diff --git a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/ControlFlowCache.java b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/ControlFlowCache.java
index e4dc539f0a2f..642f2db39e6f 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/ControlFlowCache.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/ControlFlowCache.java
@@ -19,6 +19,8 @@ import com.intellij.codeInsight.controlflow.ControlFlow;
 import com.intellij.openapi.util.Key;
 import com.jetbrains.python.codeInsight.dataflow.scope.Scope;
 import com.jetbrains.python.codeInsight.dataflow.scope.impl.ScopeImpl;
+import com.jetbrains.python.psi.PyUtil;
+import com.jetbrains.python.psi.types.TypeEvalContext;
 import org.jetbrains.annotations.NotNull;
 
 import java.lang.ref.SoftReference;
@@ -62,4 +64,11 @@ public final class ControlFlowCache {
     }
     return scope;
   }
+
+  public static @NotNull PyDataFlow getDataFlow(@NotNull ScopeOwner element, @NotNull TypeEvalContext context) {
+    // Cache will reset on psi modification, same as TypeEvalContext
+    return PyUtil.getParameterizedCachedValue(element, context, (ctx) -> {
+      return new PyDataFlow(getControlFlow(element), context);
+    });
+  }
 }
diff --git a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java
index 530cbfbcd536..6047bb0563a5 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyControlFlowBuilder.java
@@ -641,6 +641,7 @@ public class PyControlFlowBuilder extends PyRecursiveElementVisitor {
       myBuilder.flowAbrupted();
       finallyFailInstruction = myBuilder.startNode(finallyPart);
       finallyPart.accept(this);
+      myBuilder.addNode(new PyFinallyFailExitInstruction(myBuilder, finallyFailInstruction));
       myBuilder.addPendingEdge(null, myBuilder.prevInstruction);
       myBuilder.flowAbrupted();
     }
diff --git a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyDataFlow.java b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyDataFlow.java
new file mode 100644
index 000000000000..84f89d085125
--- /dev/null
+++ b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyDataFlow.java
@@ -0,0 +1,61 @@
+package com.jetbrains.python.codeInsight.controlflow;
+
+import com.intellij.codeInsight.controlflow.ControlFlow;
+import com.intellij.codeInsight.controlflow.ControlFlowUtil;
+import com.intellij.codeInsight.controlflow.Instruction;
+import com.intellij.psi.PsiElement;
+import com.jetbrains.python.codeInsight.dataflow.scope.ScopeUtil;
+import com.jetbrains.python.psi.types.TypeEvalContext;
+import org.jetbrains.annotations.ApiStatus;
+import org.jetbrains.annotations.NotNull;
+
+import java.util.*;
+
+@ApiStatus.Internal
+public class PyDataFlow {
+  private final TypeEvalContext myTypeEvalContext;
+  private final Instruction[] myInstructions;
+  private final boolean[] myReachability;
+
+  public PyDataFlow(@NotNull ControlFlow controlFlow, @NotNull TypeEvalContext context) {
+    myTypeEvalContext = context;
+    myInstructions = controlFlow.getInstructions();
+    myReachability = new boolean[myInstructions.length];
+    buildReachability();
+  }
+
+  private void buildReachability() {
+    Queue<Instruction> toBeProcessed = new ArrayDeque<>();
+    toBeProcessed.add(myInstructions[0]);
+    while (!toBeProcessed.isEmpty()) {
+      Instruction instruction = toBeProcessed.poll();
+      myReachability[instruction.num()] = true;
+      for (var successor : getReachableSuccessors(instruction)) {
+        if (!myReachability[successor.num()]) {
+          toBeProcessed.add(successor);
+        }
+      }
+    }
+  }
+
