diff --git a/platform/lang-impl/src/com/intellij/ide/navigationToolbar/DefaultNavBarExtension.java b/platform/lang-impl/src/com/intellij/ide/navigationToolbar/DefaultNavBarExtension.java
index 06928197028d..8f888a825472 100644
--- a/platform/lang-impl/src/com/intellij/ide/navigationToolbar/DefaultNavBarExtension.java
+++ b/platform/lang-impl/src/com/intellij/ide/navigationToolbar/DefaultNavBarExtension.java
@@ -29,6 +29,7 @@ import com.intellij.psi.*;
 import com.intellij.psi.search.GlobalSearchScope;
 import com.intellij.psi.search.PsiFileSystemItemProcessor;
 import com.intellij.psi.util.PsiUtilCore;
+import com.intellij.util.PathUtil;
 import com.intellij.util.Processor;
 import org.jetbrains.annotations.NotNull;
 import org.jetbrains.annotations.Nullable;
@@ -181,4 +182,51 @@ public class DefaultNavBarExtension extends AbstractNavBarModelExtension {
       }
     });
   }
+
+  @Nullable
+  @Override
+  public PsiElement getParent(PsiElement psiElement) {
+    PsiFile containingFile = psiElement.getContainingFile();
+    if (containingFile != null) {
+      PsiDirectory containingDirectory = containingFile.getContainingDirectory();
+      if (containingDirectory != null) {
+        return containingDirectory;
+      }
+    }
+    else if (psiElement instanceof PsiDirectory) {
+      PsiDirectory psiDirectory = (PsiDirectory)psiElement;
+      Project project = psiElement.getProject();
+
+      PsiDirectory parentDirectory = psiDirectory.getParentDirectory();
+
+      if (parentDirectory == null) {
+        VirtualFile jar = PathUtil.getLocalFile(psiDirectory.getVirtualFile());
+        if (ProjectRootManager.getInstance(project).getFileIndex().isInContent(jar)) {
+          parentDirectory = PsiManager.getInstance(project).findDirectory(jar.getParent());
+        }
+      }
+      return parentDirectory;
+    }
+    else if (psiElement instanceof PsiFileSystemItem) {
+      VirtualFile virtualFile = ((PsiFileSystemItem)psiElement).getVirtualFile();
+      if (virtualFile == null) return null;
+      PsiManager psiManager = psiElement.getManager();
+      PsiElement resultElement;
+      if (virtualFile.isDirectory()) {
+        resultElement = psiManager.findDirectory(virtualFile);
+      }
+      else {
+        resultElement = psiManager.findFile(virtualFile);
+      }
+      if (resultElement == null) return null;
+      VirtualFile parentVFile = virtualFile.getParent();
+      if (parentVFile != null) {
+        PsiDirectory parentDirectory = psiManager.findDirectory(parentVFile);
+        if (parentDirectory != null) {
+          return parentDirectory;
+        }
+      }
+    }
+    return null;
+  }
 }
diff --git a/platform/lang-impl/src/com/intellij/ide/navigationToolbar/NavBarModel.java b/platform/lang-impl/src/com/intellij/ide/navigationToolbar/NavBarModel.java
index 98cf21272902..ddaa4682e896 100644
--- a/platform/lang-impl/src/com/intellij/ide/navigationToolbar/NavBarModel.java
+++ b/platform/lang-impl/src/com/intellij/ide/navigationToolbar/NavBarModel.java
@@ -33,9 +33,9 @@ import com.intellij.openapi.util.Computable;
 import com.intellij.openapi.util.Pair;
 import com.intellij.openapi.vfs.VirtualFile;
 import com.intellij.psi.*;
+import com.intellij.psi.util.PsiUtilCore;
 import com.intellij.util.CommonProcessors;
 import com.intellij.util.ObjectUtils;
-import com.intellij.util.PathUtil;
 import com.intellij.util.Processor;
 import com.intellij.util.containers.ContainerUtil;
 import org.jetbrains.annotations.NotNull;
@@ -174,7 +174,7 @@ public class NavBarModel {
       }
     });
 
