diff --git a/compiler/src/dotty/tools/dotc/core/Types.scala b/compiler/src/dotty/tools/dotc/core/Types.scala
index 7e0867f087eb..30c20ded03ff 100644
--- a/compiler/src/dotty/tools/dotc/core/Types.scala
+++ b/compiler/src/dotty/tools/dotc/core/Types.scala
@@ -6123,39 +6123,47 @@ object Types extends TypeUtils {
         approxWildcardArgs(tp)
     end samParent
 
-    def samClass(tp: Type)(using Context): Symbol = tp match
-      case tp: ClassInfo =>
-        val cls = tp.cls
-        def takesNoArgs(tp: Type) =
-          !tp.classSymbol.primaryConstructor.exists
+    def unapply(tp: Type)(using Context): Option[(MethodType, Type)] =
+      deconstruct(tp, false)
+
+    /** Optionally ignores `final` and `sealed`, so that error messages can point to this specific problem. */
+    def deconstruct(tp: Type, ignoreFinalOrSealed: Boolean)(using Context): Option[(MethodType, Type)] =
+      def samClass(tp: Type)(using Context): Symbol = tp match {
+        case tp: ClassInfo =>
+          val cls = tp.cls
+
+          def takesNoArgs(tp: Type) =
+            !tp.classSymbol.primaryConstructor.exists
               // e.g. `ContextFunctionN` does not have constructors
-          || tp.applicableConstructors(argTypes = Nil, adaptVarargs = true).lengthCompare(1) == 0
-              // we require a unique constructor so that SAM expansion is deterministic
-        val noArgsNeeded: Boolean =
-          takesNoArgs(tp)
-          && (!cls.is(Trait) || takesNoArgs(tp.parents.head))
-        def isInstantiable =
-          !cls.isOneOf(FinalOrSealed) && (tp.appliedRef <:< tp.selfType)
-        if noArgsNeeded && isInstantiable then cls
-        else NoSymbol
-      case tp: AppliedType =>
-        samClass(tp.superType)
-      case tp: TypeRef =>
-        samClass(tp.underlying)
-      case tp: RefinedType =>
-        samClass(tp.underlying)
-      case tp: TypeBounds =>
-        samClass(tp.underlying)
-      case tp: TypeVar =>
-        samClass(tp.underlying)
-      case tp: AnnotatedType =>
-        samClass(tp.underlying)
-      case tp: FlexibleType =>
-        samClass(tp.underlying)
-      case _ =>
-        NoSymbol
+              || tp.applicableConstructors(argTypes = Nil, adaptVarargs = true).lengthCompare(1) == 0
 
-    def unapply(tp: Type)(using Context): Option[(MethodType, Type)] =
+          // we require a unique constructor so that SAM expansion is deterministic
+          val noArgsNeeded: Boolean =
+            takesNoArgs(tp)
+              && (!cls.is(Trait) || takesNoArgs(tp.parents.head))
+
+          def isInstantiable =
+            (ignoreFinalOrSealed || !cls.isOneOf(FinalOrSealed)) && (tp.appliedRef <:< tp.selfType)
+
+          if noArgsNeeded && isInstantiable then cls
+          else NoSymbol
+        case tp: AppliedType =>
+          samClass(tp.superType)
+        case tp: TypeRef =>
+          samClass(tp.underlying)
+        case tp: RefinedType =>
+          samClass(tp.underlying)
+        case tp: TypeBounds =>
+          samClass(tp.underlying)
+        case tp: TypeVar =>
+          samClass(tp.underlying)
+        case tp: AnnotatedType =>
+          samClass(tp.underlying)
+        case tp: FlexibleType =>
+          samClass(tp.underlying)
+        case _ =>
+          NoSymbol
+      }
       val cls = samClass(tp)
       if cls.exists then
         val absMems =
diff --git a/compiler/src/dotty/tools/dotc/reporting/messages.scala b/compiler/src/dotty/tools/dotc/reporting/messages.scala
index 7e5fbb1d17ed..ba4f76fa7d04 100644
--- a/compiler/src/dotty/tools/dotc/reporting/messages.scala
+++ b/compiler/src/dotty/tools/dotc/reporting/messages.scala
@@ -359,8 +359,14 @@ class TypeMismatch(val found: Type, expected: Type, val inTree: Option[untpd.Tre
       if (found1 frozen_<:< expected1) || reported.fbounded then (found, expected)
       else (found1, expected1)
     val (foundStr, expectedStr) = Formatting.typeDiff(found2.normalized, expected2.normalized)
+    val extra =
+      if defn.isFunctionNType(found)
+        && SAMType.deconstruct(expected, ignoreFinalOrSealed = false).isEmpty
+        && SAMType.deconstruct(expected, ignoreFinalOrSealed = true).nonEmpty
+      then i"\nNote that conversion from a function to a single abstract method type is only possible if the type is neither ${hl("final")} nor ${hl("sealed")}"
+      else ""
     i"""|${preface}Found:    $foundStr
-        |Required: $expectedStr${reported.notes}"""
+        |Required: $expectedStr${reported.notes}$extra"""
   end msg
 
   override def msgPostscript(using Context): String =
diff --git a/tests/neg/closure-to-sealed-trait.check b/tests/neg/closure-to-sealed-trait.check
new file mode 100644
index 000000000000..f96a2b63ce02
--- /dev/null
+++ b/tests/neg/closure-to-sealed-trait.check
@@ -0,0 +1,8 @@
+-- [E007] Type Mismatch Error: tests/neg/closure-to-sealed-trait.scala:4:18 --------------------------------------------
+4 |def test: Foo = { (x: String) => "" } // error
+  |                  ^^^^^^^^^^^^^^^^^
+  |Found:    String => String
+  |Required: Foo
+  |Note that conversion from a function to a single abstract method type is only possible if the type is neither final nor sealed
+  |
+  | longer explanation available when compiling with `-explain`
diff --git a/tests/neg/closure-to-sealed-trait.scala b/tests/neg/closure-to-sealed-trait.scala
new file mode 100644
index 000000000000..8ca3ac494d38
--- /dev/null
+++ b/tests/neg/closure-to-sealed-trait.scala
@@ -0,0 +1,4 @@
+sealed trait Foo {
+  def foo(x: String): String
+}
+def test: Foo = { (x: String) => "" } // error