diff --git a/python/src/com/jetbrains/python/codeInsight/regexp/PythonRegexpParserDefinition.java b/python/src/com/jetbrains/python/codeInsight/regexp/PythonRegexpParserDefinition.java
index 1daa0095591a..c74ff6a41628 100644
--- a/python/src/com/jetbrains/python/codeInsight/regexp/PythonRegexpParserDefinition.java
+++ b/python/src/com/jetbrains/python/codeInsight/regexp/PythonRegexpParserDefinition.java
@@ -18,7 +18,7 @@ public class PythonRegexpParserDefinition extends RegExpParserDefinition {
 
   @NotNull
   public Lexer createLexer(Project project) {
-    return new RegExpLexer(false, true, false);
+    return new RegExpLexer(false, true, false, true);
   }
 
   @Override
diff --git a/python/testData/regexp/octal.py b/python/testData/regexp/octal.py
new file mode 100644
index 000000000000..9941e2fd340f
--- /dev/null
+++ b/python/testData/regexp/octal.py
@@ -0,0 +1,3 @@
+import re
+
+re.compile(r'\302\273')
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/PyRegexpTest.java b/python/testSrc/com/jetbrains/python/PyRegexpTest.java
index 285394c9f9fd..23bbb8869ed2 100644
--- a/python/testSrc/com/jetbrains/python/PyRegexpTest.java
+++ b/python/testSrc/com/jetbrains/python/PyRegexpTest.java
@@ -14,6 +14,10 @@ public class PyRegexpTest extends PyLightFixtureTestCase {
     doTest();
   }
 
+  public void testOctal() {  // PY-2906
+    doTest();
+  }
+
   private void doTest() {
     myFixture.testHighlighting(true, false, false, "regexp/" + getTestName(true) + ".py");
   }