diff --git a/python/testData/inspections/PyTypeCheckerInspection/SecondFormIter.py b/python/testData/inspections/PyTypeCheckerInspection/SecondFormIter.py
new file mode 100644
index 000000000000..bf0a0e80c6a2
--- /dev/null
+++ b/python/testData/inspections/PyTypeCheckerInspection/SecondFormIter.py
@@ -0,0 +1,16 @@
+def test_second_form():
+    def f():
+        return ''
+
+    for chunk in iter(lambda: f(), ''):
+        pass
+
+
+def test_second_form_fail():
+    for chunk in iter(<weak_warning descr="Expected type 'Iterable | () -> object' (matched generic type 'Iterable[T] | () -> object'), got 'int' instead">10</weak_warning>, ''):
+        pass
+
+
+def test_first_form():
+    for x in iter([1, 2, 3]):
+        pass
diff --git a/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java b/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java
index f67754eb8b94..ef672f12c975 100644
--- a/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java
+++ b/python/testSrc/com/jetbrains/python/inspections/PyTypeCheckerInspectionTest.java
@@ -208,4 +208,9 @@ public class PyTypeCheckerInspectionTest extends PyTestCase {
   public void testStringStartsWith() {
     doTest();
   }
+
+  // PY-10854
+  public void testSecondFormIter() {
+    doTest();
+  }
 }