diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/ConstructorDescriptorImpl.java b/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/ConstructorDescriptorImpl.java
index e1cd53f01e8..1d6e0acc47c 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/ConstructorDescriptorImpl.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/ConstructorDescriptorImpl.java
@@ -48,7 +48,6 @@ public class ConstructorDescriptorImpl extends FunctionDescriptorImpl implements
         return initialize(typeParameters, unsubstitutedValueParameters, visibility, false);
     }
 
-    //isStatic - for java only
     public ConstructorDescriptorImpl initialize(@NotNull List<TypeParameterDescriptor> typeParameters, @NotNull List<ValueParameterDescriptor> unsubstitutedValueParameters, Visibility visibility, boolean isStatic) {
         super.initialize(null, isStatic ? NO_RECEIVER_PARAMETER : getExpectedThisObject(getContainingDeclaration()), typeParameters, unsubstitutedValueParameters, null, Modality.FINAL, visibility);
         return this;
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/Errors.java b/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/Errors.java
index 0f6fb32e420..be9af1d9ded 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/Errors.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/Errors.java
@@ -521,6 +521,8 @@ public interface Errors {
     SimpleDiagnosticFactory<JetRootNamespaceExpression> NAMESPACE_IS_NOT_AN_EXPRESSION = SimpleDiagnosticFactory.create(ERROR);
     DiagnosticFactory1<JetSimpleNameExpression, ClassifierDescriptor> NO_CLASS_OBJECT = DiagnosticFactory1.create(ERROR);
 
+    DiagnosticFactory1<PsiElement, ClassDescriptor> INACCESSIBLE_OUTER_CLASS_EXPRESSION = DiagnosticFactory1.create(ERROR);
+
     ////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
 
     // This field is needed to make the Initializer class load (interfaces cannot have static initializers)
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/rendering/DefaultErrorMessages.java b/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/rendering/DefaultErrorMessages.java
index 5e5fc57e97b..a675fd343ec 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/rendering/DefaultErrorMessages.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/diagnostics/rendering/DefaultErrorMessages.java
@@ -229,6 +229,8 @@ public class DefaultErrorMessages {
         MAP.put(NO_CLASS_OBJECT, "Please specify constructor invocation; classifier ''{0}'' does not have a class object", NAME);
         MAP.put(NO_GENERICS_IN_SUPERTYPE_SPECIFIER, "Generic arguments of the base type must be specified");
 
+        MAP.put(INACCESSIBLE_OUTER_CLASS_EXPRESSION, "Expression is inaccessible from a nested class ''{0}'', use ''inner'' keyword to make the class inner", NAME);
+
         MAP.put(HAS_NEXT_MISSING, "hasNext() cannot be called on iterator() of type ''{0}''", RENDER_TYPE);
         MAP.put(HAS_NEXT_FUNCTION_AMBIGUITY, "hasNext() is ambiguous for iterator() of type ''{0}''", RENDER_TYPE);
         MAP.put(HAS_NEXT_FUNCTION_NONE_APPLICABLE, "None of the hasNext() functions is applicable for iterator() of type ''{0}''", RENDER_TYPE);
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java
index 9519e854213..ceb4309a7d6 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorResolver.java
@@ -48,8 +48,7 @@ import java.util.*;
 import static org.jetbrains.jet.lang.descriptors.ReceiverParameterDescriptor.NO_RECEIVER_PARAMETER;
 import static org.jetbrains.jet.lang.diagnostics.Errors.*;
 import static org.jetbrains.jet.lang.resolve.BindingContext.CONSTRUCTOR;
-import static org.jetbrains.jet.lang.resolve.DescriptorUtils.getDefaultConstructorVisibility;
-import static org.jetbrains.jet.lang.resolve.DescriptorUtils.getExpectedThisObjectIfNeeded;
+import static org.jetbrains.jet.lang.resolve.DescriptorUtils.*;
 import static org.jetbrains.jet.lang.resolve.ModifiersChecker.*;
 import static org.jetbrains.jet.lexer.JetTokens.OVERRIDE_KEYWORD;
 
@@ -1157,7 +1156,8 @@ public class DescriptorResolver {
                         constructorDescriptor,
                         parameterScope,
                         valueParameters, trace),
-                resolveVisibilityFromModifiers(modifierList, getDefaultConstructorVisibility(classDescriptor)));
+                resolveVisibilityFromModifiers(modifierList, getDefaultConstructorVisibility(classDescriptor)),
+                DescriptorUtils.isConstructorOfStaticNestedClass(constructorDescriptor));
     }
 