+  private @NotNull Collection<Instruction> getReachableSuccessors(@NotNull Instruction instruction) {
+    if (instruction instanceof CallInstruction ci && ci.isNoReturnCall(myTypeEvalContext)) return List.of();
+    if (instruction instanceof PyWithContextExitInstruction wi && !wi.isSuppressingExceptions(myTypeEvalContext)) return List.of();
+    return instruction.allSucc();
+  }
+
+  public boolean isUnreachable(@NotNull Instruction instruction) {
+    return !myReachability[instruction.num()];
+  }
+
+  public static boolean isUnreachable(@NotNull PsiElement element, @NotNull TypeEvalContext context) {
+    final var scope = ScopeUtil.getScopeOwner(element);
+    if (scope != null) {
+      final var flow = ControlFlowCache.getControlFlow(scope).getInstructions();
+      int idx = ControlFlowUtil.findInstructionNumberByElement(flow, element);
+      if (idx < 0) return false;
+      return ControlFlowCache.getDataFlow(scope, context).isUnreachable(flow[idx]);
+    }
+    return false;
+  }
+}
diff --git a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyFinallyFailExitInstruction.kt b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyFinallyFailExitInstruction.kt
new file mode 100644
index 000000000000..d489de667b17
--- /dev/null
+++ b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/controlflow/PyFinallyFailExitInstruction.kt
@@ -0,0 +1,13 @@
+package com.jetbrains.python.codeInsight.controlflow
+
+import com.intellij.codeInsight.controlflow.ControlFlowBuilder
+import com.intellij.codeInsight.controlflow.Instruction
+import com.intellij.codeInsight.controlflow.impl.InstructionImpl
+
+/**
+ * It is an implicit raise at the end of a finally block when we got here due to exception propagation
+ * or return statement in try-except-else parts.
+ */
+class PyFinallyFailExitInstruction(builder: ControlFlowBuilder, val begin: Instruction) : InstructionImpl(builder, begin.element) {
+  override fun getElementPresentation(): String = "finally fail exit"
+}
\ No newline at end of file
diff --git a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/dataflow/PyReachingDefsDfaInstance.java b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/dataflow/PyReachingDefsDfaInstance.java
index aacc0b147bc9..9930e14afacc 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/codeInsight/dataflow/PyReachingDefsDfaInstance.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/codeInsight/dataflow/PyReachingDefsDfaInstance.java
@@ -7,6 +7,7 @@ import com.intellij.codeInsight.dataflow.map.DfaMapInstance;
 import com.intellij.psi.PsiElement;
 import com.intellij.psi.util.PsiTreeUtil;
 import com.jetbrains.python.codeInsight.controlflow.CallInstruction;
+import com.jetbrains.python.codeInsight.controlflow.ControlFlowCache;
 import com.jetbrains.python.codeInsight.controlflow.ReadWriteInstruction;
 import com.jetbrains.python.codeInsight.dataflow.scope.ScopeUtil;
 import com.jetbrains.python.codeInsight.dataflow.scope.ScopeVariable;
@@ -36,6 +37,12 @@ public class PyReachingDefsDfaInstance implements DfaMapInstance<ScopeVariable>
     if (element == null || ((PyFile) element.getContainingFile()).getLanguageLevel().isPython2()){
       return processReducedMap(map, instruction, element);
     }
+    var scope = ScopeUtil.getScopeOwner(element);
+    if (scope != null) {
+      if (ControlFlowCache.getDataFlow(scope, myContext).isUnreachable(instruction)) {
+        return UNREACHABLE_MARKER;
+      }
+    }
     if (instruction instanceof CallInstruction callInstruction) {
       if (callInstruction.isNoReturnCall(myContext)) {
