diff --git a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java
index 7c76a792220a..f85afa0270d8 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightClassUtil.java
@@ -1012,4 +1012,28 @@ public class HighlightClassUtil {
     }
     return null;
   }
+
+  static HighlightInfo checkExtendsSealedClass(PsiClass aClass, PsiClass superClass, PsiJavaCodeReferenceElement elementToHighlight) {
+    if (superClass.hasModifierProperty(PsiModifier.SEALED)) {
+      PsiClassType[] permittedTypes = superClass.getPermitsListTypes();
+      if (permittedTypes.length > 0) {
+        if (Arrays.stream(permittedTypes).map(permittedType -> permittedType.resolve()).anyMatch(permittedClass -> aClass.equals(permittedClass))) {
+          return null;
+        }
+      }
+      else if (JavaPsiFacade.getInstance(aClass.getProject()).arePackagesTheSame(aClass, superClass)) {
+        return null;
+      }
+      else {
+        PsiJavaModule javaModule = JavaModuleGraphUtil.findDescriptorByElement(aClass);
+        if (javaModule != null && javaModule == JavaModuleGraphUtil.findDescriptorByElement(superClass)) {
+          return null;
+        }
+      }
+      return HighlightInfo.newHighlightInfo(HighlightInfoType.ERROR)
+        .descriptionAndTooltip(JavaErrorBundle.message("not.allowed.in.sealed.hierarchy", aClass.getName()))
+        .range(elementToHighlight).create();
+    }
+    return null;
+  }
 }
diff --git a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
index 512b2f1c916c..e02efb254839 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
@@ -3153,6 +3153,9 @@ public class HighlightUtil {
           if (highlightInfo == null) {
             highlightInfo = GenericsHighlightUtil.checkCannotInheritFromTypeParameter(aClass, ref);
           }
+          if (highlightInfo == null) {
+            highlightInfo = HighlightClassUtil.checkExtendsSealedClass((PsiClass)refGrandParent, aClass, ref);
+          }
         }
       }
       else if (refGrandParent instanceof PsiMethod && ((PsiMethod)refGrandParent).getThrowsList() == referenceList) {
diff --git a/java/java-psi-impl/src/messages/JavaErrorBundle.properties b/java/java-psi-impl/src/messages/JavaErrorBundle.properties
index e5ce278d1dc7..ba34d1e2b5bd 100644
--- a/java/java-psi-impl/src/messages/JavaErrorBundle.properties
+++ b/java/java-psi-impl/src/messages/JavaErrorBundle.properties
@@ -476,3 +476,4 @@ type.parameter.has.incompatible.upper.bounds=Type parameter {0} has incompatible
 safevarargs.not.allowed.on.methods.with.fixed.arity=@SafeVarargs is not allowed on methods with fixed arity
 functional.interface.must.not.be.sealed.error.description=Functional interface can''t be declared as ''{0}''
 sealed.type.inheritor.expected.modifiers={0}, {1} or {2} modifiers expected
+not.allowed.in.sealed.hierarchy={0} is not allowed in the sealed hierarchy
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingSealedTypes/SealedTypesBasics.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingSealedTypes/SealedTypesBasics.java
index 9ce1b21f2448..5a8a3c18f3a0 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingSealedTypes/SealedTypesBasics.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingSealedTypes/SealedTypesBasics.java
@@ -3,7 +3,7 @@ sealed class A permits B {}
 sealed class B extends A permits C, D {}
 final class C extends B {}
 non-sealed class D extends B {}
-class <error descr="sealed, non-sealed or final modifiers expected">E</error> extends A {}
+class E extends <error descr="E is not allowed in the sealed hierarchy">A</error> {}
 <error descr="Illegal combination of modifiers: 'sealed' and 'sealed'">sealed</error> <error descr="Illegal combination of modifiers: 'sealed' and 'sealed'">sealed</error> class SealedSealed {}
 <error descr="Illegal combination of modifiers: 'sealed' and 'non-sealed'">sealed</error> <error descr="Illegal combination of modifiers: 'non-sealed' and 'sealed'">non-sealed</error> class SealedNonSealed {}
 <error descr="Illegal combination of modifiers: 'sealed' and 'final'">sealed</error> <error descr="Illegal combination of modifiers: 'final' and 'sealed'">final</error> class SealedFinal {}