     @Nullable
@@ -1351,4 +1351,35 @@ public class DescriptorResolver {
             }
         };
     }
+
+    public static boolean checkHasOuterClassInstance(
+            @NotNull JetScope scope,
+            @NotNull BindingTrace trace,
+            @NotNull PsiElement reportErrorsOn,
+            @NotNull ClassDescriptor target
+    ) {
+        ClassDescriptor thisClass = getContainingClass(scope);
+        if (thisClass == null) return true;
+        if (!isAncestor(target, thisClass, true)) return true;
+
+        if (!hasOuterClassInstance(thisClass, target)) {
+            trace.report(INACCESSIBLE_OUTER_CLASS_EXPRESSION.on(reportErrorsOn, thisClass));
+            return false;
+        }
+        return true;
+    }
+
+    private static boolean hasOuterClassInstance(@NotNull ClassDescriptor thisClass, @NotNull ClassDescriptor outerClass) {
+        DeclarationDescriptor descriptor = thisClass;
+        while (true) {
+            assert descriptor != null : "outerClass must be an ancestor of thisClass: " + thisClass + " " + outerClass;
+            if (descriptor instanceof ClassDescriptor && isSubclass((ClassDescriptor) descriptor, outerClass)) {
+                return true;
+            }
+            if (isStaticNestedClass(descriptor)) {
+                return false;
+            }
+            descriptor = descriptor.getContainingDeclaration();
+        }
+    }
 }
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorUtils.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorUtils.java
index d5bce089b93..730f493690b 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorUtils.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/DescriptorUtils.java
@@ -27,6 +27,7 @@ import org.jetbrains.jet.lang.resolve.constants.CompileTimeConstant;
 import org.jetbrains.jet.lang.resolve.name.FqName;
 import org.jetbrains.jet.lang.resolve.name.FqNameUnsafe;
 import org.jetbrains.jet.lang.resolve.name.Name;
+import org.jetbrains.jet.lang.resolve.scopes.JetScope;
 import org.jetbrains.jet.lang.resolve.scopes.receivers.ReceiverValue;
 import org.jetbrains.jet.lang.types.DescriptorSubstitutor;
 import org.jetbrains.jet.lang.types.JetType;
@@ -426,4 +427,25 @@ public class DescriptorUtils {
         }
         return parameterTypes;
     }
+
+    public static boolean isConstructorOfStaticNestedClass(@Nullable CallableDescriptor descriptor) {
+        return descriptor instanceof ConstructorDescriptor && isStaticNestedClass(descriptor.getContainingDeclaration());
+    }
+
+    /**
+     * @return true if descriptor is a class inside another class and does not have access to the outer class
+     */
+    public static boolean isStaticNestedClass(@NotNull DeclarationDescriptor descriptor) {
+        DeclarationDescriptor containing = descriptor.getContainingDeclaration();
+        return descriptor instanceof ClassDescriptor &&
+               containing instanceof ClassDescriptor &&
+               !((ClassDescriptor) descriptor).isInner() &&
+               !((ClassDescriptor) containing).getKind().isObject();
+    }
+
+    @Nullable
+    public static ClassDescriptor getContainingClass(@NotNull JetScope scope) {
+        DeclarationDescriptor containingDeclaration = scope.getContainingDeclaration();
+        return getParentOfType(containingDeclaration, ClassDescriptor.class, false);
+    }
 }
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/CandidateResolver.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/CandidateResolver.java
index 116b0a60b54..8ecaa16b105 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/CandidateResolver.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/CandidateResolver.java
@@ -80,6 +80,11 @@ public class CandidateResolver {
             return;
         }
 
+        if (!checkOuterClassMemberIsAccessible(context)) {
+            candidateCall.addStatus(OTHER_ERROR);
+            return;
+        }
+
         if (!Visibilities.isVisible(candidate, context.scope.getContainingDeclaration())) {
             candidateCall.addStatus(OTHER_ERROR);
             context.tracing.invisibleMember(context.trace, candidate);
@@ -162,6 +167,24 @@ public class CandidateResolver {
         AutoCastUtils.recordAutoCastIfNecessary(candidateCall.getThisObject(), candidateCall.getTrace());
     }
 
