Index: clang/docs/ReleaseNotes.rst
===================================================================
--- clang/docs/ReleaseNotes.rst
+++ clang/docs/ReleaseNotes.rst
@@ -189,6 +189,9 @@
 ^^^^^^^^^^^^^^^^^^^^^
 - Diagnose consteval and constexpr issues that happen at namespace scope. This
   partially addresses `Issue 51593 <https://github.com/llvm/llvm-project/issues/51593>`_.
+- No longer attempt to evaluate a consteval UDL function call at runtime when
+  it is called through a template instantiation. This fixes
+  `Issue 54578 <https://github.com/llvm/llvm-project/issues/54578>`_.
 
 C++2b Feature Support
 ^^^^^^^^^^^^^^^^^^^^^
Index: clang/lib/Sema/TreeTransform.h
===================================================================
--- clang/lib/Sema/TreeTransform.h
+++ clang/lib/Sema/TreeTransform.h
@@ -10513,9 +10513,7 @@
 template<typename Derived>
 ExprResult
 TreeTransform<Derived>::TransformUserDefinedLiteral(UserDefinedLiteral *E) {
-  if (FunctionDecl *FD = E->getDirectCallee())
-    SemaRef.MarkFunctionReferenced(E->getBeginLoc(), FD);
-  return SemaRef.MaybeBindToTemporary(E);
+  return getDerived().TransformCallExpr(E);
 }
 
 template<typename Derived>
Index: clang/test/CodeGenCXX/cxx20-consteval-crash.cpp
===================================================================
--- clang/test/CodeGenCXX/cxx20-consteval-crash.cpp
+++ clang/test/CodeGenCXX/cxx20-consteval-crash.cpp
@@ -24,3 +24,35 @@
 // CHECK:  ret void
 // CHECK: }
 }
+
+namespace Issue54578 {
+inline consteval unsigned char operator""_UC(const unsigned long long n) {
+  return static_cast<unsigned char>(n);
+}
+
+inline constexpr char f1(const auto octet) {
+  return 4_UC;
+}
+
+template <typename Ty>
+inline constexpr char f2(const Ty octet) {
+  return 4_UC;
+}
+
+int foo() {
+  return f1('a') + f2('a');
+}
+
+// Because the consteval functions are inline (implicitly as well as
+// explicitly), we need to defer the CHECK lines until this point to get the
+// order correct. We want to ensure there is no definition of the consteval
+// UDL function, and that the constexpr f1 and f2 functions both return a
+// constant value.
+
+// CHECK-NOT: define{{.*}} zeroext i8 @_ZN10Issue54578li3_UCEy
+// CHECK: define{{.*}} i32 @_ZN10Issue545783fooEv(
+// CHECK: define{{.*}} signext i8 @_ZN10Issue545782f1IcEEcT_(
+// CHECK: ret i8 4
+// CHECK: define{{.*}} signext i8 @_ZN10Issue545782f2IcEEcT_(
+// CHECK: ret i8 4
+}
Index: clang/test/SemaCXX/cxx2a-consteval.cpp
===================================================================
--- clang/test/SemaCXX/cxx2a-consteval.cpp
+++ clang/test/SemaCXX/cxx2a-consteval.cpp
@@ -721,3 +721,27 @@
              expected-note {{subobject of type 'int' is not initialized}}
 
 } // namespace NamespaceScopeConsteval
+
+namespace Issue54578 {
+// We expect the user-defined literal to be resovled entirely at compile time
+// despite being instantiated through a template.
+inline consteval unsigned char operator""_UC(const unsigned long long n) {
+  return static_cast<unsigned char>(n);
+}
+
+inline constexpr char f1(const auto octet) {
+  return 4_UC;
+}
+
+template <typename Ty>
+inline constexpr char f2(const Ty octet) {
+  return 4_UC;
+}
+
+void test() {
+  static_assert(f1('a') == 4);
+  static_assert(f2('a') == 4);
+  constexpr int c = f1('a') + f2('a');
+  static_assert(c == 8);
+}
+}