diff --git a/java/execution/impl/src/com/intellij/execution/util/JavaParametersUtil.java b/java/execution/impl/src/com/intellij/execution/util/JavaParametersUtil.java
index b227005e9529..451e25655dd2 100644
--- a/java/execution/impl/src/com/intellij/execution/util/JavaParametersUtil.java
+++ b/java/execution/impl/src/com/intellij/execution/util/JavaParametersUtil.java
@@ -124,7 +124,7 @@ public class JavaParametersUtil {
                                      JavaParameters parameters,
                                      @MagicConstant(valuesFromClass = JavaParameters.class) int classPathType,
                                      @Nullable String jreHome) throws CantRunException {
-    parameters.configureByModule(module, classPathType, createModuleJdk(module, jreHome));
+    parameters.configureByModule(module, classPathType, createModuleJdk(module, (classPathType & JavaParameters.TESTS_ONLY) == 0, jreHome));
   }
 
   public static void configureProject(Project project,
@@ -134,8 +134,8 @@ public class JavaParametersUtil {
     parameters.configureByProject(project, classPathType, createProjectJdk(project, jreHome));
   }
 
-  private static Sdk createModuleJdk(final Module module, @Nullable String jreHome) throws CantRunException {
-    return jreHome == null ? JavaParameters.getModuleJdk(module) : createAlternativeJdk(jreHome);
+  private static Sdk createModuleJdk(final Module module, boolean productionOnly, @Nullable String jreHome) throws CantRunException {
+    return jreHome == null ? JavaParameters.getValidJdkToRunModule(module, productionOnly) : createAlternativeJdk(jreHome);
   }
 
   public static Sdk createProjectJdk(final Project project, @Nullable String jreHome) throws CantRunException {
diff --git a/java/execution/openapi/src/com/intellij/execution/configurations/JavaParameters.java b/java/execution/openapi/src/com/intellij/execution/configurations/JavaParameters.java
index 7025dc3188ff..516290113e97 100644
--- a/java/execution/openapi/src/com/intellij/execution/configurations/JavaParameters.java
+++ b/java/execution/openapi/src/com/intellij/execution/configurations/JavaParameters.java
@@ -27,11 +27,15 @@ import com.intellij.openapi.vfs.VirtualFile;
 import com.intellij.openapi.vfs.encoding.EncodingProjectManager;
 import com.intellij.util.NotNullFunction;
 import com.intellij.util.PathsList;
+import com.intellij.util.Processor;
+import com.intellij.util.text.VersionComparatorUtil;
 import org.intellij.lang.annotations.MagicConstant;
 import org.jetbrains.annotations.NotNull;
 import org.jetbrains.annotations.Nullable;
 
 import java.nio.charset.Charset;
+import java.util.LinkedHashSet;
+import java.util.Set;
 
 public class JavaParameters extends SimpleJavaParameters {
   private static final Logger LOG = Logger.getInstance(JavaParameters.class);
@@ -53,7 +57,7 @@ public class JavaParameters extends SimpleJavaParameters {
 
   public static final int JDK_ONLY = 0x1;
   public static final int CLASSES_ONLY = 0x2;
-  private static final int TESTS_ONLY = 0x4;
+  public static final int TESTS_ONLY = 0x4;
   public static final int JDK_AND_CLASSES = JDK_ONLY | CLASSES_ONLY;
   public static final int JDK_AND_CLASSES_AND_TESTS = JDK_ONLY | CLASSES_ONLY | TESTS_ONLY;
   public static final int CLASSES_AND_TESTS = CLASSES_ONLY | TESTS_ONLY;
@@ -112,11 +116,19 @@ public class JavaParameters extends SimpleJavaParameters {
 
   public void configureByModule(final Module module,
                                 @MagicConstant(valuesFromClass = JavaParameters.class) final int classPathType) throws CantRunException {
-    configureByModule(module, classPathType, getModuleJdk(module));
+    configureByModule(module, classPathType, getValidJdkToRunModule(module, (classPathType & TESTS_ONLY) == 0));
   }
 
+  /**
+   * @deprecated use {@link #getValidJdkToRunModule(Module, boolean)} instead
+   */
   public static Sdk getModuleJdk(final Module module) throws CantRunException {
-    final Sdk jdk = ModuleRootManager.getInstance(module).getSdk();
+    return getValidJdkToRunModule(module, false);
+  }
+
+  @NotNull
+  public static Sdk getValidJdkToRunModule(final Module module, boolean productionOnly) throws CantRunException {
+    Sdk jdk = getJdkToRunModule(module, productionOnly);
     if (jdk == null) {
       throw CantRunException.noJdkForModule(module);
     }
@@ -127,6 +139,42 @@ public class JavaParameters extends SimpleJavaParameters {
     return jdk;
   }
 
