diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/parsing/JetParsing.java b/compiler/frontend/src/org/jetbrains/jet/lang/parsing/JetParsing.java
index fa6da4f6347..26e6a05e9f8 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/parsing/JetParsing.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/parsing/JetParsing.java
@@ -1729,17 +1729,25 @@ public class JetParsing extends AbstractJetParsing {
      *   ;
      */
     private boolean parseFunctionParameterRest() {
-        expect(IDENTIFIER, "Parameter name expected", PARAMETER_NAME_RECOVERY_SET);
-
         boolean noErrors = true;
 
-        if (at(COLON)) {
-            advance(); // COLON
+        // Recovery for the case 'fun foo(Array<String>) {}'
+        if (at(IDENTIFIER) && lookahead(1) == LT) {
+            error("Parameter name expected");
             parseTypeRef();
+            noErrors = false;
         }
         else {
-            errorWithRecovery("Parameters must have type annotation", PARAMETER_NAME_RECOVERY_SET);
-            noErrors = false;
+            expect(IDENTIFIER, "Parameter name expected", PARAMETER_NAME_RECOVERY_SET);
+
+            if (at(COLON)) {
+                advance(); // COLON
+                parseTypeRef();
+            }
+            else {
+                errorWithRecovery("Parameters must have type annotation", PARAMETER_NAME_RECOVERY_SET);
+                noErrors = false;
+            }
         }
 
         if (at(EQ)) {
diff --git a/compiler/testData/psi/ParameterNameMising.kt b/compiler/testData/psi/ParameterNameMising.kt
new file mode 100644
index 00000000000..3a4887543e4
--- /dev/null
+++ b/compiler/testData/psi/ParameterNameMising.kt
@@ -0,0 +1,9 @@
+fun foo(Array<String>) : Unit {
+    var x : Int = 42
+    x += 1
+}
+
+fun bar(Array<String> = array("")) : Unit {
+    var x : Int = 42
+    x += 1
+}
\ No newline at end of file
diff --git a/compiler/testData/psi/ParameterNameMising.txt b/compiler/testData/psi/ParameterNameMising.txt
new file mode 100644
index 00000000000..718301cb67b
--- /dev/null
+++ b/compiler/testData/psi/ParameterNameMising.txt
@@ -0,0 +1,142 @@
+JetFile: ParameterNameMising.kt
+  NAMESPACE_HEADER
+    <empty list>
+  FUN
+    PsiElement(fun)('fun')
+    PsiWhiteSpace(' ')
+    PsiElement(IDENTIFIER)('foo')
+    VALUE_PARAMETER_LIST
+      PsiElement(LPAR)('(')
+      VALUE_PARAMETER
+        PsiErrorElement:Parameter name expected
+          <empty list>
+        TYPE_REFERENCE
+          USER_TYPE
+            REFERENCE_EXPRESSION
+              PsiElement(IDENTIFIER)('Array')
+            TYPE_ARGUMENT_LIST
+              PsiElement(LT)('<')
+              TYPE_PROJECTION
+                TYPE_REFERENCE
+                  USER_TYPE
+                    REFERENCE_EXPRESSION
+                      PsiElement(IDENTIFIER)('String')
+              PsiElement(GT)('>')
+      PsiElement(RPAR)(')')
+    PsiWhiteSpace(' ')
+    PsiElement(COLON)(':')
+    PsiWhiteSpace(' ')
+    TYPE_REFERENCE
+      USER_TYPE
+        REFERENCE_EXPRESSION
+          PsiElement(IDENTIFIER)('Unit')
+    PsiWhiteSpace(' ')
+    BLOCK
+      PsiElement(LBRACE)('{')
+      PsiWhiteSpace('\n    ')
+      PROPERTY
+        PsiElement(var)('var')
+        PsiWhiteSpace(' ')
