diff --git a/python/src/com/jetbrains/python/parsing/FunctionParsing.java b/python/src/com/jetbrains/python/parsing/FunctionParsing.java
index 323b1c957dec..4045b6e19582 100644
--- a/python/src/com/jetbrains/python/parsing/FunctionParsing.java
+++ b/python/src/com/jetbrains/python/parsing/FunctionParsing.java
@@ -34,23 +34,25 @@ public class FunctionParsing extends Parsing {
     super(context);
   }
 
-  public void parseFunctionDeclaration(@NotNull PsiBuilder.Marker endMarker) {
+  public void parseFunctionDeclaration(@NotNull PsiBuilder.Marker endMarker, boolean async) {
     assertCurrentToken(PyTokenTypes.DEF_KEYWORD);
-    parseFunctionInnards(endMarker);
+    parseFunctionInnards(endMarker, async);
   }
 
   protected IElementType getFunctionType() {
     return FUNCTION_TYPE;
   }
 
-  protected void parseFunctionInnards(@NotNull PsiBuilder.Marker functionMarker) {
+  protected void parseFunctionInnards(@NotNull PsiBuilder.Marker functionMarker, boolean async) {
     myBuilder.advanceLexer();
     parseIdentifierOrSkip(PyTokenTypes.LPAR);
     parseParameterList();
     parseReturnTypeAnnotation();
     checkMatches(PyTokenTypes.COLON, message("PARSE.expected.colon"));
     final ParsingContext context = getParsingContext();
-    context.pushScope(context.getScope().withFunction(true));
+    ParsingScope newScope = context.getScope().withFunction(true);
+    if (async) newScope = newScope.withAsync();
+    context.pushScope(newScope);
     getStatementParser().parseSuite(functionMarker, getFunctionType());
     context.popScope();
   }
@@ -98,21 +100,19 @@ public class FunctionParsing extends Parsing {
     parseDeclarationAfterDecorator(decoratorStartMarker);
   }
 
-  protected void parseDeclarationAfterDecorator(PsiBuilder.Marker endMarker) {
+  private void parseDeclarationAfterDecorator(PsiBuilder.Marker endMarker) {
     if (myBuilder.getTokenType() == PyTokenTypes.ASYNC_KEYWORD) {
       myBuilder.advanceLexer();
-      myContext.pushScope(myContext.getScope().withAsync());
-      parseSyncDeclarationAfterDecorator(endMarker);
-      myContext.popScope();
+      parseDeclarationAfterDecorator(endMarker, true);
     }
     else {
-      parseSyncDeclarationAfterDecorator(endMarker);
+      parseDeclarationAfterDecorator(endMarker, false);
     }
   }
 
