diff --git a/java/idea-ui/src/com/intellij/ide/util/projectWizard/importSources/JavaSourceRootDetectionUtil.java b/java/idea-ui/src/com/intellij/ide/util/projectWizard/importSources/JavaSourceRootDetectionUtil.java
index 1650d8f5a0b2..cf6466ffa24c 100644
--- a/java/idea-ui/src/com/intellij/ide/util/projectWizard/importSources/JavaSourceRootDetectionUtil.java
+++ b/java/idea-ui/src/com/intellij/ide/util/projectWizard/importSources/JavaSourceRootDetectionUtil.java
@@ -70,9 +70,10 @@ public class JavaSourceRootDetectionUtil {
 
   @Nullable
   public static String getPackageName(CharSequence text) {
-    Lexer lexer = JavaParserDefinition.createLexer(LanguageLevel.JDK_1_3);
+    Lexer lexer = JavaParserDefinition.createLexer(LanguageLevel.JDK_1_5);
     lexer.start(text);
     skipWhiteSpaceAndComments(lexer);
+    skipAnnotations(lexer);
     final IElementType firstToken = lexer.getTokenType();
     if (firstToken != JavaTokenType.PACKAGE_KEYWORD) {
       if (JAVA_FILE_FIRST_TOKEN_SET.contains(firstToken)) {
@@ -104,4 +105,54 @@ public class JavaSourceRootDetectionUtil {
       lexer.advance();
     }
   }
+
+  private static void skipAnnotations(Lexer lexer){
+    while (lexer.getTokenType() == JavaTokenType.AT) {
+      lexer.advance();
+      skipQualifiedIdentifier(lexer);
+      skipArguments(lexer);
+      skipWhiteSpaceAndComments(lexer);
+    }
+  }
+
+  private static void skipQualifiedIdentifier(Lexer lexer) {
+    if (lexer.getTokenType() == JavaTokenType.IDENTIFIER) {
+      lexer.advance();
+      skipWhiteSpaceAndComments(lexer);
+      while (lexer.getTokenType() == JavaTokenType.DOT) {
+        lexer.advance();
+        skipWhiteSpaceAndComments(lexer);
+        if (lexer.getTokenType() != JavaTokenType.IDENTIFIER) {
+          break;
+        }
+        lexer.advance();
+        skipWhiteSpaceAndComments(lexer);
+      }
+      skipWhiteSpaceAndComments(lexer);
+    }
+  }
+
+  private static void skipArguments(Lexer lexer) {
+    skipWhiteSpaceAndComments(lexer);
+    if (lexer.getTokenType() == JavaTokenType.LPARENTH) {
+      lexer.advance();
+      int depth = 1;
+      while (depth > 0) {
+        IElementType tokenType = lexer.getTokenType();
+        if (tokenType == JavaTokenType.LPARENTH) {
+          depth++;
+        }
+        else if (tokenType == JavaTokenType.RPARENTH) {
+          depth--;
+        }
+        else {
+          if (tokenType == null) {
+            break;
+          }
+        }
+        lexer.advance();
+      }
+      skipWhiteSpaceAndComments(lexer);
+    }
+  }
 }
diff --git a/java/idea-ui/testSrc/com/intellij/ide/util/projectWizard/importSources/JavaSourceRootDetectionUtilTest.java b/java/idea-ui/testSrc/com/intellij/ide/util/projectWizard/importSources/JavaSourceRootDetectionUtilTest.java
new file mode 100644
index 000000000000..2f543ec4fa4f
--- /dev/null
+++ b/java/idea-ui/testSrc/com/intellij/ide/util/projectWizard/importSources/JavaSourceRootDetectionUtilTest.java
@@ -0,0 +1,65 @@
+// Copyright 2000-2017 JetBrains s.r.o. Use of this source code is governed by the Apache 2.0 license that can be found in the LICENSE file.
