diff --git a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
index 36eb5f0512ea..05da60992408 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
@@ -904,9 +904,11 @@ public class HighlightUtil extends HighlightUtilBase {
         else {
           //noinspection DuplicateExpressions
           if (PsiModifier.STATIC.equals(modifier) || privateOrProtected || PsiModifier.PACKAGE_LOCAL.equals(modifier)) {
-            isAllowed = modifierOwnerParent instanceof PsiClass &&
+            isAllowed = modifierOwnerParent instanceof PsiClass && ((PsiClass)modifierOwnerParent).getQualifiedName() != null ||
+                        modifierOwnerParent instanceof PsiDeclarationStatement && aClass.isRecord() ||            
+                        FileTypeUtils.isInServerPageFile(modifierOwnerParent) || 
                         // non-physical dummy holder might not have FQN
-                        ((PsiClass)modifierOwnerParent).getQualifiedName() != null || FileTypeUtils.isInServerPageFile(modifierOwnerParent) || !modifierOwnerParent.isPhysical();
+                        !modifierOwnerParent.isPhysical();
           }
           if (privateOrProtected && !isAllowed) {
             fix = QUICK_FIX_FACTORY.createChangeModifierFix();
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingRecords/LocalRecords.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingRecords/LocalRecords.java
new file mode 100644
index 000000000000..0c6a1dd6d95c
--- /dev/null
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlightingRecords/LocalRecords.java
@@ -0,0 +1,27 @@
+class Foo {
+  void test() {
+    record NoComponent() {}
+    
+    static record DeclaredStatic() {}
+  }
+  
+  static int STATIC_VAR = 3;
+  
+  int instanceVar;
+  
+  void capture() {
+    int outerLocal = 2;
+    final int compileTimeConstant = 3;
+    record Local() {
+      static int X = 2;
+      
+      void test() {
+        System.out.println(STATIC_VAR);
+        System.out.println(<error descr="Non-static field 'instanceVar' cannot be referenced from a static context">instanceVar</error>);
+        System.out.println(<error descr="Non-static variable 'outerLocal' cannot be referenced from a static context">outerLocal</error>);
+        System.out.println(X);
+        System.out.println(compileTimeConstant);
+      }
+    }
+  }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightRecordsHighlightingTest.java b/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightRecordsHighlightingTest.java
index 84b49cd803ca..7d1f46a81380 100644
--- a/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightRecordsHighlightingTest.java
+++ b/java/java-tests/testSrc/com/intellij/java/codeInsight/daemon/LightRecordsHighlightingTest.java
@@ -30,6 +30,9 @@ public class LightRecordsHighlightingTest extends LightJavaCodeInsightFixtureTes
   public void testRecordCompactConstructors() {
     doTest();
   }
+  public void testLocalRecords() {
+    doTest();
+  }
 
   private void doTest() {
     myFixture.addClass("package java.lang; public abstract class Record {" +