+    private static boolean checkOuterClassMemberIsAccessible(@NotNull CallResolutionContext<?, ?> context) {
+        // In "this@Outer.foo()" the error will be reported on "this@Outer" instead
+        if (context.call.getExplicitReceiver().exists()) return true;
+
+        ClassDescriptor candidateThis = getDeclaringClass(context.candidateCall.getCandidateDescriptor());
+        if (candidateThis == null || candidateThis.getKind().isObject()) return true;
+
+        return DescriptorResolver.checkHasOuterClassInstance(context.scope, context.trace, context.call.getCallElement(), candidateThis);
+    }
+
+    @Nullable
+    private static ClassDescriptor getDeclaringClass(@NotNull CallableDescriptor candidate) {
+        ReceiverParameterDescriptor expectedThis = candidate.getExpectedThisObject();
+        if (expectedThis == null) return null;
+        DeclarationDescriptor descriptor = expectedThis.getContainingDeclaration();
+        return descriptor instanceof ClassDescriptor ? (ClassDescriptor) descriptor : null;
+    }
+
     public <D extends CallableDescriptor> void completeTypeInferenceDependentOnExpectedTypeForCall(
             CallResolutionContext<D, D> context
     ) {
diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/tasks/TaskPrioritizer.java b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/tasks/TaskPrioritizer.java
index a2d80418ba4..dec5f1eb2e4 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/tasks/TaskPrioritizer.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/resolve/calls/tasks/TaskPrioritizer.java
@@ -175,6 +175,10 @@ public abstract class TaskPrioritizer {
         for (ReceiverValue thisObject : thisObjects) {
             for (ReceiverValue receiverParameter : receiverParameters) {
                 for (D extension : descriptors) {
+                    if (DescriptorUtils.isConstructorOfStaticNestedClass(extension)) {
+                        // We don't want static nested classes' constructors to be resolved with expectedThisObject
+                        continue;
+                    }
                     ResolutionCandidate<D> candidate = ResolutionCandidate.create(extension);
                     candidate.setThisObject(thisObject);
                     candidate.setReceiverArgument(receiverParameter);
diff --git a/compiler/testData/codegen/classes/inheritedInnerClass.jet b/compiler/testData/codegen/classes/inheritedInnerClass.jet
index 4717bea55a8..82bd91e93cd 100644
--- a/compiler/testData/codegen/classes/inheritedInnerClass.jet
+++ b/compiler/testData/codegen/classes/inheritedInnerClass.jet
@@ -1,8 +1,8 @@
 class Outer() {
-  open class InnerBase() {
+  open inner class InnerBase() {
   }
 
-  class InnerDerived(): InnerBase() {
+  inner class InnerDerived(): InnerBase() {
   }
 
   public val foo: InnerBase? = InnerDerived()
diff --git a/compiler/testData/codegen/classes/initializerBlockDImpl.jet b/compiler/testData/codegen/classes/initializerBlockDImpl.jet
index ba88877b35f..f018e7e5030 100644
--- a/compiler/testData/codegen/classes/initializerBlockDImpl.jet
+++ b/compiler/testData/codegen/classes/initializerBlockDImpl.jet
@@ -4,7 +4,7 @@ import java.io.*
 class World() {
   public val items: ArrayList<Item> = ArrayList<Item>()
 
-  class Item() {
+  inner class Item() {
     {
       items.add(this)
     }
diff --git a/compiler/testData/codegen/classes/innerClass.jet b/compiler/testData/codegen/classes/innerClass.jet
index df43f61e8bc..55e807c14ea 100644
--- a/compiler/testData/codegen/classes/innerClass.jet
+++ b/compiler/testData/codegen/classes/innerClass.jet
@@ -1,5 +1,5 @@
 class Outer(val foo: StringBuilder) {
-  class Inner() {
+  inner class Inner() {
     fun len() : Int {
       return foo.length()
     }
diff --git a/compiler/testData/codegen/classes/privateOuterFunctions.kt b/compiler/testData/codegen/classes/privateOuterFunctions.kt
index 0487bd4cb7e..e8f13cf7de9 100644
--- a/compiler/testData/codegen/classes/privateOuterFunctions.kt
+++ b/compiler/testData/codegen/classes/privateOuterFunctions.kt
@@ -20,7 +20,7 @@ class C {
         return "OK"
     }
 