+package com.intellij.ide.util.projectWizard.importSources;
+
+import org.junit.Test;
+
+import static org.junit.Assert.assertEquals;
+
+/**
+ * @author nik
+ */
+public class JavaSourceRootDetectionUtilTest {
+  @Test
+  public void simple() {
+    assertPackageDetected("package p; \n" +
+                          "class A {}", "p");
+    assertPackageDetected("package p; \n" +
+                          "import java.util.Set;" +
+                          "class A {}", "p");
+    assertPackageDetected("class A {}", "");
+    assertPackageDetected("import java.util.*;\n" +
+                          "class A {}", "");
+    assertPackageDetected("invalid", null);
+  }
+
+  @Test
+  public void comments() {
+    assertPackageDetected("/* aa */ package p;", "p");
+    assertPackageDetected("// aa\n" +
+                          "package p;", "p");
+    assertPackageDetected("/* a */ /* b */ package p;", "p");
+    assertPackageDetected("package /* a */ p;", "p");
+    assertPackageDetected("package p /* a */;", "p");
+  }
+
+  @Test
+  public void qualified() {
+    assertPackageDetected("package p.q;", "p.q");
+    assertPackageDetected("package p . q;", "p.q");
+    assertPackageDetected("package /* xxx */ p . q;", "p.q");
+    assertPackageDetected("package p . /* xxx */ q;", "p.q");
+  }
+
+  @Test
+  public void validPackageAnnotation() {
+    assertPackageDetected("@Deprecated package p.q;", "p.q");
+    assertPackageDetected("@java.lang.Deprecated package p.q;", "p.q");
+    assertPackageDetected("@Generated(\"text\") package p.q;", "p.q");
+    assertPackageDetected("@Generated( (\"text\") ) package p.q;", "p.q");
+    assertPackageDetected("@Generated((\"text\"), (\"text\")) package p.q;", "p.q");
+    assertPackageDetected("@Generated(\"text\")\n" +
+                          "@Deprecated\n" +
+                          "package p.q;", "p.q");
+    assertPackageDetected("@Deprecated/*aa*/ package p.q;", "p.q");
+  }
+
+  @Test
+  public void invalidPackageAnnotation() {
+    assertPackageDetected("@Deprecatedpackage p.q;", null);
+    assertPackageDetected("@javax.annotation.Generated(\"text\" package p.q;", null);
+  }
+
+  private static void assertPackageDetected(String text, String packageName) {
+    assertEquals(packageName, JavaSourceRootDetectionUtil.getPackageName(text));
+  }
+}
diff --git a/java/java-tests/testData/ide/sourceRootDetection/packageWithAnnotation/src/pack/package-info.java b/java/java-tests/testData/ide/sourceRootDetection/packageWithAnnotation/src/pack/package-info.java
new file mode 100644
index 000000000000..be9072177dcf
--- /dev/null
+++ b/java/java-tests/testData/ide/sourceRootDetection/packageWithAnnotation/src/pack/package-info.java
@@ -0,0 +1,2 @@
+@Deprecated
+package pack;
diff --git a/java/java-tests/testSrc/com/intellij/java/ide/util/JavaSourceRootDetectionTest.java b/java/java-tests/testSrc/com/intellij/java/ide/util/JavaSourceRootDetectionTest.java
index 831e08481e7d..e69a9a5fa1c7 100644
--- a/java/java-tests/testSrc/com/intellij/java/ide/util/JavaSourceRootDetectionTest.java
+++ b/java/java-tests/testSrc/com/intellij/java/ide/util/JavaSourceRootDetectionTest.java
@@ -58,6 +58,10 @@ public class JavaSourceRootDetectionTest extends PlatformTestCase {
     doTest("src", "");
   }
 
+  public void testPackageWithAnnotation() {
+    doTest("src", "");
+  }
+
   private void doTest(String... expected) {
     final String dirPath = JavaTestUtil.getJavaTestDataPath() + FileUtil.toSystemDependentName("/ide/sourceRootDetection/" + getTestName(true));
     final File dir = new File(dirPath);