diff --git a/mypy/checker.py b/mypy/checker.py
index 179ff6e0b4b6..ce14a68a3f5b 100644
--- a/mypy/checker.py
+++ b/mypy/checker.py
@@ -7295,6 +7295,8 @@ def get_isinstance_type(self, expr: Expression) -> list[TypeRange] | None:
             elif isinstance(typ, Instance) and typ.type.fullname == "builtins.type":
                 object_type = Instance(typ.type.mro[-1], [])
                 types.append(TypeRange(object_type, is_upper_bound=True))
+            elif isinstance(typ, Instance) and typ.type.fullname == "types.UnionType" and typ.args:
+                types.append(TypeRange(UnionType(typ.args), is_upper_bound=False))
             elif isinstance(typ, AnyType):
                 types.append(TypeRange(typ, is_upper_bound=False))
             else:  # we didn't see an actual type, but rather a variable with unknown value
diff --git a/mypy/checkexpr.py b/mypy/checkexpr.py
index 479ef228b038..be7d37a5372d 100644
--- a/mypy/checkexpr.py
+++ b/mypy/checkexpr.py
@@ -529,6 +529,10 @@ def visit_call_expr_inner(self, e: CallExpr, allow_none_return: bool = False) ->
                     and node
                     and isinstance(node.node, TypeAlias)
                     and not node.node.no_args
+                    and not (
+                        isinstance(node.node.target, UnionType)
+                        and node.node.target.uses_pep604_syntax
+                    )
                 ):
                     self.msg.type_arguments_not_allowed(e)
                 if isinstance(typ, RefExpr) and isinstance(typ.node, TypeInfo):
@@ -4760,6 +4764,12 @@ class LongName(Generic[T]): ...
             return TypeType(item, line=item.line, column=item.column)
         elif isinstance(item, AnyType):
             return AnyType(TypeOfAny.from_another_any, source_any=item)
+        elif (
+            isinstance(item, UnionType)
+            and item.uses_pep604_syntax
+            and self.chk.options.python_version >= (3, 10)
+        ):
+            return self.chk.named_generic_type("types.UnionType", item.items)
         else:
             if alias_definition:
                 return AnyType(TypeOfAny.special_form)
diff --git a/mypy/exprtotype.py b/mypy/exprtotype.py
index 2218a950788c..d9bdf2e2b20b 100644
--- a/mypy/exprtotype.py
+++ b/mypy/exprtotype.py
@@ -122,7 +122,8 @@ def expr_to_unanalyzed_type(
             [
                 expr_to_unanalyzed_type(expr.left, options, allow_new_syntax),
                 expr_to_unanalyzed_type(expr.right, options, allow_new_syntax),
-            ]
+            ],
+            uses_pep604_syntax=True,
         )
     elif isinstance(expr, CallExpr) and isinstance(_parent, ListExpr):
         c = expr.callee
diff --git a/mypy/type_visitor.py b/mypy/type_visitor.py
index a6ae77832ceb..d0876629fc08 100644
--- a/mypy/type_visitor.py
+++ b/mypy/type_visitor.py
@@ -266,7 +266,12 @@ def visit_literal_type(self, t: LiteralType) -> Type:
         return LiteralType(value=t.value, fallback=fallback, line=t.line, column=t.column)
 
     def visit_union_type(self, t: UnionType) -> Type:
-        return UnionType(self.translate_types(t.items), t.line, t.column)
+        return UnionType(
+            self.translate_types(t.items),
+            t.line,
+            t.column,
+            uses_pep604_syntax=t.uses_pep604_syntax,
+        )
 
     def translate_types(self, types: Iterable[Type]) -> list[Type]:
         return [t.accept(self) for t in types]
diff --git a/mypy/typeanal.py b/mypy/typeanal.py
index 8f138ab5698f..3670642ba8bc 100644
--- a/mypy/typeanal.py
+++ b/mypy/typeanal.py
@@ -1248,7 +1248,7 @@ def visit_union_type(self, t: UnionType) -> Type:
             and not self.options.python_version >= (3, 10)
         ):
             self.fail("X | Y syntax for unions requires Python 3.10", t, code=codes.SYNTAX)
-        return UnionType(self.anal_array(t.items), t.line)
+        return UnionType(self.anal_array(t.items), t.line, uses_pep604_syntax=t.uses_pep604_syntax)
 
     def visit_partial_type(self, t: PartialType) -> Type:
         assert False, "Internal error: Unexpected partial type"
diff --git a/mypy/types.py b/mypy/types.py
index 2cacc3e44085..22d017402a4b 100644
--- a/mypy/types.py
+++ b/mypy/types.py
@@ -2822,6 +2822,7 @@ def __init__(
         items: Sequence[Type],
         line: int = -1,
         column: int = -1,
+        *,
         is_evaluated: bool = True,
         uses_pep604_syntax: bool = False,
     ) -> None:
diff --git a/test-data/unit/check-python310.test b/test-data/unit/check-python310.test
index 5ecc69dc7c32..4f28bd3b48a0 100644
--- a/test-data/unit/check-python310.test
+++ b/test-data/unit/check-python310.test
@@ -1983,6 +1983,22 @@ X = None | C
 Y = None | D
 [builtins fixtures/type.pyi]
 
+[case testTypeAliasWithNewUnionIsInstance]
+SimpleAlias = int | str
+
+def foo(x: int | str | tuple):
+    if isinstance(x, SimpleAlias):
+        reveal_type(x)  # N: Revealed type is "Union[builtins.int, builtins.str]"
+    else:
+        reveal_type(x)  # N: Revealed type is "builtins.tuple[Any, ...]"
+
+ParameterizedAlias = str | list[str]
+
+# these are false negatives:
+isinstance(5, str | list[str])
+isinstance(5, ParameterizedAlias)
+[builtins fixtures/type.pyi]
+
 [case testMatchStatementWalrus]
 class A:
     a = 1
diff --git a/test-data/unit/fixtures/type.pyi b/test-data/unit/fixtures/type.pyi
index 39357a693638..a67f0f066046 100644
--- a/test-data/unit/fixtures/type.pyi
+++ b/test-data/unit/fixtures/type.pyi
@@ -1,6 +1,8 @@
 # builtins stub used in type-related test cases.
 
 from typing import Any, Generic, TypeVar, List, Union
+import sys
+import types
 
 T = TypeVar("T")
 S = TypeVar("S")
@@ -25,3 +27,5 @@ class bool: pass
 class int: pass
 class str: pass
 class ellipsis: pass
+
+def isinstance(obj: object, class_or_tuple: type | types.UnionType, /) -> bool: ...
diff --git a/test-data/unit/lib-stub/types.pyi b/test-data/unit/lib-stub/types.pyi
index 012fd8503377..e4869dbc3093 100644
--- a/test-data/unit/lib-stub/types.pyi
+++ b/test-data/unit/lib-stub/types.pyi
@@ -15,3 +15,6 @@ if sys.version_info >= (3, 10):
 
     class NoneType:
         ...
+
+    class UnionType:
+        ...