diff --git a/java/java-psi-impl/src/com/intellij/psi/scope/conflictResolvers/JavaMethodsConflictResolver.java b/java/java-psi-impl/src/com/intellij/psi/scope/conflictResolvers/JavaMethodsConflictResolver.java
index 50d04eb292dc..5f1e2f696961 100644
--- a/java/java-psi-impl/src/com/intellij/psi/scope/conflictResolvers/JavaMethodsConflictResolver.java
+++ b/java/java-psi-impl/src/com/intellij/psi/scope/conflictResolvers/JavaMethodsConflictResolver.java
@@ -719,8 +719,11 @@ public class JavaMethodsConflictResolver implements PsiConflictResolver{
       LOG.assertTrue(typeParameter != null);
       if (!substitutor.getSubstitutionMap().containsKey(typeParameter)) {
         PsiType type = siteSubstitutor.substitute(typeParameter);
-        if (type instanceof PsiClassType && ((PsiClassType)type).resolve() instanceof PsiTypeParameter) {
-          type = TypeConversionUtil.erasure(type, siteSubstitutor);
+        if (type instanceof PsiClassType) {
+          final PsiClass aClass = ((PsiClassType)type).resolve();
+          if (aClass instanceof PsiTypeParameter && ((PsiTypeParameter)aClass).getOwner() == typeParameter.getOwner()) {
+            type = TypeConversionUtil.erasure(type, siteSubstitutor);
+          }
         }
         substitutor = substitutor.put(typeParameter, type);
       } else {
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA123338.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA123338.java
new file mode 100644
index 000000000000..fdef47529a8f
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA123338.java
@@ -0,0 +1,12 @@
+class Aaa<Ta> {
+  class Inner {}
+  void doSmth(final Inner inner) {}
+}
+
+class Bbb<T> extends Aaa<T> {
+  class SubInner extends Aaa<T>.Inner {}
+  void doSmth(final SubInner inner) {}
+  void ambiguousCall() {
+    doSmth (new SubInner());
+  }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
index 241975871467..f4e40bde2970 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
@@ -344,6 +344,7 @@ public class GenericsHighlightingTest extends LightDaemonAnalyzerTestCase {
   public void testIDEA123352() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
   public void testIDEA123518() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
   public void testIDEA64103() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
+  public void testIDEA123338() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
 
   public void testJavaUtilCollections_NoVerify() throws Exception {
     PsiClass collectionsClass = getJavaFacade().findClass("java.util.Collections", GlobalSearchScope.moduleWithLibrariesScope(getModule()));