diff --git a/src/sphinx_autodoc_typehints/__init__.py b/src/sphinx_autodoc_typehints/__init__.py
index d2b1b06..e67180f 100644
--- a/src/sphinx_autodoc_typehints/__init__.py
+++ b/src/sphinx_autodoc_typehints/__init__.py
@@ -354,9 +354,24 @@ def process_signature(  # noqa: C901, PLR0913, PLR0917
 
     obj = inspect.unwrap(obj)
     sph_signature = sphinx_signature(obj, type_aliases=app.config["autodoc_type_aliases"])
+    typehints_formatter: Callable[..., str | None] | None = getattr(app.config, "typehints_formatter", None)
+
+    def _get_formatted_annotation(annotation: TypeVar) -> TypeVar:
+        if typehints_formatter is None:
+            return annotation
+        formatted_name = typehints_formatter(annotation)
+        return annotation if not isinstance(formatted_name, str) else TypeVar(formatted_name)
+
+    if app.config.typehints_use_signature_return:
+        sph_signature = sph_signature.replace(
+            return_annotation=_get_formatted_annotation(sph_signature.return_annotation)
+        )
 
     if app.config.typehints_use_signature:
-        parameters = list(sph_signature.parameters.values())
+        parameters = [
+            param.replace(annotation=_get_formatted_annotation(param.annotation))
+            for param in sph_signature.parameters.values()
+        ]
     else:
         parameters = [param.replace(annotation=inspect.Parameter.empty) for param in sph_signature.parameters.values()]
 
diff --git a/tests/test_integration.py b/tests/test_integration.py
index 3339916..93aa1e5 100644
--- a/tests/test_integration.py
+++ b/tests/test_integration.py
@@ -1385,6 +1385,42 @@ def has_doctest1() -> None:
     """
 
 
+Unformatted = TypeVar("Unformatted")
+
+
+@warns("cannot cache unpickable configuration value: 'typehints_formatter'")
+@expected(
+    """
+    mod.typehints_formatter_applied_to_signature(param: Formatted) -> Formatted
+
+       Do nothing
+
+       Parameters:
+          **param** (Formatted) -- A parameter
+
+       Return type:
+          Formatted
+
+       Returns:
+          The return value
+    """,
+    typehints_use_signature=True,
+    typehints_use_signature_return=True,
+    typehints_formatter=lambda _, __=None: "Formatted",
+)
+def typehints_formatter_applied_to_signature(param: Unformatted) -> Unformatted:
+    """
+    Do nothing
+
+    Args:
+        param: A parameter
+
+    Returns:
+        The return value
+    """
+    return param
+
+
 # Config settings for each test run.
 # Config Name: Sphinx Options as Dict.
 configs = {