diff --git a/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java b/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
index 06d99a93af8..f1ef1d6e5e8 100644
--- a/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
+++ b/compiler/backend/src/org/jetbrains/jet/codegen/ExpressionCodegen.java
@@ -1045,7 +1045,9 @@ public class ExpressionCodegen extends JetVisitor<StackValue, StackValue> implem
     @Override
     public StackValue visitBlockExpression(JetBlockExpression expression, StackValue receiver) {
         List<JetElement> statements = expression.getStatements();
-        return generateBlock(statements);
+        JetType unitType = KotlinBuiltIns.getInstance().getUnitType();
+        boolean lastStatementIsExpression = !unitType.equals(bindingContext.get(EXPRESSION_TYPE, expression));
+        return generateBlock(statements, lastStatementIsExpression);
     }
 
     @Override
@@ -1069,7 +1071,7 @@ public class ExpressionCodegen extends JetVisitor<StackValue, StackValue> implem
         //noinspection ConstantConditions
         if (bindingContext.get(BindingContext.BLOCK, expression)) {
             //noinspection ConstantConditions
-            return generateBlock(expression.getFunctionLiteral().getBodyExpression().getStatements());
+            return gen(expression.getFunctionLiteral().getBodyExpression());
         }
         else {
             return genClosure(expression);
@@ -1165,7 +1167,7 @@ public class ExpressionCodegen extends JetVisitor<StackValue, StackValue> implem
         }
     }
 
-    private StackValue generateBlock(List<JetElement> statements) {
+    private StackValue generateBlock(List<JetElement> statements, boolean lastStatementIsExpression) {
         final Label blockEnd = new Label();
 
         List<Function<StackValue, Void>> leaveTasks = Lists.newArrayList();
@@ -1197,9 +1199,9 @@ public class ExpressionCodegen extends JetVisitor<StackValue, StackValue> implem
                 generateLocalFunctionDeclaration((JetNamedFunction) statement, leaveTasks);
             }
 
-            boolean isStatement = iterator.hasNext() || !isInsideNonUnitFunction();
+            boolean isExpression = !iterator.hasNext() && lastStatementIsExpression;
 
-            StackValue result = isStatement ? genStatement(statement) : gen(statement);
+            StackValue result = isExpression ? gen(statement) : genStatement(statement);
 
             if (!iterator.hasNext()) {
                 answer = result;
@@ -1218,12 +1220,6 @@ public class ExpressionCodegen extends JetVisitor<StackValue, StackValue> implem
         return answer;
     }
 
-    private boolean isInsideNonUnitFunction() {
-        DeclarationDescriptor descriptor = context.getContextDescriptor();
-        JetType unit = KotlinBuiltIns.getInstance().getUnitType();
-        return descriptor instanceof CallableDescriptor && !unit.equals(((CallableDescriptor) descriptor).getReturnType());
-    }
-
     private void generateLocalVariableDeclaration(
             @NotNull JetVariableDeclaration variableDeclaration,
             final @NotNull Label blockEnd,
diff --git a/compiler/testData/codegen/regressions/kt3203_1.kt b/compiler/testData/codegen/regressions/kt3203_1.kt
new file mode 100644
index 00000000000..a1b72471df1
--- /dev/null
+++ b/compiler/testData/codegen/regressions/kt3203_1.kt
@@ -0,0 +1,19 @@
+fun testIf() {
+    val condition = true
+    val result = if (condition) {
+        val hello: String? = "hello"
+        if (hello == null) {
+            false
+        }
+        else {
+            true
+        }
+    }
+    else true
+    if (!result) throw AssertionError("result is false")
+}
+
+fun box(): String {
+    testIf()
+    return "OK"
+}
diff --git a/compiler/testData/codegen/regressions/kt3203_2.kt b/compiler/testData/codegen/regressions/kt3203_2.kt
new file mode 100644
index 00000000000..bde4cc3fe77
--- /dev/null
+++ b/compiler/testData/codegen/regressions/kt3203_2.kt
@@ -0,0 +1,20 @@
+fun check1() {
+    val result = if (true) {
+        if (true) 1 else 2
+    }
+    else 3
+    if (result != 1) throw AssertionError("result: $result")
+}
+
+fun check2() {
+    val result = if (true)
+        if (true) 1 else 2
+    else 3
+    if (result != 1) throw AssertionError("result: $result")
+}
+
+fun box(): String {
+    check1()
+    check2()
+    return "OK"
+}
diff --git a/compiler/tests/org/jetbrains/jet/codegen/ControlStructuresTest.java b/compiler/tests/org/jetbrains/jet/codegen/ControlStructuresTest.java
index e0b98c9ef23..bd3b57c0981 100644
--- a/compiler/tests/org/jetbrains/jet/codegen/ControlStructuresTest.java
+++ b/compiler/tests/org/jetbrains/jet/codegen/ControlStructuresTest.java
@@ -476,4 +476,14 @@ public class ControlStructuresTest extends CodegenTestCase {
         createEnvironmentWithMockJdkAndIdeaAnnotations(ConfigurationKind.JDK_ONLY);
         blackBoxFile("regressions/kt3087.kt");
     }
+
+    public void testKt3203_1() {
+        createEnvironmentWithMockJdkAndIdeaAnnotations(ConfigurationKind.JDK_ONLY);
+        blackBoxFile("regressions/kt3203_1.kt");
+    }
+
+    public void testKt3203_2() {
+        createEnvironmentWithMockJdkAndIdeaAnnotations(ConfigurationKind.JDK_ONLY);
+        blackBoxFile("regressions/kt3203_2.kt");
+    }
 }