diff --git a/python/psi-api/src/com/jetbrains/python/psi/PyElementVisitor.java b/python/psi-api/src/com/jetbrains/python/psi/PyElementVisitor.java
index 18444383b3f8..0dd970faf51e 100644
--- a/python/psi-api/src/com/jetbrains/python/psi/PyElementVisitor.java
+++ b/python/psi-api/src/com/jetbrains/python/psi/PyElementVisitor.java
@@ -257,4 +257,8 @@ public class PyElementVisitor extends PsiElementVisitor {
   public void visitPyKeywordArgument(PyKeywordArgument node) {
     visitPyElement(node);
   }
+
+  public void visitPyWithItem(PyWithItem node) {
+    visitPyElement(node);
+  }
 }
diff --git a/python/src/com/jetbrains/python/psi/impl/PyWithItemImpl.java b/python/src/com/jetbrains/python/psi/impl/PyWithItemImpl.java
index 6347eae5f95f..2db3c0ad9755 100644
--- a/python/src/com/jetbrains/python/psi/impl/PyWithItemImpl.java
+++ b/python/src/com/jetbrains/python/psi/impl/PyWithItemImpl.java
@@ -3,6 +3,7 @@ package com.jetbrains.python.psi.impl;
 import com.intellij.lang.ASTNode;
 import com.intellij.psi.PsiElement;
 import com.jetbrains.python.PyTokenTypes;
+import com.jetbrains.python.psi.PyElementVisitor;
 import com.jetbrains.python.psi.PyExpression;
 import com.jetbrains.python.psi.PyWithItem;
 
@@ -14,6 +15,11 @@ public class PyWithItemImpl extends PyElementImpl implements PyWithItem {
     super(astNode);
   }
 
+  @Override
+  protected void acceptPyVisitor(PyElementVisitor pyVisitor) {
+    pyVisitor.visitPyWithItem(this);
+  }
+
   @Override
   public PyExpression getExpression() {
     ASTNode[] children = getNode().getChildren(null);
diff --git a/python/src/com/jetbrains/python/validation/AssignTargetAnnotator.java b/python/src/com/jetbrains/python/validation/AssignTargetAnnotator.java
index e3c7203ba1e2..b47220fed5e5 100644
--- a/python/src/com/jetbrains/python/validation/AssignTargetAnnotator.java
+++ b/python/src/com/jetbrains/python/validation/AssignTargetAnnotator.java
@@ -12,7 +12,7 @@ import static com.jetbrains.python.PyBundle.message;
  */
 public class AssignTargetAnnotator extends PyAnnotator {
   private enum Operation {
-    Assign, AugAssign, Delete, Except, For
+    Assign, AugAssign, Delete, Except, For, With
   }
 
   @Override
@@ -51,6 +51,14 @@ public class AssignTargetAnnotator extends PyAnnotator {
     }
   }
 
+  @Override
+  public void visitPyWithItem(PyWithItem node) {
+    PyExpression target = node.getTarget();
+    if (target != null) {
+      target.accept(new ExprVisitor(Operation.With));
+    }
+  }
+
   private class ExprVisitor extends PyElementVisitor {
     private final Operation myOp;
     private final String DELETING_NONE = message("ANN.deleting.none");
diff --git a/python/testData/highlighting/assignmentTargetWith.py b/python/testData/highlighting/assignmentTargetWith.py
new file mode 100644
index 000000000000..f516b41c6b1a
--- /dev/null
+++ b/python/testData/highlighting/assignmentTargetWith.py
@@ -0,0 +1,2 @@
+with open("") as <error descr="can't assign to operator">my_<<var</error>:
+    pass
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/PythonHighlightingTest.java b/python/testSrc/com/jetbrains/python/PythonHighlightingTest.java
index de14792f8a33..2797bf34e2ac 100644
--- a/python/testSrc/com/jetbrains/python/PythonHighlightingTest.java
+++ b/python/testSrc/com/jetbrains/python/PythonHighlightingTest.java
@@ -65,6 +65,11 @@ public class PythonHighlightingTest extends PyTestCase {
     doTest(true, false);
   }
 
+  public void testAssignmentTargetWith() {  // PY-7529
+    setLanguageLevel(LanguageLevel.PYTHON27);
+    doTest(true, false);
+  }
+
   public void testAssignmentTargets3K() {
     doTest(LanguageLevel.PYTHON30, true, false);    
   }