diff --git a/gnovm/pkg/gnolang/preprocess.go b/gnovm/pkg/gnolang/preprocess.go
index 6e749053d72..a3e498710bb 100644
--- a/gnovm/pkg/gnolang/preprocess.go
+++ b/gnovm/pkg/gnolang/preprocess.go
@@ -4283,6 +4283,12 @@ func tryPredefine(store Store, last BlockNode, d Decl) (un Name) {
 				if isBlankIdentifier(tx) {
 					panic("cannot use _ as value or type")
 				}
+
+				// do not allow nil as type.
+				if tx.Name == "nil" {
+					panic("nil is not a type")
+				}
+
 				if tv := last.GetValueRef(store, tx.Name, true); tv != nil {
 					t = tv.GetType()
 					if dt, ok := t.(*DeclaredType); ok {
diff --git a/gnovm/tests/files/type40.gno b/gnovm/tests/files/type40.gno
index 65210798007..fe312e220e0 100644
--- a/gnovm/tests/files/type40.gno
+++ b/gnovm/tests/files/type40.gno
@@ -43,4 +43,4 @@ func main() {
 // 5
 // 6
 // 7
-// yo
\ No newline at end of file
+// yo
diff --git a/gnovm/tests/files/type41.gno b/gnovm/tests/files/type41.gno
new file mode 100644
index 00000000000..ea1a3b1df24
--- /dev/null
+++ b/gnovm/tests/files/type41.gno
@@ -0,0 +1,9 @@
+package main
+
+type A nil
+
+func main() {
+}
+
+// Error:
+// main/files/type41.gno:3:6: nil is not a type