-    private class Inner() {
+    private inner class Inner() {
         fun innerFun() {
             "".ext()
             f()
diff --git a/compiler/testData/codegen/classes/privateOuterProperty.kt b/compiler/testData/codegen/classes/privateOuterProperty.kt
index 70afd19a592..8b972461cec 100644
--- a/compiler/testData/codegen/classes/privateOuterProperty.kt
+++ b/compiler/testData/codegen/classes/privateOuterProperty.kt
@@ -17,7 +17,7 @@ class C{
         return v
     }
 
-    private class Inner() {
+    private inner class Inner() {
         fun innerFun() {
             v = v + 1
         }
diff --git a/compiler/testData/codegen/classes/propertyInInitializer.jet b/compiler/testData/codegen/classes/propertyInInitializer.jet
index f6e84b15afd..bd8aa833063 100644
--- a/compiler/testData/codegen/classes/propertyInInitializer.jet
+++ b/compiler/testData/codegen/classes/propertyInInitializer.jet
@@ -1,10 +1,10 @@
 class Outer() {
   val s = "xyzzy"
 
-  open class InnerBase(public val name: String) {
+  open inner class InnerBase(public val name: String) {
   }
 
-  class InnerDerived(): InnerBase(s) {
+  inner class InnerDerived(): InnerBase(s) {
   }
 
   val x = InnerDerived()
diff --git a/compiler/testData/codegen/defaultArguments/blackBox/constructor/defArgs1InnerClass.kt b/compiler/testData/codegen/defaultArguments/blackBox/constructor/defArgs1InnerClass.kt
index eabbda234bf..588b0cf1c60 100644
--- a/compiler/testData/codegen/defaultArguments/blackBox/constructor/defArgs1InnerClass.kt
+++ b/compiler/testData/codegen/defaultArguments/blackBox/constructor/defArgs1InnerClass.kt
@@ -1,5 +1,5 @@
 class A {
-    class B(val a: String = "a", val b: Int = 55, val c: String = "c")
+    inner class B(val a: String = "a", val b: Int = 55, val c: String = "c")
 }
 
 fun box(): String {
diff --git a/compiler/testData/codegen/defaultArguments/blackBox/constructor/doubleDefArgs1InnerClass.kt b/compiler/testData/codegen/defaultArguments/blackBox/constructor/doubleDefArgs1InnerClass.kt
index a054997be89..cc9737c3e47 100644
--- a/compiler/testData/codegen/defaultArguments/blackBox/constructor/doubleDefArgs1InnerClass.kt
+++ b/compiler/testData/codegen/defaultArguments/blackBox/constructor/doubleDefArgs1InnerClass.kt
@@ -1,5 +1,5 @@
 class A {
-    class B(val a: Double = 1.0, val b: Int = 55, val c: String = "c")
+    inner class B(val a: Double = 1.0, val b: Int = 55, val c: String = "c")
 }
 
 fun box(): String {
diff --git a/compiler/testData/codegen/defaultArguments/blackBox/constructor/kt2852.kt b/compiler/testData/codegen/defaultArguments/blackBox/constructor/kt2852.kt
index 34f2d616092..9a5434a99cf 100644
--- a/compiler/testData/codegen/defaultArguments/blackBox/constructor/kt2852.kt
+++ b/compiler/testData/codegen/defaultArguments/blackBox/constructor/kt2852.kt
@@ -1,6 +1,6 @@
 fun box(): String {
     val o = object {
-        class A(val value: String = "OK")
+        inner class A(val value: String = "OK")
     }
 
     return o.A().value
diff --git a/compiler/testData/codegen/defaultArguments/reflection/publicInnerClass.kt b/compiler/testData/codegen/defaultArguments/reflection/publicInnerClass.kt
index 3c9a7665d6c..a8bb9facf1d 100644
--- a/compiler/testData/codegen/defaultArguments/reflection/publicInnerClass.kt
+++ b/compiler/testData/codegen/defaultArguments/reflection/publicInnerClass.kt
@@ -1,5 +1,5 @@
 class A {
-    public class Foo(val a: Int = 1) {}
+    public inner class Foo(val a: Int = 1) {}
 
     fun foo() {
         Foo()
diff --git a/compiler/testData/codegen/defaultArguments/reflection/publicInnerClassInPrivateClass.kt b/compiler/testData/codegen/defaultArguments/reflection/publicInnerClassInPrivateClass.kt
index 7cc70c18986..00976fef7ca 100644
--- a/compiler/testData/codegen/defaultArguments/reflection/publicInnerClassInPrivateClass.kt
+++ b/compiler/testData/codegen/defaultArguments/reflection/publicInnerClassInPrivateClass.kt
@@ -1,5 +1,5 @@
 private class A {
-  public class Foo(val a: Int = 1) {}
+  public inner class Foo(val a: Int = 1) {}
 }
 
