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 336077d79125..7cfe2cb889d4 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
@@ -1387,7 +1387,8 @@ public class HighlightUtil extends HighlightUtilBase {
       if (ExceptionUtil.isGeneralExceptionType(catchType)) continue;
 
       // collect exceptions which are caught by this type
-      Collection<PsiClassType> caught = ContainerUtil.findAll(thrownTypes, catchType::isAssignableFrom);
+      final Collection<PsiClassType> caught =
+        ContainerUtil.findAll(thrownTypes, type -> catchType.isAssignableFrom(type) || type.isAssignableFrom(catchType));
       if (caught.isEmpty()) continue;
       final Collection<PsiClassType> caughtCopy = ContainerUtil.newHashSet(caught);
 
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting7/CatchSubclassOfThrownException.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting7/CatchSubclassOfThrownException.java
new file mode 100644
index 000000000000..76775d6508b2
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting7/CatchSubclassOfThrownException.java
@@ -0,0 +1,23 @@
+class C {
+  void foo(boolean b) throws Exception {
+    try {
+      if (b) {
+        throw new ChildException();
+      } else {
+        method();
+      }
+    } catch (ChildException e) {
+      System.out.println("child");
+    } catch (ParentException e) {
+      System.out.println("parent");
+    }
+  }
+
+  private static void method() throws Exception {
+    throw new ParentException();
+  }
+
+  static class ParentException extends Exception { }
+
+  static class ChildException extends ParentException { }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightAdvHighlightingJdk7Test.java b/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightAdvHighlightingJdk7Test.java
index 39a11cde6e6c..3aa128dd35d9 100644
--- a/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightAdvHighlightingJdk7Test.java
+++ b/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightAdvHighlightingJdk7Test.java
@@ -186,6 +186,7 @@ public class LightAdvHighlightingJdk7Test extends LightDaemonAnalyzerTestCase {
   public void testIDEA138978() { doTest(false, false); }
   public void testIntersectionTypeCast() { doTest(false, false); }
   public void testUsedMethodCalledViaReflectionInTheSameFile() { doTest(true, false); }
+  public void testCatchSubclassOfThrownException() { doTest(true, false); }
 
   public void testArrayInitializerTypeCheckVariableType() { doTest(false, false);}