-    setModel(updatedModel);
+    setModel(ContainerUtil.reverse(updatedModel));
   }
 
   void revalidate() {
@@ -215,81 +215,42 @@ public class NavBarModel {
     }
   }
 
-  private void traverseToRoot(@NotNull PsiElement psiElement, Set<VirtualFile> roots, List<Object> model) {
-    if (!psiElement.isValid()) return;
-    final PsiFile containingFile = psiElement.getContainingFile();
-    if (containingFile != null && containingFile.getVirtualFile() == null) return; //non physical elements
-    psiElement = getOriginalElement(psiElement);
-    PsiElement resultElement = psiElement;
+  private static void traverseToRoot(@NotNull PsiElement psiElement, Set<VirtualFile> roots, List<Object> model) {
+    if (!isValid(psiElement)) return;
 
-    resultElement = normalize(resultElement);
-    if (resultElement == null) return;
+    NavBarModelExtension[] extensions = Extensions.getExtensions(NavBarModelExtension.EP_NAME);
 
-    boolean foundByExtension = false;
-    for (final NavBarModelExtension modelExtension : Extensions.getExtensions(NavBarModelExtension.EP_NAME)) {
-      final PsiElement parent = modelExtension.getParent(resultElement);
-      if (parent != null) {
-        if (parent != resultElement) { // HACK is to return same element to stop traversing
-          traverseToRoot(parent, roots, model);
-        }
-        foundByExtension = true;
-        break;
-      }
-    }
+    for (PsiElement e = normalize(getOriginalElement(psiElement)), next = null;
+         e != null; e = normalize(getOriginalElement(next)), next = null) {
+      // check if we're running circles due to getParent()->normalize/adjust()
+      if (model.contains(e)) break;
 
-    if (!foundByExtension) {
-      if (containingFile != null) {
-        final PsiDirectory containingDirectory = containingFile.getContainingDirectory();
-        if (containingDirectory != null) {
-            traverseToRoot(containingDirectory, roots, model);
-          }
-      }
-      else if (psiElement instanceof PsiDirectory) {
-        final PsiDirectory psiDirectory = (PsiDirectory)psiElement;
+      model.add(e);
 
-        if (!roots.contains(psiDirectory.getVirtualFile())) {
-          PsiDirectory parentDirectory = psiDirectory.getParentDirectory();
+      // check if a root is reached
+      VirtualFile vFile = PsiUtilCore.getVirtualFile(e);
+      if (roots.contains(vFile)) break;
 
-          if (parentDirectory == null) {
-            VirtualFile jar = PathUtil.getLocalFile(psiDirectory.getVirtualFile());
-            if (ProjectRootManager.getInstance(myProject).getFileIndex().isInContent(jar)) {
-              parentDirectory = PsiManager.getInstance(myProject).findDirectory(jar.getParent());
-            }
-          }
-
-
-          if (parentDirectory != null) {
-            traverseToRoot(parentDirectory, roots, model);
-          }
-        }
-      }
-      else if (psiElement instanceof PsiFileSystemItem) {
-        final VirtualFile virtualFile = ((PsiFileSystemItem)psiElement).getVirtualFile();
-        if (virtualFile == null) return;
-        final PsiManager psiManager = PsiManager.getInstance(myProject);
-        if (virtualFile.isDirectory()) {
-          resultElement =  psiManager.findDirectory(virtualFile);
-        }
-        else {
-          resultElement =  psiManager.findFile(virtualFile);
-        }
-        if (resultElement == null) return;
-        final VirtualFile parentVFile = virtualFile.getParent();
-        if (parentVFile != null && !roots.contains(parentVFile)) {
-          final PsiDirectory parentDirectory = psiManager.findDirectory(parentVFile);
-          if (parentDirectory != null) {
-            traverseToRoot(parentDirectory, roots, model);
-          }
+      for (NavBarModelExtension ext : extensions) {
+        PsiElement parent = ext.getParent(e);
+        if (parent != null && parent != e) {
+          //noinspection AssignmentToForLoopParameter
+          next = parent;
+          break;
         }
       }
     }
-
-    model.add(resultElement);
   }
 
-  private static PsiElement getOriginalElement(PsiElement psiElement) {
-    final PsiElement originalElement = psiElement.getOriginalElement();
-    return !(psiElement instanceof PsiCompiledElement) && originalElement instanceof PsiCompiledElement ? psiElement : originalElement;
+  @Nullable
+  private static PsiElement getOriginalElement(@Nullable PsiElement e) {
+    if (e == null || !e.isValid()) return null;
+
+    PsiFile containingFile = e.getContainingFile();
+    if (containingFile != null && containingFile.getVirtualFile() == null) return null;
+
+    PsiElement orig = e.getOriginalElement();
+    return !(e instanceof PsiCompiledElement) && orig instanceof PsiCompiledElement ? e : orig;
   }