 // CLASS: A$Foo
diff --git a/compiler/testData/codegen/enum/entrywithinner.kt b/compiler/testData/codegen/enum/entrywithinner.kt
index bed94d2dc0d..73e82e8c4fb 100644
--- a/compiler/testData/codegen/enum/entrywithinner.kt
+++ b/compiler/testData/codegen/enum/entrywithinner.kt
@@ -4,14 +4,14 @@ fun box() = IssueState.DEFAULT.ToString() + IssueState.FIXED.ToString()
 
 enum class IssueState {
    DEFAULT {
-       class D {
+       inner class D {
           val k = ToString()
        }
    }
    FIXED {
        override fun ToString() = "K"
 
-       object D {
+       inner class D {
           val k = ToString()
        }
    }
diff --git a/compiler/testData/codegen/regressions/kt1136.kt b/compiler/testData/codegen/regressions/kt1136.kt
index e3214c521fa..2b563158319 100644
--- a/compiler/testData/codegen/regressions/kt1136.kt
+++ b/compiler/testData/codegen/regressions/kt1136.kt
@@ -16,7 +16,7 @@ public object SomeObject {
 }
 
 public class SomeClass() {
-    class Inner {
+    inner class Inner {
         val copy = list
     }
 
diff --git a/compiler/testData/codegen/super/enclosedVar.jet b/compiler/testData/codegen/super/enclosedVar.jet
index d1538aba765..50477570820 100644
--- a/compiler/testData/codegen/super/enclosedVar.jet
+++ b/compiler/testData/codegen/super/enclosedVar.jet
@@ -6,7 +6,7 @@ open class N() : M() {
 
     override var y = 200
 
-    open class C() {
+    open inner class C() {
         fun test5() = y
         fun test6() : Int {
             super<M>@N.y += 200
diff --git a/compiler/testData/diagnostics/tests/UninitializedOrReassignedVariables.kt b/compiler/testData/diagnostics/tests/UninitializedOrReassignedVariables.kt
index e76d907ce23..9025136d100 100644
--- a/compiler/testData/diagnostics/tests/UninitializedOrReassignedVariables.kt
+++ b/compiler/testData/diagnostics/tests/UninitializedOrReassignedVariables.kt
@@ -229,7 +229,7 @@ class Outer() {
         $b = 1
     }
 