-  private void parseSyncDeclarationAfterDecorator(PsiBuilder.Marker endMarker) {
+  protected void parseDeclarationAfterDecorator(PsiBuilder.Marker endMarker, boolean async) {
     if (myBuilder.getTokenType() == PyTokenTypes.DEF_KEYWORD) {
-      parseFunctionInnards(endMarker);
+      parseFunctionInnards(endMarker, async);
     }
     else if (myBuilder.getTokenType() == PyTokenTypes.CLASS_KEYWORD) {
       getStatementParser().parseClassDeclaration(endMarker);
diff --git a/python/src/com/jetbrains/python/parsing/ParsingScope.java b/python/src/com/jetbrains/python/parsing/ParsingScope.java
index d73721d52751..d720fbaa9068 100644
--- a/python/src/com/jetbrains/python/parsing/ParsingScope.java
+++ b/python/src/com/jetbrains/python/parsing/ParsingScope.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2000-2014 JetBrains s.r.o.
+ * Copyright 2000-2016 JetBrains s.r.o.
  *
  * Licensed under the Apache License, Version 2.0 (the "License");
  * you may not use this file except in compliance with the License.
@@ -84,7 +84,6 @@ public class ParsingScope {
     result.myFunction = myFunction;
     result.myClass = myClass;
     result.mySuite = mySuite;
-    result.myAsync = myAsync;
     return result;
   }
 }
diff --git a/python/src/com/jetbrains/python/parsing/StatementParsing.java b/python/src/com/jetbrains/python/parsing/StatementParsing.java
index e5c7124c7a5d..a14ba4cbfef8 100644
--- a/python/src/com/jetbrains/python/parsing/StatementParsing.java
+++ b/python/src/com/jetbrains/python/parsing/StatementParsing.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2000-2014 JetBrains s.r.o.
+ * Copyright 2000-2016 JetBrains s.r.o.
  *
  * Licensed under the Apache License, Version 2.0 (the "License");
  * you may not use this file except in compliance with the License.
@@ -117,7 +117,7 @@ public class StatementParsing extends Parsing implements ITokenTypeRemapper {
       return;
     }
     if (firstToken == PyTokenTypes.DEF_KEYWORD) {
-      getFunctionParser().parseFunctionDeclaration(myBuilder.mark());
+      getFunctionParser().parseFunctionDeclaration(myBuilder.mark(), false);
       return;
     }
     if (firstToken == PyTokenTypes.AT) {
@@ -819,10 +819,7 @@ public class StatementParsing extends Parsing implements ITokenTypeRemapper {
     myBuilder.advanceLexer();
     final IElementType token = myBuilder.getTokenType();
     if (token == PyTokenTypes.DEF_KEYWORD) {
-      final ParsingContext context = getParsingContext();
-      context.pushScope(context.getScope().withAsync());
-      getFunctionParser().parseFunctionDeclaration(marker);
-      context.popScope();
+      getFunctionParser().parseFunctionDeclaration(marker, true);
     }
     else if (token == PyTokenTypes.WITH_KEYWORD) {
       parseWithStatement(marker);
diff --git a/python/testData/psi/AwaitInNonAsyncNestedFunction.py b/python/testData/psi/AwaitInNonAsyncNestedFunction.py
new file mode 100644
index 000000000000..4dea0e0144a9
--- /dev/null
+++ b/python/testData/psi/AwaitInNonAsyncNestedFunction.py
@@ -0,0 +1,8 @@
+import asyncio
+
+
+async def connect():
+    def callback():
+        return await asyncio.sleep(5)
+
+    return await asyncio.sleep(5)
diff --git a/python/testData/psi/AwaitInNonAsyncNestedFunction.txt b/python/testData/psi/AwaitInNonAsyncNestedFunction.txt
new file mode 100644
index 000000000000..173605e1d554
--- /dev/null
+++ b/python/testData/psi/AwaitInNonAsyncNestedFunction.txt
@@ -0,0 +1,68 @@
+PyFile:AwaitInNonAsyncNestedFunction.py
+  PyImportStatement
+    PsiElement(Py:IMPORT_KEYWORD)('import')
+    PsiWhiteSpace(' ')
+    PyImportElement:asyncio
+      PyReferenceExpression: asyncio
+        PsiElement(Py:IDENTIFIER)('asyncio')
+  PsiWhiteSpace('\n\n\n')
+  PyFunction('connect')
+    PsiElement(Py:ASYNC_KEYWORD)('async')
+    PsiWhiteSpace(' ')
+    PsiElement(Py:DEF_KEYWORD)('def')
+    PsiWhiteSpace(' ')
+    PsiElement(Py:IDENTIFIER)('connect')
+    PyParameterList
+      PsiElement(Py:LPAR)('(')
+      PsiElement(Py:RPAR)(')')
+    PsiElement(Py:COLON)(':')
+    PsiWhiteSpace('\n    ')
+    PyStatementList
+      PyFunction('callback')
+        PsiElement(Py:DEF_KEYWORD)('def')
+        PsiWhiteSpace(' ')
+        PsiElement(Py:IDENTIFIER)('callback')
+        PyParameterList
+          PsiElement(Py:LPAR)('(')
+          PsiElement(Py:RPAR)(')')
+        PsiElement(Py:COLON)(':')
+        PsiWhiteSpace('\n        ')
+        PyStatementList
+          PyReturnStatement
+            PsiElement(Py:RETURN_KEYWORD)('return')
+            PsiWhiteSpace(' ')
+            PyReferenceExpression: await
+              PsiElement(Py:IDENTIFIER)('await')
+            PsiErrorElement:End of statement expected
+              <empty list>
+          PsiWhiteSpace(' ')
+          PyExpressionStatement
+            PyCallExpression: asyncio.sleep
+              PyReferenceExpression: sleep
+                PyReferenceExpression: asyncio
+                  PsiElement(Py:IDENTIFIER)('asyncio')
+                PsiElement(Py:DOT)('.')
+                PsiElement(Py:IDENTIFIER)('sleep')
+              PyArgumentList
+                PsiElement(Py:LPAR)('(')
+                PyNumericLiteralExpression
+                  PsiElement(Py:INTEGER_LITERAL)('5')
+                PsiElement(Py:RPAR)(')')
+      PsiWhiteSpace('\n\n    ')
+      PyReturnStatement
+        PsiElement(Py:RETURN_KEYWORD)('return')
+        PsiWhiteSpace(' ')
+        PyPrefixExpression
+          PsiElement(Py:AWAIT_KEYWORD)('await')
+          PsiWhiteSpace(' ')
+          PyCallExpression: asyncio.sleep
+            PyReferenceExpression: sleep
+              PyReferenceExpression: asyncio
+                PsiElement(Py:IDENTIFIER)('asyncio')
+              PsiElement(Py:DOT)('.')
+              PsiElement(Py:IDENTIFIER)('sleep')
+            PyArgumentList
+              PsiElement(Py:LPAR)('(')
+              PyNumericLiteralExpression
+                PsiElement(Py:INTEGER_LITERAL)('5')
+              PsiElement(Py:RPAR)(')')
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/PythonParsingTest.java b/python/testSrc/com/jetbrains/python/PythonParsingTest.java
index a6ded4fdffd3..169c0141848b 100644
--- a/python/testSrc/com/jetbrains/python/PythonParsingTest.java
+++ b/python/testSrc/com/jetbrains/python/PythonParsingTest.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2000-2013 JetBrains s.r.o.
+ * Copyright 2000-2016 JetBrains s.r.o.
  *
  * Licensed under the Apache License, Version 2.0 (the "License");
  * you may not use this file except in compliance with the License.
@@ -506,6 +506,11 @@ public class PythonParsingTest extends ParsingTestCase {
     doTest(LanguageLevel.PYTHON35);
   }
 
+  // PY-19036
+  public void testAwaitInNonAsyncNestedFunction() {
+    doTest(LanguageLevel.PYTHON35);
+  }
+
   public void testUnpackingExpressions() {
     doTest(LanguageLevel.PYTHON35);
   }