diff --git a/plugins/xpath/xpath-lang/src/org/intellij/lang/xpath/xslt/impl/XsltChecker.java b/plugins/xpath/xpath-lang/src/org/intellij/lang/xpath/xslt/impl/XsltChecker.java
index a5409608c723..7b8b76b3e6f1 100644
--- a/plugins/xpath/xpath-lang/src/org/intellij/lang/xpath/xslt/impl/XsltChecker.java
+++ b/plugins/xpath/xpath-lang/src/org/intellij/lang/xpath/xslt/impl/XsltChecker.java
@@ -66,25 +66,25 @@ public class XsltChecker implements NanoXmlBuilder {
     private void checkVersion(String value, State yes) {
         if (isVersion1(value)) {
             myState = yes;
-        } else if (isVersion2(value)) {
+        } else if (isVersion2(value) || isVersion3(value)) {
             myState = State.VERSION2;
         } else {
             myState = State.NO;
         }
     }
 
-    public static boolean isSupportedVersion(String value) {
-        return isVersion1(value) || isVersion2(value);
-    }
-
-    public static boolean isVersion1(String value) {
+    private static boolean isVersion1(String value) {
         return "1.0".equals(value) || "1.1".equals(value);
     }
 
-    public static boolean isVersion2(String value) {
+    private static boolean isVersion2(String value) {
         return "2.0".equals(value);
     }
 
+    private static boolean isVersion3(String value) {
+        return "3.0".equals(value);
+    }
+
     @Override
     public void elementAttributesProcessed(String name, String nsPrefix, String nsURI) throws Exception {
         NanoXmlBuilder.stop();  // the first element (or its attrs) decides - stop here
@@ -99,10 +99,6 @@ public class XsltChecker implements NanoXmlBuilder {
         return myState == State.YES || myState == State.SIMPLIFIED;
     }
 
-    public boolean isSimplifiedSyntax() {
-        return myState == State.SIMPLIFIED;
-    }
-
     public static LanguageLevel getLanguageLevel(String value) {
         if (value == null) {
             return LanguageLevel.NONE;
@@ -113,6 +109,9 @@ public class XsltChecker implements NanoXmlBuilder {
         if (isVersion2(value)) {
             return LanguageLevel.V2;
         }
+        if (isVersion3(value)) {
+            return LanguageLevel.V2;
+        }
         return LanguageLevel.NONE;
     }
 
diff --git a/plugins/xpath/xpath-lang/test/org/intellij/lang/xpath/xslt/Xslt2HighlightingTest.java b/plugins/xpath/xpath-lang/test/org/intellij/lang/xpath/xslt/Xslt2HighlightingTest.java
index d42b95d88ad4..d5e8c793ce10 100644
--- a/plugins/xpath/xpath-lang/test/org/intellij/lang/xpath/xslt/Xslt2HighlightingTest.java
+++ b/plugins/xpath/xpath-lang/test/org/intellij/lang/xpath/xslt/Xslt2HighlightingTest.java
@@ -56,6 +56,10 @@ public class Xslt2HighlightingTest extends TestBase {
     doXsltHighlighting("move-def.xsd");
   }
 
+  public void testXslt3() {
+    doXsltHighlighting();
+  }
+
   private void doXsltHighlighting(String... moreFiles) {
     final String name = getTestFileName();
     myFixture.testHighlighting(true, false, false, ArrayUtil.mergeArrays(new String[]{ name + ".xsl" }, moreFiles));
diff --git a/plugins/xpath/xpath-lang/testData/xslt2/highlighting/xslt3.xsl b/plugins/xpath/xpath-lang/testData/xslt2/highlighting/xslt3.xsl
new file mode 100644
index 000000000000..8e62774149f8
--- /dev/null
+++ b/plugins/xpath/xpath-lang/testData/xslt2/highlighting/xslt3.xsl
@@ -0,0 +1,6 @@
+<xsl:stylesheet version="3.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
+    <xsl:template match="/">
+        <xsl:variable name="foo" select="foo"/>
+        <xsl:variable name="<warning descr="Variable 'bar' is never used">bar</warning>" select="concat($foo, '/', $<error descr="Unresolved variable 'unknown'">unknown</error>)"/>
+    </xsl:template>
+</xsl:stylesheet>
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