-    class Inner() {
+    inner class Inner() {
         {
             <!VAL_REASSIGNMENT!>a<!>++
             b++
diff --git a/compiler/testData/diagnostics/tests/inner/constructorAccess.kt b/compiler/testData/diagnostics/tests/inner/constructorAccess.kt
new file mode 100644
index 00000000000..de62359b68e
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/constructorAccess.kt
@@ -0,0 +1,32 @@
+class Outer1 {
+    class Nested
+    
+    class C1 { val b = Nested() }
+    class C2(val b: Any = Nested())
+    inner class C3 { val b = Nested() }
+    inner class C4(val b: Any = Nested())
+    
+    inner class Inner
+    
+    class C5 { val b = <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>Inner()<!> }
+    class C6(val b: Any = <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>Inner()<!>)
+    inner class C7 { val b = Inner() }
+    inner class C8(val b: Any = Inner())
+}
+
+
+class Outer2 {
+    class Nested {
+        fun foo() = Outer2()
+        fun bar() = <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>Inner()<!>
+    }
+    inner class Inner {
+        fun foo() = Outer2()
+        fun bar() = Nested()
+    }
+    
+    fun foo() {
+        Nested()
+        Inner()
+    }
+}
diff --git a/compiler/testData/diagnostics/tests/inner/enumEntries.kt b/compiler/testData/diagnostics/tests/inner/enumEntries.kt
new file mode 100644
index 00000000000..49f8711cbe6
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/enumEntries.kt
@@ -0,0 +1,12 @@
+enum class E {
+    E1 {
+        override fun foo() = outerFun() + super.outerFun()
+    }
+    E2 {
+        override fun foo() = E1.foo()
+    }
+    
+    abstract fun foo(): Int
+    
+    fun outerFun() = 42
+}
diff --git a/compiler/testData/diagnostics/tests/inner/extensionFun.kt b/compiler/testData/diagnostics/tests/inner/extensionFun.kt
new file mode 100644
index 00000000000..6515d9c486c
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/extensionFun.kt
@@ -0,0 +1,28 @@
+class Outer {
+    class Nested
+    inner class Inner
+    
+    fun Inner.foo() {
+        Outer()
+        Nested()
+        Inner()
+    }
+    
+    fun Nested.bar() {
+        Outer()
+        Nested()
+        Inner()
+    }
+    
+    fun Outer.baz() {
+        Outer()
+        Nested()
+        Inner()
+    }
+}
+
+fun Outer.foo() {
+    Outer()
+    <!UNRESOLVED_REFERENCE!>Nested<!>()
+    Inner()
+}
diff --git a/compiler/testData/diagnostics/tests/inner/localClass.kt b/compiler/testData/diagnostics/tests/inner/localClass.kt
new file mode 100644
index 00000000000..2cf0bdc644e
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/localClass.kt
@@ -0,0 +1,18 @@
+class Outer {
+    fun foo(): Int {
+        if (outerState > 0) return outerState
+        
+        class Local {
+            val localState = outerState
+            
+            inner class LocalInner {
+                val o = outerState
+                val l = localState
+            }
+        }
+        
+        return Local().localState
+    }
+    
+    val outerState = 42
+}
diff --git a/compiler/testData/diagnostics/tests/inner/localClassInsideNested.kt b/compiler/testData/diagnostics/tests/inner/localClassInsideNested.kt
new file mode 100644
index 00000000000..f2618891794
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/localClassInsideNested.kt
@@ -0,0 +1,11 @@
+class Outer {
+    class Nested {
+        fun foo() {
+            class Local {
+                val state = <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>outerState<!>
+            }
+        }
+    }
+    
+    val outerState = 42
+}
diff --git a/compiler/testData/diagnostics/tests/inner/modality.kt b/compiler/testData/diagnostics/tests/inner/modality.kt
new file mode 100644
index 00000000000..0dabdb45d44
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/modality.kt
@@ -0,0 +1,17 @@
+class Outer {
+    open class OpenNested
+    class FinalNested
+    
+    open inner class OpenInner
+    class FinalInner
+
+    class Nested1 : OpenNested()
+    class Nested2 : <!FINAL_SUPERTYPE!>FinalNested<!>()
+    class Nested3 : <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>OpenInner()<!>
+    class Nested4 : <!FINAL_SUPERTYPE!>FinalInner<!>()
+
+    inner class Inner1 : OpenNested()
+    inner class Inner2 : <!FINAL_SUPERTYPE!>FinalNested<!>()
+    inner class Inner3 : OpenInner()
+    inner class Inner4 : <!FINAL_SUPERTYPE!>FinalInner<!>()
+}
diff --git a/compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuter.kt b/compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuter.kt
new file mode 100644
index 00000000000..991b4ffb543
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuter.kt
@@ -0,0 +1,8 @@
+open class Outer {
+    class Nested : Outer() {
+        fun bar() = foo()
+        fun baz() = super.foo()
+    }
+    
+    fun foo() = 42
+}
diff --git a/compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuterGeneric.kt b/compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuterGeneric.kt
new file mode 100644
index 00000000000..11e0d3b9340
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuterGeneric.kt
@@ -0,0 +1,12 @@
+open class Outer<T> {
+    class Nested<U> : Outer<U>() {
+        fun bar(): U = foo()
+        fun baz(): U = super.foo()
+    }
+    class Nested2 : Outer<String>() {
+        fun bar(): String = foo()
+        fun baz(): String = super.foo()
+    }
+    
+    fun foo(): T = null!!
+}
diff --git a/compiler/testData/diagnostics/tests/inner/nestedVsInnerAccessOuterMember.kt b/compiler/testData/diagnostics/tests/inner/nestedVsInnerAccessOuterMember.kt
new file mode 100644
index 00000000000..0b43bfb3158
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/nestedVsInnerAccessOuterMember.kt
@@ -0,0 +1,19 @@
+class Outer {
+    fun function() = 42
+    val property = ""
+    
+    class Nested {
+        fun f() = <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>function()<!>
+        fun g() = <!INACCESSIBLE_OUTER_CLASS_EXPRESSION!>property<!>
+    }
+    
+    inner class Inner {
+        fun innerFun() = function()
+        val innerProp = property
+        
+        inner class InnerInner {
+            fun f() = innerFun()
+            fun g() = innerProp
+        }
+    }
+}
diff --git a/compiler/testData/diagnostics/tests/inner/visibility.kt b/compiler/testData/diagnostics/tests/inner/visibility.kt
new file mode 100644
index 00000000000..ee06738ff47
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inner/visibility.kt
@@ -0,0 +1,34 @@
+open class Outer {
+    private class PrivateNested
+    private inner class PrivateInner
+
+    protected class ProtectedNested
+    protected inner class ProtectedInner
+
+    public class PublicNested
+    public inner class PublicInner
+}
+
+class Derived : Outer() {
+    fun foo() {
+        Outer.<!INVISIBLE_MEMBER!>PrivateNested<!>()
+        super.<!INVISIBLE_MEMBER!>PrivateInner<!>()
+
+        Outer.ProtectedNested()
+        super.ProtectedInner()
+
+        Outer.PublicNested()
+        super.PublicInner()
+    }
+}
+
+fun foo() {
+    Outer.<!INVISIBLE_MEMBER!>PrivateNested<!>()
+    Outer().<!INVISIBLE_MEMBER!>PrivateInner<!>()
+
+    Outer.<!INVISIBLE_MEMBER!>ProtectedNested<!>()
+    Outer().<!INVISIBLE_MEMBER!>ProtectedInner<!>()
+
+    Outer.PublicNested()
+    Outer().PublicInner()
+}
diff --git a/compiler/testData/diagnostics/tests/scopes/initializerScopeOfExtensionProperty.kt b/compiler/testData/diagnostics/tests/scopes/initializerScopeOfExtensionProperty.kt
index b1e105bcbfa..602a3617d24 100644
--- a/compiler/testData/diagnostics/tests/scopes/initializerScopeOfExtensionProperty.kt
+++ b/compiler/testData/diagnostics/tests/scopes/initializerScopeOfExtensionProperty.kt
@@ -19,7 +19,7 @@ val A.foo1 : Int get() = ii
 
