotty/tools/dotc/reporting/ErrorMessageID.scala
+++ b/compiler/src/dotty/tools/dotc/reporting/ErrorMessageID.scala
@@ -176,7 +176,8 @@ enum ErrorMessageID extends java.lang.Enum[ErrorMessageID]:
     MatchableWarningID,
     CannotExtendFunctionID,
     LossyWideningConstantConversionID,
-    ImplicitSearchTooLargeID
+    ImplicitSearchTooLargeID,
+    TargetNameOnTopLevelClassID
 
   def errorNumber = ordinal - 2
 
diff --git a/compiler/src/dotty/tools/dotc/reporting/messages.scala b/compiler/src/dotty/tools/dotc/reporting/messages.scala
index 797073115bb5..48135f9aa35d 100644
--- a/compiler/src/dotty/tools/dotc/reporting/messages.scala
+++ b/compiler/src/dotty/tools/dotc/reporting/messages.scala
@@ -2540,3 +2540,24 @@ import transform.SymUtils._
           |
           |${openSearchPairs.reverse.map(showQuery)}%\n%
         """
+
+  class TargetNameOnTopLevelClass(symbol: Symbol)(using Context)
+  extends SyntaxMsg(TargetNameOnTopLevelClassID):
+    def msg = em"${hl("@targetName")} annotation not allowed on top-level $symbol"
+    def explain =
+      val annot = symbol.getAnnotation(defn.TargetNameAnnot).get
+      em"""The @targetName annotation may be applied to a top-level ${hl("val")} or ${hl("def")}, but not
+          |a top-level ${hl("class")}, ${hl("trait")}, or ${hl("object")}.
+          |
+          |This restriction is due to the naming convention of Java classfiles, whose filenames
+          |are based on the name of the class defined within. If @targetName were permitted
+          |here, the name of the classfile would be based on the target name, and the compiler
+          |could not associate that classfile with the Scala-visible defined name of the class.
+          |
+          |If your use case requires @targetName, consider wrapping $symbol in an ${hl("object")}
+          |(and possibly exporting it), as in the following example:
+          |
+          |${hl("object Wrapper:")}
+          |  $annot $symbol { ... }
+          |
+          |${hl("export")} Wrapper.${symbol.name}  ${hl("// optional")}"""
diff --git a/compiler/src/dotty/tools/dotc/typer/Checking.scala b/compiler/src/dotty/tools/dotc/typer/Checking.scala
index 1e597e42d2a5..7b7bdd5945be 100644
--- a/compiler/src/dotty/tools/dotc/typer/Checking.scala
+++ b/compiler/src/dotty/tools/dotc/typer/Checking.scala
@@ -505,6 +505,8 @@ object Checking {
         fail(TailrecNotApplicable(sym))
       else if sym.is(Inline) then
         fail("Inline methods cannot be @tailrec")
+    if sym.hasAnnotation(defn.TargetNameAnnot) && sym.isClass && sym.isTopLevelClass then
+      fail(TargetNameOnTopLevelClass(sym))
     if (sym.hasAnnotation(defn.NativeAnnot)) {
       if (!sym.is(Deferred))
         fail(NativeMembersMayNotHaveImplementation(sym))
diff --git a/docs/_docs/reference/other-new-features/targetName.md b/docs/_docs/reference/other-new-features/targetName.md
index d2a654697d15..09886968a232 100644
--- a/docs/_docs/reference/other-new-features/targetName.md
+++ b/docs/_docs/reference/other-new-features/targetName.md
@@ -29,7 +29,7 @@ The [`@targetName`](https://scala-lang.org/api/3.x/scala/annotation/targetName.h
     of type `String`. That string is called the _external name_ of the definition
     that's annotated.
 
- 2. A `@targetName` annotation can be given for all kinds of definitions.
+ 2. A `@targetName` annotation can be given for all kinds of definitions except a top-level `class`, `trait`, or `object`.
 
  3. The name given in a [`@targetName`](https://scala-lang.org/api/3.x/scala/annotation/targetName.html) annotation must be a legal name
     for the defined entities on the host platform.
diff --git a/tests/neg/targetName-toplevel.scala b/tests/neg/targetName-toplevel.scala
new file mode 100644
index 000000000000..28e8b0e84ca3
--- /dev/null
+++ b/tests/neg/targetName-toplevel.scala
@@ -0,0 +1,18 @@
+import scala.annotation.targetName
+
+@targetName("B1") class A1  // error targetName on top-level class
+@targetName("B2") trait A2  // error targetName on top-level trait
+@targetName("B3") object A3 // error targetName on top-level object
+
+@targetName("bar") def foo = 42 // OK
+
+object Outer:
+  @targetName("B1") class A1  // OK
+  @targetName("B2") trait A2  // OK
+  @targetName("B3") object A3 // OK
+  @targetName("D1") class C1  // OK
+  @targetName("D2") trait C2  // OK
+  @targetName("D3") object C3 // OK
+
+export Outer.{A1, A2, A3}  // error // error // error already defined
+export Outer.{C1, C2, C3}  // OK
diff --git a/tests/run/targetName-interop/Test_2.java b/tests/run/targetName-interop/Test_2.java
index 6e93f3cd3533..a1c710174c68 100644
--- a/tests/run/targetName-interop/Test_2.java
+++ b/tests/run/targetName-interop/Test_2.java
@@ -4,7 +4,7 @@
 public class Test_2 {
 
