diff --git a/plugins/junit/java-tests/test/com/intellij/execution/junit/codeInspection/JavaJUnitMalformedDeclarationInspectionTest.kt b/plugins/junit/java-tests/test/com/intellij/execution/junit/codeInspection/JavaJUnitMalformedDeclarationInspectionTest.kt
index 20ff16ff68f9..35e8014636a8 100644
--- a/plugins/junit/java-tests/test/com/intellij/execution/junit/codeInspection/JavaJUnitMalformedDeclarationInspectionTest.kt
+++ b/plugins/junit/java-tests/test/com/intellij/execution/junit/codeInspection/JavaJUnitMalformedDeclarationInspectionTest.kt
@@ -652,6 +652,19 @@ class JavaJUnitMalformedDeclarationInspectionTest {
         void implicitConversionClass(Book book) { }
 
         static class Book { public Book(String title) { } }
+        
+        static class StaticInnerTest {
+          @org.junit.jupiter.params.ParameterizedTest
+          @org.junit.jupiter.params.provider.ValueSource(strings = {"1","2"})
+          public void test(String data) {}
+        }
+        
+        @org.junit.jupiter.api.Nested
+        class NestedInnerTest {
+          @org.junit.jupiter.params.ParameterizedTest
+          @org.junit.jupiter.params.provider.ValueSource(strings = {"1","2"})
+          public void test(String data) {}
+        }
       }
       
       class MethodSource {
@@ -974,6 +987,21 @@ class JavaJUnitMalformedDeclarationInspectionTest {
       }
     """.trimIndent())
     }
+    fun `test malformed ParameterizedTest inner class should be nested highlighting`() {
+      myFixture.testHighlighting(JvmLanguage.JAVA, """
+      class OuterTest {
+        @org.junit.jupiter.params.ParameterizedTest
+        @org.junit.jupiter.params.provider.ValueSource(strings = {"1","2"})
+        public void test(String data) {}
+      
+        class <error descr="Tests in nested class will not be executed">InnerTest</error> {
+          @org.junit.jupiter.params.ParameterizedTest
+          @org.junit.jupiter.params.provider.ValueSource(strings = {"1","2"})
+          public void test(String data) {}
+        }
+      }
+      """.trimIndent())
+    }
     fun `test malformed parameterized multiple types highlighting`() {
       myFixture.testHighlighting(JvmLanguage.JAVA, """
       class ValueSourcesTest {
diff --git a/plugins/junit/src/com/intellij/execution/junit/codeInspection/JUnitMalformedDeclarationInspection.kt b/plugins/junit/src/com/intellij/execution/junit/codeInspection/JUnitMalformedDeclarationInspection.kt
index 1ffdccd3d97a..1121b0d14ae8 100644
--- a/plugins/junit/src/com/intellij/execution/junit/codeInspection/JUnitMalformedDeclarationInspection.kt
+++ b/plugins/junit/src/com/intellij/execution/junit/codeInspection/JUnitMalformedDeclarationInspection.kt
@@ -386,7 +386,8 @@ private class JUnitMalformedSignatureVisitor(
     val javaClass = aClass.javaPsi
     if (aClass.isInterface || aClass.javaPsi.hasModifier(JvmModifier.ABSTRACT)) return
     val hasNestedAnnotation = javaClass.hasAnnotation(ORG_JUNIT_JUPITER_API_NESTED)
-    if (!hasNestedAnnotation && !aClass.methods.any { it.javaPsi.hasAnnotation(ORG_JUNIT_JUPITER_API_TEST) }) return
+    if (!hasNestedAnnotation && !aClass.methods.any { it.javaPsi.hasAnnotation(ORG_JUNIT_JUPITER_API_TEST) ||
+                                                      it.javaPsi.hasAnnotation(ORG_JUNIT_JUPITER_PARAMS_PARAMETERIZED_TEST)}) return
     if (!hasNestedAnnotation && aClass.isStatic) return
     if (hasNestedAnnotation && !aClass.isStatic && aClass.visibility != UastVisibility.PRIVATE) return
     val message = JUnitBundle.message("jvm.inspections.junit.malformed.missing.nested.annotation.descriptor")