diff --git a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/JavaGenericsUtil.java b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/JavaGenericsUtil.java
index 3a5df04091fa..fc39ddef9f41 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/JavaGenericsUtil.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/JavaGenericsUtil.java
@@ -281,7 +281,7 @@ public class JavaGenericsUtil {
       if (typeParameter == null) return null;
       PsiClass owner = (PsiClass)typeParameter.getOwner();
       if (owner == null) return null;
-      PsiSubstitutor superClassSubstitutor = TypeConversionUtil.getClassSubstitutor(owner, aClass, PsiSubstitutor.EMPTY);
+      PsiSubstitutor superClassSubstitutor = TypeConversionUtil.getClassSubstitutor(owner, aClass, substitutor);
       if (superClassSubstitutor == null) return null;
       PsiType itemType = superClassSubstitutor.substitute(typeParameter);
       itemType = substitutor.substitute(itemType);
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA124271.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA124271.java
new file mode 100644
index 000000000000..98869422a2a2
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting/IDEA124271.java
@@ -0,0 +1,9 @@
+
+interface Container<T extends Content> extends Iterable<T> {}
+interface Content {}
+
+class Main {
+  public static void doSomething(Container container) {
+    for (<error descr="Incompatible types. Found: 'java.lang.Object', required: 'Content'">Content content : container</error>) {}
+  }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
index aaf4d57b87a1..bf74b4eb756d 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/GenericsHighlightingTest.java
@@ -347,6 +347,7 @@ public class GenericsHighlightingTest extends LightDaemonAnalyzerTestCase {
   public void testIDEA123518() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
   public void testIDEA64103() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
   public void testIDEA123338() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
+  public void testIDEA124271() { doTest(LanguageLevel.JDK_1_7, JavaSdkVersion.JDK_1_7, false); }
 
   public void testJavaUtilCollections_NoVerify() throws Exception {
     PsiClass collectionsClass = getJavaFacade().findClass("java.util.Collections", GlobalSearchScope.moduleWithLibrariesScope(getModule()));