diff --git a/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/processor.kt b/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/processor.kt
index 61db8b17d65..3efd323d984 100644
--- a/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/processor.kt
+++ b/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/processor.kt
@@ -5,6 +5,7 @@ import arrow.optics.plugin.isSealed
 import arrow.optics.plugin.isValue
 import com.google.devtools.ksp.processing.KSPLogger
 import com.google.devtools.ksp.symbol.*
+import com.google.devtools.ksp.symbol.Variance.INVARIANT
 import java.util.Locale
 
 internal fun adt(c: KSClassDeclaration, logger: KSPLogger): ADT =
@@ -153,12 +154,12 @@ internal fun evalAnnotatedIsoElement(
 internal fun KSClassDeclaration.getConstructorTypesNames(): List<String> =
   primaryConstructor?.parameters?.map { it.type.resolve().qualifiedString() }.orEmpty()
 
-internal fun KSType.qualifiedString(): String = when (declaration) {
+internal fun KSType.qualifiedString(prefix: String = ""): String = when (declaration) {
   is KSTypeParameter -> {
-    val n = declaration.simpleName.asSanitizedString()
+    val n = declaration.simpleName.asSanitizedString(prefix = prefix)
     if (isMarkedNullable) "$n?" else n
   }
-  else -> when (val qname = declaration.qualifiedName?.asSanitizedString()) {
+  else -> when (val qname = declaration.qualifiedName?.asSanitizedString(prefix = prefix)) {
     null -> toString()
     else -> {
       val withArgs = when {
@@ -172,7 +173,7 @@ internal fun KSType.qualifiedString(): String = when (declaration) {
 
 internal fun KSTypeArgument.qualifiedString(): String = when (val ty = type?.resolve()) {
   null -> toString()
-  else -> ty.qualifiedString()
+  else -> ty.qualifiedString(prefix = "${variance.label} ".takeIf { variance != INVARIANT }.orEmpty())
 }
 
 internal fun KSClassDeclaration.getConstructorParamNames(): List<String> =
diff --git a/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/utils.kt b/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/utils.kt
index d61dde87043..f7bce0daf7d 100644
--- a/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/utils.kt
+++ b/arrow-libs/optics/arrow-optics-ksp-plugin/src/main/kotlin/arrow/optics/plugin/internals/utils.kt
@@ -12,8 +12,8 @@ fun String.plusIfNotBlank(prefix: String = "", postfix: String = "") =
 /**
  * Sanitizes each delimited section if it matches with Kotlin reserved keywords.
  */
-fun KSName.asSanitizedString(delimiter: String = ".") =
-  asString().splitToSequence(delimiter).joinToString(delimiter) { if (it in kotlinKeywords) "`$it`" else it }
+fun KSName.asSanitizedString(delimiter: String = ".", prefix: String = "") =
+  asString().splitToSequence(delimiter).joinToString(delimiter, prefix) { if (it in kotlinKeywords) "`$it`" else it }
 
 
 private val kotlinKeywords = setOf(
diff --git a/arrow-libs/optics/arrow-optics-ksp-plugin/src/test/kotlin/arrow/optics/plugin/DSLTests.kt b/arrow-libs/optics/arrow-optics-ksp-plugin/src/test/kotlin/arrow/optics/plugin/DSLTests.kt
index 22a21a55d6d..5a41c95f3f8 100755
--- a/arrow-libs/optics/arrow-optics-ksp-plugin/src/test/kotlin/arrow/optics/plugin/DSLTests.kt
+++ b/arrow-libs/optics/arrow-optics-ksp-plugin/src/test/kotlin/arrow/optics/plugin/DSLTests.kt
@@ -76,5 +76,23 @@ class DSLTests {
       """.compilationSucceeds()
   }
 
+  @Test
+  fun `DSL works with variance, issue #3057`() {
+    """
+      |$`package`
+      |$imports
+      |
+      |sealed interface ITest {
+      |  data class Test1(val test: String) : ITest
+      |}
+      |
+      |interface Extendable<T>
+      |@optics
+      |data class TestClass(val details: Extendable<out ITest>) {
+      |  companion object
+      |}
+      """.compilationSucceeds()
+  }
+
   // Db.content.at(At.map(), One).set(db, None)
 }