diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/java/test/kt33617/MyClass.java b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/java/test/kt33617/MyClass.java
new file mode 100644
index 00000000000..9c79ca3a1fe
--- /dev/null
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/java/test/kt33617/MyClass.java
@@ -0,0 +1,9 @@
+/*
+ * Copyright 2010-2019 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
+ */
+
+package test.kt33617;
+
+public class MyClass {
+}
diff --git a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KaptIncrementalWithIsolatingApt.kt b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KaptIncrementalWithIsolatingApt.kt
index 359ec0d47a7..54c3c753957 100644
--- a/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KaptIncrementalWithIsolatingApt.kt
+++ b/libraries/tools/kotlin-gradle-plugin-integration-tests/src/test/kotlin/org/jetbrains/kotlin/gradle/KaptIncrementalWithIsolatingApt.kt
@@ -8,7 +8,9 @@ package org.jetbrains.kotlin.gradle
 import org.jetbrains.kotlin.gradle.incapt.IncrementalProcessor
 import org.jetbrains.kotlin.gradle.util.modify
 import org.junit.Assert.assertEquals
+import org.junit.Assume
 import org.junit.Test
+import test.kt33617.MyClass
 import java.io.File
 import java.util.zip.ZipEntry
 import java.util.zip.ZipOutputStream
@@ -113,6 +115,46 @@ class KaptIncrementalWithIsolatingApt : KaptIncrementalIT() {
             assertContains("Incremental annotation processing (apt mode): false")
         }
     }
+
+    /** Regression test for https://youtrack.jetbrains.com/issue/KT-33617. */
+    @Test
+    fun testSourcesInCompileClasspathJars() {
+        val javaHome = File(System.getProperty("jdk9Home")!!)
+        Assume.assumeTrue("JDK 9 isn't available", javaHome.isDirectory)
+        val options = defaultBuildOptions().copy(javaHome = javaHome)
+
+        val project = getProject()
+        // create jar with .class and .java file for the same type
+        ZipOutputStream(project.projectDir.resolve("lib-with-sources.jar").outputStream()).use {
+            it.putNextEntry(ZipEntry("test/kt33617/MyClass.class"))
+            MyClass::class.java.classLoader.getResourceAsStream("test/kt33617/MyClass.class").use { input ->
+                it.write(input!!.readBytes())
+            }
+            it.closeEntry()
+
+            it.putNextEntry(ZipEntry("test/kt33617/MyClass.java"))
+            it.write(
+                """
+                package test.kt33617;
+                public class MyClass {}
+            """.trimIndent().toByteArray(Charsets.UTF_8)
+            )
+            it.closeEntry()
+        }
+        project.gradleBuildScript().appendText(
+            """
+                
+            dependencies {
+                implementation files('lib-with-sources.jar')
+            }
+        """.trimIndent()
+        )
+        project.projectFile("useB.kt").modify { current -> "$current\nfun otherFunction(param: test.kt33617.MyClass) {}" }
+
+        project.build("clean", "kaptKotlin", options = options) {
+            assertSuccessful()
+        }
+    }
 }
 
 private const val patternApt = "Processing java sources with annotation processors:"
diff --git a/plugins/kapt3/kapt3-base/src/org/jetbrains/kotlin/kapt3/base/incremental/classStructureCache.kt b/plugins/kapt3/kapt3-base/src/org/jetbrains/kotlin/kapt3/base/incremental/classStructureCache.kt
index ae89a466d28..374db2302af 100644
--- a/plugins/kapt3/kapt3-base/src/org/jetbrains/kotlin/kapt3/base/incremental/classStructureCache.kt
+++ b/plugins/kapt3/kapt3-base/src/org/jetbrains/kotlin/kapt3/base/incremental/classStructureCache.kt
@@ -9,6 +9,7 @@ import java.io.File
 import java.io.ObjectInputStream
 import java.io.ObjectOutputStream
 import java.io.Serializable
+import java.lang.IllegalArgumentException
 import java.net.URI
 import java.util.regex.Pattern
 
@@ -73,7 +74,23 @@ class JavaClassCache() : Serializable {
         output.writeObject(generatedTypes)
     }
 
-    fun isAlreadyProcessed(sourceFile: URI) = sourceCache.containsKey(sourceFile) || generatedTypes.containsKey(File(sourceFile))
+    fun isAlreadyProcessed(sourceFile: URI): Boolean {
+        if (!sourceFile.isAbsolute) {
+            // we never want to process non-absolute URIs, see https://youtrack.jetbrains.com/issue/KT-33617
+            return true
+        }
+        if (sourceFile.isOpaque) {
+            // we never want to process non-hierarchical URIs, https://youtrack.jetbrains.com/issue/KT-33617
+            return true
+        }
+        return try {
+            val fileFromUri = File(sourceFile)
+            sourceCache.containsKey(sourceFile) || generatedTypes.containsKey(fileFromUri)
+        } catch (e: IllegalArgumentException) {
+            // unable to create File instance, avoid processing these files
+            true
+        }
+    }
 
     /** Used for testing only. */
     internal fun getStructure(sourceFile: File) = sourceCache[sourceFile.toURI()]