   public static void main(String[] args) {
-    Alpha<String> a = new Bar();
+    Alpha<String> a = new Outer$Bar();
     assert a.foo() == 1;
     assert a.bar("a").equals("aa");
     Alpha<String> aa = a.append(a);
diff --git a/tests/run/targetName-interop/alpha_1.scala b/tests/run/targetName-interop/alpha_1.scala
index 41fb26c3f019..6408fccb48e5 100644
--- a/tests/run/targetName-interop/alpha_1.scala
+++ b/tests/run/targetName-interop/alpha_1.scala
@@ -11,10 +11,11 @@ abstract class Alpha[T] {
 
 }
 
-@targetName("Bar") class | extends Alpha[String] {
+object Outer {
+  @targetName("Bar") class | extends Alpha[String] {
 
-  @targetName("bar") override def foo(x: String) = x ++ x
-
-  @targetName("append") override def ++ (xs: Alpha[String]) = this
+    @targetName("bar") override def foo(x: String) = x ++ x
 
+    @targetName("append") override def ++ (xs: Alpha[String]) = this
+  }
 }
\ No newline at end of file
diff --git a/tests/run/targetName-modules-1/7721_1.scala b/tests/run/targetName-modules-1/7721_1.scala
index 5e59433c6beb..8420c14107ab 100644
--- a/tests/run/targetName-modules-1/7721_1.scala
+++ b/tests/run/targetName-modules-1/7721_1.scala
@@ -1,5 +1,7 @@
 package alpha
 
-@scala.annotation.targetName("A") object B {
-  def foo = 23
+object Outer {
+  @scala.annotation.targetName("A") object B {
+    def foo = 23
+  }
 }
diff --git a/tests/run/targetName-modules-1/Test_2.java b/tests/run/targetName-modules-1/Test_2.java
index 2dbed46aa644..e92e602362c6 100644
--- a/tests/run/targetName-modules-1/Test_2.java
+++ b/tests/run/targetName-modules-1/Test_2.java
@@ -3,7 +3,7 @@
 public class Test_2 {
 
   public static void main(String[] args) {
-    assert A.foo() == 23;
-    assert A$.MODULE$.foo() == 23;
+    assert Outer$.A.foo() == 23;
+    assert Outer$A$.MODULE$.foo() == 23;
   }
 }
diff --git a/tests/run/targetName-modules-2/7723_1.scala b/tests/run/targetName-modules-2/7723_1.scala
index 128dac508a14..8865c5ada577 100644
--- a/tests/run/targetName-modules-2/7723_1.scala
+++ b/tests/run/targetName-modules-2/7723_1.scala
@@ -1,3 +1,4 @@
 package alpha
 
-@scala.annotation.targetName("A") class B(val i: Int = 1)
+object Outer:
+  @scala.annotation.targetName("A") class B(val i: Int = 1)
diff --git a/tests/run/targetName-modules-2/Test_2.java b/tests/run/targetName-modules-2/Test_2.java
index 39bdf269a98a..7d48407a6ded 100644
--- a/tests/run/targetName-modules-2/Test_2.java
+++ b/tests/run/targetName-modules-2/Test_2.java
@@ -3,8 +3,8 @@
 public class Test_2 {
 
   public static void main(String[] args) {
-    assert new A(101).i() == 101;
-    assert new A(A.$lessinit$greater$default$1()).i() == 101;
-    assert new A(A$.MODULE$.$lessinit$greater$default$1()).i() == 101;
+    assert new Outer$A(101).i() == 101;
+    assert new Outer$A(Outer$A.$lessinit$greater$default$1()).i() == 101;
+    assert new Outer$A(Outer$A$.MODULE$.$lessinit$greater$default$1()).i() == 101;
   }
 }
diff --git a/tests/run/targetName-separate/Foo_1.scala b/tests/run/targetName-separate/Foo_1.scala
new file mode 100644
index 000000000000..dca3c888470c
--- /dev/null
+++ b/tests/run/targetName-separate/Foo_1.scala
@@ -0,0 +1,5 @@
+object Outer:
+  @annotation.targetName("Bar") class Foo:
+    def it: Int = 42
+
+export Outer.Foo
diff --git a/tests/run/targetName-separate/Test_2.scala b/tests/run/targetName-separate/Test_2.scala
new file mode 100644
index 000000000000..f051adde1531
--- /dev/null
+++ b/tests/run/targetName-separate/Test_2.scala
@@ -0,0 +1,3 @@
+@main def Test =
+  assert(new Foo().it == 42)
+  assert(Foo().it == 42)