Error "illegal generic type for instanceof" when using local classes

To me this seems to be an oversight or limitation in the Java language and I do not think it is possible.

The referenced type in an instanceof expression must be reifiable according to JLS 4.7, meaning that it must be expressed as a reifiable type by its fully qualified name. At the same time, JLS 6.7 states that local classes do not have a fully qualified name, they can therefore not be expressed as reifiable.

If you declare Z as generic, the instanceof operator treats Z as a raw type where all generic properties to it - in this case the enclosing class - are considered raw as well. (Similar to a generic methods of a raw type being considered as raw despite any generic signature. This is a measure to retain backwards compatiblity of type generification.) Since any raw type is reifiable, declaring Z to be generic will compile.

A possible workaround is to use reflection:

import java.util.Arrays;

public class X<T> {
    void m() {
        class Z {}

        for (Object o : Arrays.asList(1, 2, 3))
            if (Z.class.isInstance(o)) {}
    }
}