         return UNREACHABLE_MARKER;
diff --git a/python/python-psi-impl/src/com/jetbrains/python/inspections/PyInspectionsUtil.java b/python/python-psi-impl/src/com/jetbrains/python/inspections/PyInspectionsUtil.java
index 685f887efc91..f93e4e0e3328 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/inspections/PyInspectionsUtil.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/inspections/PyInspectionsUtil.java
@@ -10,7 +10,6 @@ import com.jetbrains.python.codeInsight.controlflow.CallInstruction;
 import com.jetbrains.python.codeInsight.controlflow.ControlFlowCache;
 import com.jetbrains.python.codeInsight.controlflow.PyWithContextExitInstruction;
 import com.jetbrains.python.codeInsight.controlflow.ScopeOwner;
-import com.jetbrains.python.codeInsight.dataflow.scope.ScopeUtil;
 import com.jetbrains.python.psi.PyStatementListContainer;
 import com.jetbrains.python.psi.types.TypeEvalContext;
 import org.jetbrains.annotations.ApiStatus;
@@ -21,14 +20,6 @@ import java.util.ArrayList;
 import java.util.List;
 
 public final class PyInspectionsUtil {
-  @ApiStatus.Internal
-  public static boolean hasAnyInterruptedControlFlowPaths(@NotNull PsiElement element, @NotNull TypeEvalContext context) {
-    final ScopeOwner owner = ScopeUtil.getScopeOwner(element);
-    if (owner != null) {
-      return !collectUnreachable(owner, element, context).isEmpty();
-    }
-    return false;
-  }
 
   /**
    * Collects a list of unreachable elements, iterating through CFG backwards
diff --git a/python/python-psi-impl/src/com/jetbrains/python/inspections/PyUnboundLocalVariableInspection.java b/python/python-psi-impl/src/com/jetbrains/python/inspections/PyUnboundLocalVariableInspection.java
index f30a6a08fd31..b436962a27d0 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/inspections/PyUnboundLocalVariableInspection.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/inspections/PyUnboundLocalVariableInspection.java
@@ -15,6 +15,7 @@ import com.intellij.psi.PsiPolyVariantReference;
 import com.intellij.psi.util.PsiTreeUtil;
 import com.jetbrains.python.PyPsiBundle;
 import com.jetbrains.python.codeInsight.controlflow.ControlFlowCache;
+import com.jetbrains.python.codeInsight.controlflow.PyDataFlow;
 import com.jetbrains.python.codeInsight.controlflow.ReadWriteInstruction;
 import com.jetbrains.python.codeInsight.controlflow.ScopeOwner;
 import com.jetbrains.python.codeInsight.dataflow.scope.Scope;
@@ -66,6 +67,9 @@ public final class PyUnboundLocalVariableInspection extends PyInspection {
       if (PsiTreeUtil.getParentOfType(node, PyImportStatementBase.class) != null) {
         return;
       }
+      if (PyDataFlow.isUnreachable(node, myTypeEvalContext)) {
+        return;
+      }
       final String name = node.getReferencedName();
       if (name == null) {
         return;
@@ -122,9 +126,6 @@ public final class PyUnboundLocalVariableInspection extends PyInspection {
         if (resolvedUnderWithStatement(node, resolved) || resolvedUnderAssignmentExpressionAndCondition(node, resolved)) {
           return;
         }
-        if (PyInspectionsUtil.hasAnyInterruptedControlFlowPaths(node, myTypeEvalContext)) {
-          return;
-        }
         if (owner instanceof PyFile) {
           if (isBuiltin) {
             return;
diff --git a/python/python-psi-impl/src/com/jetbrains/python/inspections/unresolvedReference/PyUnresolvedReferencesVisitor.java b/python/python-psi-impl/src/com/jetbrains/python/inspections/unresolvedReference/PyUnresolvedReferencesVisitor.java
