diff --git a/json/src/com/jetbrains/jsonSchema/impl/JsonSchemaObject.java b/json/src/com/jetbrains/jsonSchema/impl/JsonSchemaObject.java
index 31b271f89d86..f0a6f31c5ef1 100644
--- a/json/src/com/jetbrains/jsonSchema/impl/JsonSchemaObject.java
+++ b/json/src/com/jetbrains/jsonSchema/impl/JsonSchemaObject.java
@@ -102,8 +102,7 @@ public class JsonSchemaObject {
   // peer pointer is not merged!
   public void mergeValues(@NotNull JsonSchemaObject other) {
     // we do not copy id, schema
-
-    myProperties.putAll(other.myProperties);
+    mergeProperties(this, other);
     myDefinitionsMap = copyMap(myDefinitionsMap, other.myDefinitionsMap);
     final Map<String, JsonSchemaObject> map = copyMap(myPatternProperties == null ? null : myPatternProperties.mySchemasMap,
                                                       other.myPatternProperties == null ? null : other.myPatternProperties.mySchemasMap);
@@ -161,6 +160,20 @@ public class JsonSchemaObject {
     myShouldValidateAgainstJSType |= other.myShouldValidateAgainstJSType;
   }
 
+  private static void mergeProperties(@NotNull JsonSchemaObject thisObject, @NotNull JsonSchemaObject otherObject) {
+    for (Map.Entry<String, JsonSchemaObject> prop: otherObject.myProperties.entrySet()) {
+      String key = prop.getKey();
+      JsonSchemaObject otherProp = prop.getValue();
+      if (!thisObject.myProperties.containsKey(key)) {
+        thisObject.myProperties.put(key, otherProp);
+      }
+      else {
+        JsonSchemaObject existingProp = thisObject.myProperties.get(key);
+        thisObject.myProperties.put(key, JsonSchemaVariantsTreeBuilder.merge(existingProp, otherProp, otherProp));
+      }
+    }
+  }
+
   public void shouldValidateAgainstJSType() {
     myShouldValidateAgainstJSType = true;
   }
diff --git a/json/tests/test/com/jetbrains/jsonSchema/impl/JsonBySchemaCompletionTest.kt b/json/tests/test/com/jetbrains/jsonSchema/impl/JsonBySchemaCompletionTest.kt
index d6f4acedbe2e..a182810b1979 100644
--- a/json/tests/test/com/jetbrains/jsonSchema/impl/JsonBySchemaCompletionTest.kt
+++ b/json/tests/test/com/jetbrains/jsonSchema/impl/JsonBySchemaCompletionTest.kt
@@ -281,7 +281,7 @@ class JsonBySchemaCompletionTest : JsonBySchemaCompletionBaseTest() {
   }
 
   @Throws(Exception::class)
-  private fun testImpl(schema: String, text: String,
+  private fun testImpl(@Language("JSON") schema: String, text: String,
                        vararg variants: String) {
     testBySchema(schema, text, ".json", *variants)
   }
@@ -352,4 +352,28 @@ class JsonBySchemaCompletionTest : JsonBySchemaCompletionBaseTest() {
     testImpl(ifThenElseSchema, """{"a": 5, "c": <caret>}""", "false", "true")
     Assert.assertEquals(2, myItems.size.toLong())
   }
+
+  @Throws(Exception::class)
+  fun testNestedPropsMerging() {
+    testImpl("""{
+  "allOf": [
+    {
+      "properties": {
+        "severity": {
+          "type": "string",
+          "enum": ["a", "b"]
+        }
+      }
+    },
+    {
+      "properties": {
+        "severity": {
+        }
+      }
+    }
+  ]
+}""","""{
+  "severity": <caret>
+}""", "\"a\"", "\"b\"");
+  }
 }