diff --git a/crates/compiler/mono/src/decision_tree.rs b/crates/compiler/mono/src/decision_tree.rs
index 7cbb39c9f6..bb61192edd 100644
--- a/crates/compiler/mono/src/decision_tree.rs
+++ b/crates/compiler/mono/src/decision_tree.rs
@@ -977,9 +977,16 @@ fn needs_tests(pattern: &Pattern) -> bool {
 
     match pattern {
         Identifier(_) | Underscore => false,
+        NewtypeDestructure { arguments, .. } => {
+            // Newtypes that only have one argument decay immediately into that argument, so no
+            // test for them is needed.
+            //
+            // Newtypes with > 1 argument decay into a struct of those arguments, and we'll need to
+            // read the appropriate argument in the struct when constructing the decision tree.
+            arguments.len() != 1
+        }
 
         RecordDestructure(_, _)
-        | NewtypeDestructure { .. }
         | AppliedTag { .. }
         | OpaqueUnwrap { .. }
         | BitLiteral { .. }
diff --git a/crates/compiler/solve/tests/solve_expr.rs b/crates/compiler/solve/tests/solve_expr.rs
index f586cfa85f..4bc0ad0196 100644
--- a/crates/compiler/solve/tests/solve_expr.rs
+++ b/crates/compiler/solve/tests/solve_expr.rs
@@ -7418,7 +7418,9 @@ mod solve_expr {
                         Wrapper (AlternatePayload str) -> str
                 "#
             ),
-            &[r#"Wrapper (Payload "err") : [Wrapper [AlternatePayload Str, Payload Str]]"#,]
+            @r###"
+            Wrapper (Payload "err") : [Wrapper [AlternatePayload Str, Payload Str]]
+            "###
         )
     }
 }
diff --git a/crates/compiler/test_gen/src/gen_tags.rs b/crates/compiler/test_gen/src/gen_tags.rs
index 15bb82d1e1..7acc0917d2 100644
--- a/crates/compiler/test_gen/src/gen_tags.rs
+++ b/crates/compiler/test_gen/src/gen_tags.rs
@@ -1805,3 +1805,19 @@ fn instantiate_annotated_as_recursive_alias_multiple_polymorphic_expr() {
         i64
     )
 }
+
+#[test]
+#[cfg(any(feature = "gen-llvm", feature = "gen-wasm"))]
+fn issue_3560_nested_tag_constructor_is_newtype() {
+    assert_evals_to!(
+        indoc!(
+            r#"
+            when Wrapper (Payload "err") is
+                Wrapper (Payload str) -> str
+                Wrapper (AlternatePayload str) -> str
+            "#
+        ),
+        RocStr::from("err"),
+        RocStr
+    )
+}
diff --git a/crates/compiler/test_mono/generated/issue_3560_nested_tag_constructor_is_newtype.txt b/crates/compiler/test_mono/generated/issue_3560_nested_tag_constructor_is_newtype.txt
new file mode 100644
index 0000000000..f9ef100d57
--- /dev/null
+++ b/crates/compiler/test_mono/generated/issue_3560_nested_tag_constructor_is_newtype.txt
@@ -0,0 +1,13 @@
+procedure Test.0 ():
+    let Test.10 : Str = "err";
+    let Test.9 : [C Str, C Str] = TagId(1) Test.10;
+    joinpoint Test.8:
+        let Test.4 : Str = UnionAtIndex (Id 0) (Index 0) Test.9;
+        inc Test.4;
+        dec Test.9;
+        ret Test.4;
+    in
+    let Test.3 : Str = UnionAtIndex (Id 1) (Index 0) Test.9;
+    inc Test.3;
+    dec Test.9;
+    ret Test.3;
diff --git a/crates/compiler/test_mono/src/tests.rs b/crates/compiler/test_mono/src/tests.rs
index 9734cbbcc5..ac925f1023 100644
--- a/crates/compiler/test_mono/src/tests.rs
+++ b/crates/compiler/test_mono/src/tests.rs
@@ -1886,17 +1886,12 @@ fn encode_derived_tag_two_payloads_string() {
 }
 
 #[mono_test]
-fn issue_3560_nested_tag_union() {
+fn issue_3560_nested_tag_constructor_is_newtype() {
     indoc!(
         r#"
-        app "test"
-            imports [Encode.{ toEncoder }, Json]
-            provides [main] to "./platform"
-
-        main =
-            when Wrapper (Payload "err") is
-                Wrapper (Payload str) -> str
-                Wrapper (AlternatePayload str) -> str
+        when Wrapper (Payload "err") is
+            Wrapper (Payload str) -> str
+            Wrapper (AlternatePayload str) -> str
         "#
     )
 }