index c040724e1bb4..152da932b554 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/inspections/unresolvedReference/PyUnresolvedReferencesVisitor.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/inspections/unresolvedReference/PyUnresolvedReferencesVisitor.java
@@ -28,6 +28,7 @@ import com.jetbrains.python.PythonRuntimeService;
 import com.jetbrains.python.codeInsight.PyCustomMember;
 import com.jetbrains.python.codeInsight.PySubstitutionChunkReference;
 import com.jetbrains.python.codeInsight.controlflow.ControlFlowCache;
+import com.jetbrains.python.codeInsight.controlflow.PyDataFlow;
 import com.jetbrains.python.codeInsight.controlflow.ReadWriteInstruction;
 import com.jetbrains.python.codeInsight.controlflow.ScopeOwner;
 import com.jetbrains.python.codeInsight.dataflow.scope.ScopeUtil;
@@ -38,7 +39,6 @@ import com.jetbrains.python.documentation.docstrings.DocStringTypeReference;
 import com.jetbrains.python.inspections.PyInspection;
 import com.jetbrains.python.inspections.PyInspectionExtension;
 import com.jetbrains.python.inspections.PyInspectionVisitor;
-import com.jetbrains.python.inspections.PyInspectionsUtil;
 import com.jetbrains.python.inspections.quickfix.*;
 import com.jetbrains.python.psi.*;
 import com.jetbrains.python.psi.impl.*;
@@ -298,7 +298,7 @@ public abstract class PyUnresolvedReferencesVisitor extends PyInspectionVisitor
         return;
       }
       if (!expr.isQualified()) {
-        if (PyInspectionsUtil.hasAnyInterruptedControlFlowPaths(expr, myTypeEvalContext)) {
+        if (PyDataFlow.isUnreachable(expr, myTypeEvalContext)) {
           return;
         }
         ContainerUtil.addIfNotNull(fixes, getTrueFalseQuickFix(refText));
diff --git a/python/python-psi-impl/src/com/jetbrains/python/psi/impl/PyFunctionImpl.java b/python/python-psi-impl/src/com/jetbrains/python/psi/impl/PyFunctionImpl.java
index 3830a5324af7..83e7c78aa917 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/psi/impl/PyFunctionImpl.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/psi/impl/PyFunctionImpl.java
@@ -17,6 +17,7 @@ import com.intellij.psi.stubs.IStubElementType;
 import com.intellij.psi.stubs.StubElement;
 import com.intellij.psi.util.*;
 import com.intellij.ui.IconManager;
+import com.intellij.util.ArrayUtil;
 import com.intellij.util.IncorrectOperationException;
 import com.intellij.util.PlatformIcons;
 import com.intellij.util.containers.JBIterable;
@@ -379,26 +380,52 @@ public class PyFunctionImpl extends PyBaseElementImpl<PyFunctionStub> implements
   @Override
   public @NotNull List<PyStatement> getReturnPoints(@NotNull TypeEvalContext context) {
     final Instruction[] flow = ControlFlowCache.getControlFlow(this).getInstructions();
-    final List<PyStatement> returnPoints = new ArrayList<>();
+    final PyDataFlow dataFlow = ControlFlowCache.getDataFlow(this, context);
 
-    ControlFlowUtil.iteratePrev(flow.length-1, flow, instruction -> {
-      if (instruction instanceof CallInstruction ci && ci.isNoReturnCall(context)) {
+    class ReturnPointCollector {
+      final List<PyStatement> returnPoints = new ArrayList<>();
+      boolean collectImplicitReturn = true;
+
+      ControlFlowUtil.Operation checkInstruction(@NotNull Instruction instruction) {
+        if (dataFlow.isUnreachable(instruction)) {
+          return ControlFlowUtil.Operation.CONTINUE;
+        }
+        if (instruction instanceof PyFinallyFailExitInstruction exitInstruction) {
+          // Most nodes in try-part are connected to finally-fail-part,
+          // but we will only be interested in explicit return statements.
