diff --git a/java/java-psi-api/src/com/intellij/psi/util/MethodSignatureUtil.java b/java/java-psi-api/src/com/intellij/psi/util/MethodSignatureUtil.java
index f6553508a3d7..a7c3ca7b3ffd 100644
--- a/java/java-psi-api/src/com/intellij/psi/util/MethodSignatureUtil.java
+++ b/java/java-psi-api/src/com/intellij/psi/util/MethodSignatureUtil.java
@@ -23,7 +23,10 @@ import org.jetbrains.annotations.NonNls;
 import org.jetbrains.annotations.NotNull;
 import org.jetbrains.annotations.Nullable;
 
-import java.util.*;
+import java.util.Arrays;
+import java.util.HashSet;
+import java.util.List;
+import java.util.Set;
 
 
 public class MethodSignatureUtil {
@@ -320,16 +323,20 @@ public class MethodSignatureUtil {
       result = result.put(superTypeParameters[i], factory.createType(methodTypeParameter));
     }
 
+    final PsiSubstitutor methodSubstitutor = methodSignature.getSubstitutor();
+
     //check bounds
     for (int i = 0; i < methodTypeParameters.length; i++) {
       PsiTypeParameter methodTypeParameter = methodTypeParameters[i];
       PsiTypeParameter superTypeParameter = superTypeParameters[i];
       final Set<PsiType> methodSupers = new HashSet<PsiType>();
-      Collections.addAll(methodSupers, methodTypeParameter.getSuperTypes());
+      for (PsiClassType methodSuper : methodTypeParameter.getSuperTypes()) {
+        methodSupers.add(methodSubstitutor.substitute(methodSuper));
+      }
 
       final Set<PsiType> superSupers = new HashSet<PsiType>();
       for (PsiClassType superSuper : superTypeParameter.getSuperTypes()) {
-        superSupers.add(result.substitute(superSuper));
+        superSupers.add(methodSubstitutor.substitute(result.substitute(superSuper)));
       }
       methodSupers.remove(PsiType.getJavaLangObject(methodTypeParameter.getManager(), methodTypeParameter.getResolveScope()));
       superSupers.remove(PsiType.getJavaLangObject(superTypeParameter.getManager(), superTypeParameter.getResolveScope()));
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting8/UnifiedSubstitutorUpInTheHierarchy.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting8/UnifiedSubstitutorUpInTheHierarchy.java
new file mode 100644
index 000000000000..8ee848cca3e2
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/genericsHighlighting8/UnifiedSubstitutorUpInTheHierarchy.java
@@ -0,0 +1,20 @@
+import java.io.Serializable;
+import java.math.BigInteger;
+
+class C extends B<String, BigInteger> {
+  @Override
+  public <S extends String> S save(S entity) {
+    return super.save(entity);
+  }
+}
+
+
+class B<T, ID extends Serializable> implements A<T, ID> {
+  public <S extends T> S save(S entity) {
+    return null;
+  }
+}
+
+interface A<T, ID extends Serializable>  {
+  <S extends T> S save(S var1);
+}
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GenericsHighlighting8Test.java b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GenericsHighlighting8Test.java
index 21f506801484..d0eb309d8ae2 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GenericsHighlighting8Test.java
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/daemon/lambda/GenericsHighlighting8Test.java
@@ -986,4 +986,8 @@ public class GenericsHighlighting8Test extends LightDaemonAnalyzerTestCase {
   public void testUncheckedWarningsInsideIncorporationPhase() throws Exception {
     doTest();
   }
+
+  public void testUnifiedSubstitutorUpInTheHierarchy() throws Exception {
+    doTest();
+  }
 }