 
 class C {
-    class D {}
+    inner class D {}
 }
 
 val C.foo : C.D = <!UNRESOLVED_REFERENCE!>D<!>()
diff --git a/compiler/testData/diagnostics/tests/scopes/kt2262.kt b/compiler/testData/diagnostics/tests/scopes/kt2262.kt
index 494cd16a54c..c78be35d876 100644
--- a/compiler/testData/diagnostics/tests/scopes/kt2262.kt
+++ b/compiler/testData/diagnostics/tests/scopes/kt2262.kt
@@ -9,7 +9,7 @@ abstract class Foo {
 class Bar : Foo() {
     protected val i: Int = 1
 
-    class Baz {
+    inner class Baz {
         val copy = color // INVISIBLE_MEMBER: Cannot access 'color' in 'Bar'
         val j = i
     }
diff --git a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
index 5938ffc3699..74c6949f454 100644
--- a/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/jet/checkers/JetDiagnosticsTestGenerated.java
@@ -30,7 +30,7 @@ import org.jetbrains.jet.checkers.AbstractDiagnosticsTestWithEagerResolve;
 @InnerTestClasses({JetDiagnosticsTestGenerated.Tests.class, JetDiagnosticsTestGenerated.Script.class})
 public class JetDiagnosticsTestGenerated extends AbstractDiagnosticsTestWithEagerResolve {
     @TestMetadata("compiler/testData/diagnostics/tests")
-    @InnerTestClasses({Tests.Annotations.class, Tests.BackingField.class, Tests.Cast.class, Tests.CheckArguments.class, Tests.ControlFlowAnalysis.class, Tests.ControlStructures.class, Tests.DataClasses.class, Tests.DataFlow.class, Tests.DataFlowInfoTraversal.class, Tests.DeclarationChecks.class, Tests.Deparenthesize.class, Tests.Enum.class, Tests.Extensions.class, Tests.FunctionLiterals.class, Tests.Generics.class, Tests.IncompleteCode.class, Tests.Inference.class, Tests.Infos.class, Tests.J_k.class, Tests.Jdk_annotations.class, Tests.Library.class, Tests.NullabilityAndAutoCasts.class, Tests.NullableTypes.class, Tests.Objects.class, Tests.OperatorsOverloading.class, Tests.Overload.class, Tests.Override.class, Tests.Redeclarations.class, Tests.Regressions.class, Tests.Resolve.class, Tests.Scopes.class, Tests.SenselessComparison.class, Tests.Shadowing.class, Tests.Substitutions.class, Tests.Subtyping.class, Tests.ThisAndSuper.class, Tests.Tuples.class, Tests.Varargs.class})
+    @InnerTestClasses({Tests.Annotations.class, Tests.BackingField.class, Tests.Cast.class, Tests.CheckArguments.class, Tests.ControlFlowAnalysis.class, Tests.ControlStructures.class, Tests.DataClasses.class, Tests.DataFlow.class, Tests.DataFlowInfoTraversal.class, Tests.DeclarationChecks.class, Tests.Deparenthesize.class, Tests.Enum.class, Tests.Extensions.class, Tests.FunctionLiterals.class, Tests.Generics.class, Tests.IncompleteCode.class, Tests.Inference.class, Tests.Infos.class, Tests.Inner.class, Tests.J_k.class, Tests.Jdk_annotations.class, Tests.Library.class, Tests.NullabilityAndAutoCasts.class, Tests.NullableTypes.class, Tests.Objects.class, Tests.OperatorsOverloading.class, Tests.Overload.class, Tests.Override.class, Tests.Redeclarations.class, Tests.Regressions.class, Tests.Resolve.class, Tests.Scopes.class, Tests.SenselessComparison.class, Tests.Shadowing.class, Tests.Substitutions.class, Tests.Subtyping.class, Tests.ThisAndSuper.class, Tests.Tuples.class, Tests.Varargs.class})
     public static class Tests extends AbstractDiagnosticsTestWithEagerResolve {
         @TestMetadata("Abstract.kt")
         public void testAbstract() throws Exception {
@@ -2398,6 +2398,64 @@ public class JetDiagnosticsTestGenerated extends AbstractDiagnosticsTestWithEage
             