+          boolean oldCollectImplicitReturn = collectImplicitReturn;
+          collectImplicitReturn = false;
+          walkCFG(ArrayUtil.indexOf(flow, exitInstruction.getBegin()));
+          collectImplicitReturn = oldCollectImplicitReturn;
+          return ControlFlowUtil.Operation.CONTINUE;
+        }
+        if (instruction instanceof CallInstruction ci && ci.isNoReturnCall(context)) {
+          return ControlFlowUtil.Operation.CONTINUE;
+        }
+        if (instruction instanceof PyRaiseInstruction) {
+          return ControlFlowUtil.Operation.CONTINUE;
+        }
+        if (instruction instanceof PyWithContextExitInstruction withExit && !withExit.isSuppressingExceptions(context)) {
+          return ControlFlowUtil.Operation.CONTINUE;
+        }
+        final PsiElement element = instruction.getElement();
+        if (!(element instanceof PyStatement statement)) {
+          return ControlFlowUtil.Operation.NEXT;
+        }
+        if (collectImplicitReturn || statement instanceof PyReturnStatement) {
+          returnPoints.add(statement);
+        }
         return ControlFlowUtil.Operation.CONTINUE;
       }
-      if (instruction instanceof PyRaiseInstruction) {
-        return ControlFlowUtil.Operation.CONTINUE;
+      
+      void walkCFG(int startInstruction) {
+        ControlFlowUtil.iteratePrev(startInstruction, flow, this::checkInstruction);
       }
-      if (instruction instanceof PyWithContextExitInstruction withExit && !withExit.isSuppressingExceptions(context)) {
-        return ControlFlowUtil.Operation.CONTINUE;
-      }
-      final PsiElement element = instruction.getElement();
-      if (!(element instanceof PyStatement statement)) {
-        return ControlFlowUtil.Operation.NEXT;
-      }
-      returnPoints.add(statement);
-      return ControlFlowUtil.Operation.CONTINUE;
-    });
-    return returnPoints;
+    }
+    
+    ReturnPointCollector collector = new ReturnPointCollector();
+    collector.walkCFG(flow.length - 1);
+    return collector.returnPoints;
   }
 
   @Override
diff --git a/python/testData/codeInsight/controlflow/DoubleTry.txt b/python/testData/codeInsight/controlflow/DoubleTry.txt
index ba2424a1fa75..7647910cf923 100644
--- a/python/testData/codeInsight/controlflow/DoubleTry.txt
+++ b/python/testData/codeInsight/controlflow/DoubleTry.txt
@@ -6,7 +6,7 @@
 5(6) element: PyExceptPart
 6(7) READ ACCESS: ImportError
 7(8) raise: PyRaiseStatement
-8(25) READ ACCESS: Error
+8(26) READ ACCESS: Error
 9(10) element: PyAssignmentStatement
 10(11) WRITE ACCESS: p
 11(12) element: PyTryExceptStatement
@@ -14,13 +14,14 @@
 13(14,17) element: PyReturnStatement
 14(17) READ ACCESS: foo
 15(16,17) element: PyAssignmentStatement
-16(17,20) WRITE ACCESS: x
+16(17,21) WRITE ACCESS: x
 17(18) element: PyFinallyPart
 18(19) element: PyPrintStatement
-19(25) READ ACCESS: p
-20(21) element: PyFinallyPart
-21(22) element: PyPrintStatement
-22(23) READ ACCESS: p
-23(24) element: PyAssignmentStatement
-24(25) WRITE ACCESS: y
-25() element: null
\ No newline at end of file
+19(20) READ ACCESS: p
+20(26) finally fail exit
+21(22) element: PyFinallyPart
+22(23) element: PyPrintStatement
+23(24) READ ACCESS: p
+24(25) element: PyAssignmentStatement
+25(26) WRITE ACCESS: y
+26() element: null
\ No newline at end of file
diff --git a/python/testData/codeInsight/controlflow/TryExceptElseFinally.txt b/python/testData/codeInsight/controlflow/TryExceptElseFinally.txt
index 2af0ac7bd724..01a10f59da46 100644
--- a/python/testData/codeInsight/controlflow/TryExceptElseFinally.txt