+        PsiElement(IDENTIFIER)('x')
+        PsiWhiteSpace(' ')
+        PsiElement(COLON)(':')
+        PsiWhiteSpace(' ')
+        TYPE_REFERENCE
+          USER_TYPE
+            REFERENCE_EXPRESSION
+              PsiElement(IDENTIFIER)('Int')
+        PsiWhiteSpace(' ')
+        PsiElement(EQ)('=')
+        PsiWhiteSpace(' ')
+        INTEGER_CONSTANT
+          PsiElement(INTEGER_LITERAL)('42')
+      PsiWhiteSpace('\n    ')
+      BINARY_EXPRESSION
+        REFERENCE_EXPRESSION
+          PsiElement(IDENTIFIER)('x')
+        PsiWhiteSpace(' ')
+        OPERATION_REFERENCE
+          PsiElement(PLUSEQ)('+=')
+        PsiWhiteSpace(' ')
+        INTEGER_CONSTANT
+          PsiElement(INTEGER_LITERAL)('1')
+      PsiWhiteSpace('\n')
+      PsiElement(RBRACE)('}')
+  PsiWhiteSpace('\n\n')
+  FUN
+    PsiElement(fun)('fun')
+    PsiWhiteSpace(' ')
+    PsiElement(IDENTIFIER)('bar')
+    VALUE_PARAMETER_LIST
+      PsiElement(LPAR)('(')
+      VALUE_PARAMETER
+        MODIFIER_LIST
+          ANNOTATION_ENTRY
+            CONSTRUCTOR_CALLEE
+              TYPE_REFERENCE
+                USER_TYPE
+                  REFERENCE_EXPRESSION
+                    PsiElement(IDENTIFIER)('Array')
+                  TYPE_ARGUMENT_LIST
+                    PsiElement(LT)('<')
+                    TYPE_PROJECTION
+                      TYPE_REFERENCE
+                        USER_TYPE
+                          REFERENCE_EXPRESSION
+                            PsiElement(IDENTIFIER)('String')
+                    PsiElement(GT)('>')
+        PsiErrorElement:Parameter name expected
+          <empty list>
+        PsiWhiteSpace(' ')
+        PsiElement(EQ)('=')
+        PsiWhiteSpace(' ')
+        CALL_EXPRESSION
+          REFERENCE_EXPRESSION
+            PsiElement(IDENTIFIER)('array')
+          VALUE_ARGUMENT_LIST
+            PsiElement(LPAR)('(')
+            VALUE_ARGUMENT
+              STRING_TEMPLATE
+                PsiElement(OPEN_QUOTE)('"')
+                PsiElement(CLOSING_QUOTE)('"')
+            PsiElement(RPAR)(')')
+      PsiElement(RPAR)(')')
+    PsiWhiteSpace(' ')
+    PsiElement(COLON)(':')
+    PsiWhiteSpace(' ')
+    TYPE_REFERENCE
+      USER_TYPE
+        REFERENCE_EXPRESSION
+          PsiElement(IDENTIFIER)('Unit')
+    PsiWhiteSpace(' ')
+    BLOCK
+      PsiElement(LBRACE)('{')
+      PsiWhiteSpace('\n    ')
+      PROPERTY
+        PsiElement(var)('var')
+        PsiWhiteSpace(' ')
+        PsiElement(IDENTIFIER)('x')
+        PsiWhiteSpace(' ')
+        PsiElement(COLON)(':')
+        PsiWhiteSpace(' ')
+        TYPE_REFERENCE
+          USER_TYPE
+            REFERENCE_EXPRESSION
+              PsiElement(IDENTIFIER)('Int')
+        PsiWhiteSpace(' ')
+        PsiElement(EQ)('=')
+        PsiWhiteSpace(' ')
+        INTEGER_CONSTANT
+          PsiElement(INTEGER_LITERAL)('42')
+      PsiWhiteSpace('\n    ')
+      BINARY_EXPRESSION
+        REFERENCE_EXPRESSION
+          PsiElement(IDENTIFIER)('x')
+        PsiWhiteSpace(' ')
+        OPERATION_REFERENCE
+          PsiElement(PLUSEQ)('+=')
+        PsiWhiteSpace(' ')
+        INTEGER_CONSTANT
+          PsiElement(INTEGER_LITERAL)('1')
+      PsiWhiteSpace('\n')
+      PsiElement(RBRACE)('}')
\ No newline at end of file