         }
         
+        @TestMetadata("compiler/testData/diagnostics/tests/inner")
+        public static class Inner extends AbstractDiagnosticsTestWithEagerResolve {
+            public void testAllFilesPresentInInner() throws Exception {
+                JetTestUtils.assertAllTestsPresentByMetadata(this.getClass(), "org.jetbrains.jet.generators.tests.GenerateTests", new File("compiler/testData/diagnostics/tests/inner"), "kt", true);
+            }
+            
+            @TestMetadata("constructorAccess.kt")
+            public void testConstructorAccess() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/constructorAccess.kt");
+            }
+            
+            @TestMetadata("enumEntries.kt")
+            public void testEnumEntries() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/enumEntries.kt");
+            }
+            
+            @TestMetadata("extensionFun.kt")
+            public void testExtensionFun() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/extensionFun.kt");
+            }
+            
+            @TestMetadata("localClass.kt")
+            public void testLocalClass() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/localClass.kt");
+            }
+            
+            @TestMetadata("localClassInsideNested.kt")
+            public void testLocalClassInsideNested() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/localClassInsideNested.kt");
+            }
+            
+            @TestMetadata("modality.kt")
+            public void testModality() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/modality.kt");
+            }
+            
+            @TestMetadata("nestedClassExtendsOuter.kt")
+            public void testNestedClassExtendsOuter() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuter.kt");
+            }
+            
+            @TestMetadata("nestedClassExtendsOuterGeneric.kt")
+            public void testNestedClassExtendsOuterGeneric() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/nestedClassExtendsOuterGeneric.kt");
+            }
+            
+            @TestMetadata("nestedVsInnerAccessOuterMember.kt")
+            public void testNestedVsInnerAccessOuterMember() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/nestedVsInnerAccessOuterMember.kt");
+            }
+            
+            @TestMetadata("visibility.kt")
+            public void testVisibility() throws Exception {
+                doTest("compiler/testData/diagnostics/tests/inner/visibility.kt");
+            }
+            
+        }
+        
         @TestMetadata("compiler/testData/diagnostics/tests/j+k")
         public static class J_k extends AbstractDiagnosticsTestWithEagerResolve {
             public void testAllFilesPresentInJ_k() throws Exception {
@@ -4109,6 +4167,7 @@ public class JetDiagnosticsTestGenerated extends AbstractDiagnosticsTestWithEage
             suite.addTest(IncompleteCode.innerSuite());
             suite.addTest(Inference.innerSuite());
             suite.addTestSuite(Infos.class);
+            suite.addTestSuite(Inner.class);
             suite.addTestSuite(J_k.class);
             suite.addTest(Jdk_annotations.innerSuite());
             suite.addTestSuite(Library.class);