+++ b/python/testData/codeInsight/controlflow/TryExceptElseFinally.txt
@@ -12,12 +12,13 @@
 11(12,18) element: PyElsePart
 12(13,18) element: PyPrintStatement
 13(14,18) READ ACCESS: v
-14(18,20) element: PyCallExpression: 'element value {0}'.format
+14(18,21) element: PyCallExpression: 'element value {0}'.format
 15(16,18) element: PyExceptPart
 16(17,18) READ ACCESS: KeyError
-17(18,20) element: PyPrintStatement
+17(18,21) element: PyPrintStatement
 18(19) element: PyFinallyPart
-19(22) element: PyPrintStatement
-20(21) element: PyFinallyPart
-21(22) element: PyPrintStatement
-22() element: null
\ No newline at end of file
+19(20) element: PyPrintStatement
+20(23) finally fail exit
+21(22) element: PyFinallyPart
+22(23) element: PyPrintStatement
+23() element: null
\ No newline at end of file
diff --git a/python/testData/codeInsight/controlflow/TryFinally.txt b/python/testData/codeInsight/controlflow/TryFinally.txt
index 56933be46a0b..abd1b2dc58b0 100644
--- a/python/testData/codeInsight/controlflow/TryFinally.txt
+++ b/python/testData/codeInsight/controlflow/TryFinally.txt
@@ -7,30 +7,31 @@
 6(7,10) element: PyAssignmentStatement
 7(8,10) READ ACCESS: open
 8(9,10) element: PyCallExpression: open
-9(10,21) WRITE ACCESS: status
+9(10,22) WRITE ACCESS: status
 10(11) element: PyFinallyPart
 11(12) element: PyIfStatement
 12(13) READ ACCESS: status
 13(14,16) READ ACCESS: None
 14(15) element: null. Condition: status is not None:false
-15() ASSERTTYPE ACCESS: status
+15(21) ASSERTTYPE ACCESS: status
 16(17) element: null. Condition: status is not None:true
 17(18) ASSERTTYPE ACCESS: status
 18(19) element: PyStatementList
 19(20) element: PyPrintStatement
-20() READ ACCESS: status
-21(22) element: PyFinallyPart
-22(23) element: PyIfStatement
-23(24) READ ACCESS: status
-24(25,27) READ ACCESS: None
-25(26) element: null. Condition: status is not None:false
-26(32) ASSERTTYPE ACCESS: status
-27(28) element: null. Condition: status is not None:true
-28(29) ASSERTTYPE ACCESS: status
-29(30) element: PyStatementList
-30(31) element: PyPrintStatement
-31(32) READ ACCESS: status
-32(33) element: PyExpressionStatement
-33(34) READ ACCESS: status
-34(35) element: PyCallExpression: status.close
-35() element: null
\ No newline at end of file
+20(21) READ ACCESS: status
+21(36) finally fail exit
+22(23) element: PyFinallyPart
+23(24) element: PyIfStatement
+24(25) READ ACCESS: status
+25(26,28) READ ACCESS: None
+26(27) element: null. Condition: status is not None:false
+27(33) ASSERTTYPE ACCESS: status
+28(29) element: null. Condition: status is not None:true
+29(30) ASSERTTYPE ACCESS: status
+30(31) element: PyStatementList
+31(32) element: PyPrintStatement
+32(33) READ ACCESS: status
+33(34) element: PyExpressionStatement
+34(35) READ ACCESS: status
+35(36) element: PyCallExpression: status.close
+36() element: null
\ No newline at end of file
diff --git a/python/testData/codeInsight/controlflow/TryRaiseFinally.txt b/python/testData/codeInsight/controlflow/TryRaiseFinally.txt
index 0a575acaa595..4f22fb9c4ace 100644
--- a/python/testData/codeInsight/controlflow/TryRaiseFinally.txt
+++ b/python/testData/codeInsight/controlflow/TryRaiseFinally.txt
@@ -5,4 +5,5 @@
 4(5) READ ACCESS: KeyboardInterrupt
 5(6) element: PyFinallyPart
 6(7) element: PyPrintStatement
-7() element: null
\ No newline at end of file
+7(8) finally fail exit
+8() element: null
\ No newline at end of file
diff --git a/python/testData/codeInsight/controlflow/TryTry.txt b/python/testData/codeInsight/controlflow/TryTry.txt
index 504c65500906..6abebea907f4 100644
--- a/python/testData/codeInsight/controlflow/TryTry.txt
