diff --git a/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/DfaMemoryStateImpl.java b/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/DfaMemoryStateImpl.java
index 23cb372d132b..95e5267c2549 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/DfaMemoryStateImpl.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/DfaMemoryStateImpl.java
@@ -675,12 +675,32 @@ public class DfaMemoryStateImpl implements DfaMemoryState {
         return false;
       }
       setVariableState((DfaVariableValue)value, newState);
+      if (newState.getTypeConstraint().isExact(CommonClassNames.JAVA_LANG_STRING) &&
+          !newState.getTypeConstraint().equals(oldState.getTypeConstraint())) {
+        // Type is narrowed to java.lang.String: we consider String equivalence by content,
+        // but other object types by reference, so we need to remove distinct pairs, if any.
+        convertReferenceEqualityToValueEquality(value);
+      }
       updateEquivalentVariables((DfaVariableValue)value, newState);
       return updateEqClassesByState((DfaVariableValue)value);
     }
     return true;
   }
 
+  private void convertReferenceEqualityToValueEquality(DfaValue value) {
+    int id = value.getID();
+    int[] indices = myIdToEqClassesIndices.get(id);
+    for (int index : indices) {
+      for (Iterator<DistinctPairSet.DistinctPair> iterator = myDistinctClasses.iterator(); iterator.hasNext(); ) {
+        DistinctPairSet.DistinctPair pair = iterator.next();
+        EqClass otherClass = pair.getOtherClass(index);
+        if (otherClass != null && otherClass.findConstant(false) != getFactory().getConstFactory().getNull()) {
+          iterator.remove();
+        }
+      }
+    }
+  }
+
   private boolean updateEqClassesByState(DfaVariableValue value) {
     if (DfaNullability.isNotNull(getVariableState(value).myFactMap)) {
       return applyRelation(value, getFactory().getConstFactory().getNull(), true);
diff --git a/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/TypeConstraint.java b/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/TypeConstraint.java
index b7f3471f3580..986651df6d3f 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/TypeConstraint.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInspection/dataFlow/TypeConstraint.java
@@ -68,6 +68,8 @@ public abstract class TypeConstraint {
 
   public abstract boolean isExact();
 
+  public abstract boolean isExact(String typeName);
+
 
   static final class Exact extends TypeConstraint {
     final @NotNull DfaPsiType myType;
@@ -159,6 +161,11 @@ public abstract class TypeConstraint {
       return true;
     }
 
+    @Override
+    public boolean isExact(String typeName) {
+      return myType.getPsiType().equalsToText(typeName);
+    }
+
     @Override
     public int hashCode() {
       return myType.hashCode();
@@ -404,6 +411,11 @@ public abstract class TypeConstraint {
       return false;
     }
 
+    @Override
+    public boolean isExact(String typeName) {
+      return false;
+    }
+
     @Override
     public boolean equals(Object o) {
       if (this == o) return true;
diff --git a/java/java-tests/testData/inspection/dataFlow/fixture/StringEquality.java b/java/java-tests/testData/inspection/dataFlow/fixture/StringEquality.java
index 03af595d074f..09de2cc8d23b 100644
--- a/java/java-tests/testData/inspection/dataFlow/fixture/StringEquality.java
+++ b/java/java-tests/testData/inspection/dataFlow/fixture/StringEquality.java
@@ -42,10 +42,14 @@ class StringEquality {
   }
 
   boolean compare(Object a, Object b) {
-    if(a == b) return true;
+    if(a == b) {
+      if(a instanceof String) {
+        return <warning descr="Result of '((String)a).equals(b)' is always 'true'">((String)a).equals(b)</warning>;
+      }
+      return true;
+    }
     if(a instanceof String && b instanceof String) {
-      // false-positive
-      return <warning descr="Result of '((String)a).equals((String)b)' is always 'false'">((String)a).equals((String)b)</warning>;
+      return ((String)a).equals(b);
     }
     return false;
   }