+  @Nullable
+  public static Sdk getJdkToRunModule(Module module, boolean productionOnly) {
+    final Sdk moduleSdk = ModuleRootManager.getInstance(module).getSdk();
+    if (moduleSdk == null) {
+      return null;
+    }
+
+    final Set<Sdk> sdksFromDependencies = new LinkedHashSet<Sdk>();
+    OrderEnumerator enumerator = OrderEnumerator.orderEntries(module).runtimeOnly().recursively();
+    if (productionOnly) {
+      enumerator = enumerator.productionOnly();
+    }
+    enumerator.forEachModule(new Processor<Module>() {
+      @Override
+      public boolean process(Module module) {
+        Sdk sdk = ModuleRootManager.getInstance(module).getSdk();
+        if (sdk != null && sdk.getSdkType().equals(moduleSdk.getSdkType())) {
+          sdksFromDependencies.add(sdk);
+        }
+        return true;
+      }
+    });
+    return findLatestVersion(moduleSdk, sdksFromDependencies);
+  }
+
+  @NotNull
+  private static Sdk findLatestVersion(@NotNull Sdk mainSdk, @NotNull Set<Sdk> sdks) {
+    Sdk result = mainSdk;
+    for (Sdk sdk : sdks) {
+      if (VersionComparatorUtil.compare(result.getVersionString(), sdk.getVersionString()) < 0) {
+        result = sdk;
+      }
+    }
+    return result;
+  }
+
   public void configureByProject(final Project project, @MagicConstant(valuesFromClass = JavaParameters.class) final int classPathType, final Sdk jdk) throws CantRunException {
     if ((classPathType & JDK_ONLY) != 0) {
       if (jdk == null) {
diff --git a/java/java-tests/testSrc/com/intellij/execution/configurations/JavaParametersTest.java b/java/java-tests/testSrc/com/intellij/execution/configurations/JavaParametersTest.java
index 179de1c82600..fe1bdb0cf304 100644
--- a/java/java-tests/testSrc/com/intellij/execution/configurations/JavaParametersTest.java
+++ b/java/java-tests/testSrc/com/intellij/execution/configurations/JavaParametersTest.java
@@ -22,6 +22,7 @@ import com.intellij.openapi.roots.DependencyScope;
 import com.intellij.openapi.roots.ModuleRootModificationUtil;
 import com.intellij.openapi.vfs.VirtualFile;
 import com.intellij.roots.ModuleRootManagerTestCase;
+import org.intellij.lang.annotations.MagicConstant;
 
 /**
  * @author nik
@@ -96,13 +97,22 @@ public class JavaParametersTest extends ModuleRootManagerTestCase {
                     getJDomJar());
   }
 
-  private static void assertClasspath(final Module module, final int type, VirtualFile... roots) throws CantRunException {
+  public void testUseNewestJreVersion() throws CantRunException {
+    Module dep = createModule("dep");
+    ModuleRootModificationUtil.addDependency(myModule, dep, DependencyScope.TEST, true);
+    ModuleRootModificationUtil.setModuleSdk(myModule, getMockJdk17WithRtJarOnly());
+    ModuleRootModificationUtil.setModuleSdk(dep, getMockJdk18WithRtJarOnly());
+    assertClasspath(myModule, JavaParameters.JDK_AND_CLASSES, getRtJarJdk17());
+    assertClasspath(myModule, JavaParameters.JDK_AND_CLASSES_AND_TESTS, getRtJarJdk18());
+  }
+
+  private static void assertClasspath(final Module module, @MagicConstant(flagsFromClass = JavaParameters.class) int type, VirtualFile... roots) throws CantRunException {
     final JavaParameters javaParameters = new JavaParameters();
     javaParameters.configureByModule(module, type);
     assertRoots(javaParameters.getClassPath(), roots);
   }
 
-  private void assertClasspath(final Project project, final int type, VirtualFile... roots) throws CantRunException {
+  private void assertClasspath(final Project project, @MagicConstant(flagsFromClass = JavaParameters.class) int type, VirtualFile... roots) throws CantRunException {
     final JavaParameters javaParameters = new JavaParameters();
     javaParameters.configureByProject(project, type, getTestProjectJdk());
     assertRoots(javaParameters.getClassPath(), roots);
diff --git a/java/java-tests/testSrc/com/intellij/roots/ModuleRootManagerTestCase.java b/java/java-tests/testSrc/com/intellij/roots/ModuleRootManagerTestCase.java
index a0c21b482f44..a9473a4393bf 100644
--- a/java/java-tests/testSrc/com/intellij/roots/ModuleRootManagerTestCase.java
+++ b/java/java-tests/testSrc/com/intellij/roots/ModuleRootManagerTestCase.java
@@ -33,15 +33,15 @@ public abstract class ModuleRootManagerTestCase extends ModuleTestCase {
 
   @NotNull
   protected static Sdk getMockJdk17WithRtJarOnly() {
-    return retainRtJarOnly(IdeaTestUtil.getMockJdk17());
+    return retainRtJarOnlyAndSetVersion(IdeaTestUtil.getMockJdk17());
   }
 
   protected Sdk getMockJdk18WithRtJarOnly() {
-    return retainRtJarOnly(IdeaTestUtil.getMockJdk18());
+    return retainRtJarOnlyAndSetVersion(IdeaTestUtil.getMockJdk18());
   }
 
   @NotNull
-  private static Sdk retainRtJarOnly(Sdk jdk) {
+  private static Sdk retainRtJarOnlyAndSetVersion(Sdk jdk) {
     final SdkModificator modificator = jdk.getSdkModificator();
     VirtualFile rtJar = null;
     for (VirtualFile root : modificator.getRoots(OrderRootType.CLASSES)) {
@@ -51,6 +51,7 @@ public abstract class ModuleRootManagerTestCase extends ModuleTestCase {
       }
     }
     assertNotNull("rt.jar not found in jdk: " + jdk, rtJar);
+    modificator.setVersionString(IdeaTestUtil.getMockJdkVersion(jdk.getHomePath()));
     modificator.removeAllRoots();
     modificator.addRoot(rtJar, OrderRootType.CLASSES);
     modificator.commitChanges();