+++ b/python/testData/codeInsight/controlflow/TryTry.txt
@@ -2,17 +2,17 @@
 1(2) element: PyAssignmentStatement
 2(3) WRITE ACCESS: a
 3(4) element: PyTryExceptStatement
-4(5,69) element: PyTryPart
-5(6,69) element: PyAssignmentStatement
-6(7,69) WRITE ACCESS: b
-7(8,69) element: PyForStatement
-8(9,69) element: PyTargetExpression: x
-9(10,69) WRITE ACCESS: x
-10(11,69) element: PyTryExceptStatement
-11(12,59) element: PyTryPart
-12(13,59) element: PyAssignmentStatement
-13(14,59) WRITE ACCESS: c
-14(15,59) element: PyTryExceptStatement
+4(5,71) element: PyTryPart
+5(6,71) element: PyAssignmentStatement
+6(7,71) WRITE ACCESS: b
+7(8,71) element: PyForStatement
+8(9,71) element: PyTargetExpression: x
+9(10,71) WRITE ACCESS: x
+10(11,71) element: PyTryExceptStatement
+11(12,60) element: PyTryPart
+12(13,60) element: PyAssignmentStatement
+13(14,60) WRITE ACCESS: c
+14(15,60) element: PyTryExceptStatement
 15(16,51) element: PyTryPart
 16(17,51) element: PyAssignmentStatement
 17(18,51) WRITE ACCESS: d
@@ -23,14 +23,14 @@
 22(23) element: null. Condition: x == 0:true
 23(51,24) ASSERTTYPE ACCESS: x
 24(25) element: PyStatementList
-25(54) element: PyBreakStatement
+25(55) element: PyBreakStatement
 26(27,29,51) READ ACCESS: x
 27(28) element: null. Condition: x == 1:false
 28(51,33) ASSERTTYPE ACCESS: x
 29(30) element: null. Condition: x == 1:true
 30(51,31) ASSERTTYPE ACCESS: x
 31(32) element: PyStatementList
-32(7,54) element: PyContinueStatement
+32(7,55) element: PyContinueStatement
 33(34,36,51) READ ACCESS: x
 34(35) element: null. Condition: x == 2:false
 35(51,42) ASSERTTYPE ACCESS: x
@@ -48,31 +48,34 @@
 47(48) element: PyStatementList
 48(51) element: PyReturnStatement
 49(50,51) element: PyAssignmentStatement
-50(51,54) WRITE ACCESS: e
-51(52,59) element: PyFinallyPart
-52(53,59) element: PyAssignmentStatement
-53(59) WRITE ACCESS: f
-54(55,59) element: PyFinallyPart
-55(56,59) element: PyAssignmentStatement
-56(57,59,62) WRITE ACCESS: f
-57(58,59) element: PyAssignmentStatement
-58(59,62) WRITE ACCESS: g
-59(60,69) element: PyFinallyPart
-60(61,69) element: PyAssignmentStatement
-61(69) WRITE ACCESS: h
-62(63,69) element: PyFinallyPart
-63(64,69) element: PyAssignmentStatement
-64(65,67,69) WRITE ACCESS: h
-65(66,69) element: PyAssignmentStatement
-66(8,67,69) WRITE ACCESS: i
-67(68,69) element: PyAssignmentStatement
-68(69,72) WRITE ACCESS: j
-69(70) element: PyFinallyPart
-70(71) element: PyAssignmentStatement
-71(77) WRITE ACCESS: k
-72(73) element: PyFinallyPart
-73(74) element: PyAssignmentStatement
-74(75) WRITE ACCESS: k
-75(76) element: PyAssignmentStatement
-76(77) WRITE ACCESS: l
-77() element: null
\ No newline at end of file
+50(51,55) WRITE ACCESS: e
+51(52,60) element: PyFinallyPart
+52(53,60) element: PyAssignmentStatement
+53(54,60) WRITE ACCESS: f
+54(60) finally fail exit
+55(56,60) element: PyFinallyPart
+56(57,60) element: PyAssignmentStatement
+57(58,60,64) WRITE ACCESS: f
+58(59,60) element: PyAssignmentStatement
+59(60,64) WRITE ACCESS: g
+60(61,71) element: PyFinallyPart
+61(62,71) element: PyAssignmentStatement
+62(63,71) WRITE ACCESS: h
+63(71) finally fail exit
+64(65,71) element: PyFinallyPart
+65(66,71) element: PyAssignmentStatement
+66(67,69,71) WRITE ACCESS: h
+67(68,71) element: PyAssignmentStatement
+68(8,69,71) WRITE ACCESS: i
+69(70,71) element: PyAssignmentStatement
+70(71,75) WRITE ACCESS: j
+71(72) element: PyFinallyPart
+72(73) element: PyAssignmentStatement
+73(74) WRITE ACCESS: k
+74(80) finally fail exit
+75(76) element: PyFinallyPart
+76(77) element: PyAssignmentStatement
+77(78) WRITE ACCESS: k
+78(79) element: PyAssignmentStatement
+79(80) WRITE ACCESS: l
+80() element: null
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/Py3TypeTest.java b/python/testSrc/com/jetbrains/python/Py3TypeTest.java
index 59e5955f8a3c..00d1f0415ac7 100644
--- a/python/testSrc/com/jetbrains/python/Py3TypeTest.java
+++ b/python/testSrc/com/jetbrains/python/Py3TypeTest.java
@@ -28,6 +28,22 @@ public class Py3TypeTest extends PyTestCase {
       """);
   }
 
+  // PY-78964
+  public void testFunctionReturnTypeTryFinally() {
+    doTest("str",
+           """
+             def test():
+                 try:
+                     return 42
+                 finally:
+                     return "str"
+             
+                 return True
+             
+             expr = test()
+             """);
+  }
+
   // PY-20710
   public void testLambdaGenerator() {
     doTest("Generator[int, Any, Any]", """
@@ -3438,6 +3454,44 @@ public class Py3TypeTest extends PyTestCase {
       """);
   }
 
+  public void testShadowingReturnInsideFinally() {
+    doTest("str", """
+      def f():
+          try:
+              return 42
+          finally:
+              return "foo"
+      expr = f()
+      """);
+  }
+
+  public void testNonShadowingReturnInsideFinally() {
+    doTest("int | str", """
+      def f(p):
+          try:
+              return 42
+          finally:
+              if p:
+                  return "foo"
+      expr = f()
+      """);
+  }
+
+  public void testReturnInsideExceptElse() {
+    doTest("str | bool", """
+      def f(p):
+          try:
+              e1()
+          except Exception:
+              return "foo"
+          else:
+              return True
+          finally:
+              pass
+      expr = f()
+      """);
+  }
+
   private void doTest(final String expectedType, final String text) {
     myFixture.configureByText(PythonFileType.INSTANCE, text);
     final PyExpression expr = myFixture.findElementByText("expr", PyExpression.class);
diff --git a/python/testSrc/com/jetbrains/python/PyTypeTest.java b/python/testSrc/com/jetbrains/python/PyTypeTest.java
index ef95fa21ed8d..148f21b2e2a9 100644
--- a/python/testSrc/com/jetbrains/python/PyTypeTest.java
+++ b/python/testSrc/com/jetbrains/python/PyTypeTest.java
@@ -99,8 +99,8 @@ public class PyTypeTest extends PyTestCase {
   public void testUnionOfTuples() {
     doTest("Union[Tuple[int, str], Tuple[str, int]]",
            """
-             def x():
-               if True:
+             def x(b):
+               if b:
                  return (1, 'a')
                else:
                  return ('a', 1)
diff --git a/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java b/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java
index 25d34088bb04..03dbce91dace 100644
--- a/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java
+++ b/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java
@@ -976,6 +976,22 @@ public class PyTypeCheckerInspectionTest extends PyInspectionTestCase {
     );
   }
 
+  // PY-78964
+  public void testFunctionWithTryFinally() {
+    runWithLanguageLevel(
+      LanguageLevel.getLatest(),
+      () -> doTestByText("""
+                   def test() -> bool:
+                       try:
+                           pass
+                       finally:
+                           pass
+                   
+                       return True
+                   """)
+    );
+  }
+
   // PY-33500
   public void testImplicitGenericDunderCallCallOnTypedElement() {
     runWithLanguageLevel(