diff --git a/compiler/frontend/src/org/jetbrains/kotlin/resolve/lazy/descriptors/ClassResolutionScopesSupport.kt b/compiler/frontend/src/org/jetbrains/kotlin/resolve/lazy/descriptors/ClassResolutionScopesSupport.kt
index 88a5349310e..fcaee8eee89 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/resolve/lazy/descriptors/ClassResolutionScopesSupport.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/resolve/lazy/descriptors/ClassResolutionScopesSupport.kt
@@ -60,7 +60,7 @@ class ClassResolutionScopesSupport(
         createInheritanceScope(inheritanceScopeWithoutMe(), classDescriptor, classDescriptor, withCompanionObject = false)
     }
 
-    val scopeForMemberDeclarationResolution: () -> LexicalScope = storageManager.createLazyValue {
+    val scopeForMemberDeclarationResolution: () -> LexicalScope = storageManager.createLazyValue(onRecursion = createThrowingLexicalScope) {
         val scopeWithGenerics = scopeWithGenerics(inheritanceScopeWithMe())
         LexicalScopeImpl(scopeWithGenerics, classDescriptor, true, classDescriptor.thisAsReceiverParameter, LexicalScopeKind.CLASS_MEMBER_SCOPE)
     }
@@ -116,7 +116,9 @@ class ClassResolutionScopesSupport(
             createLazyValueWithPostCompute(compute, onRecursion, {})
 
     companion object {
-        private val createThrowingLexicalScope: (Boolean) -> LexicalScope =  { ThrowingLexicalScope() }
+        private val createThrowingLexicalScope: (Boolean) -> LexicalScope =  {
+            ThrowingLexicalScope()
+        }
     }
 }
 
diff --git a/compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.kt b/compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.kt
new file mode 100644
index 00000000000..1ceca3b90b9
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.kt
@@ -0,0 +1,22 @@
+// As in KT-18514
+object A : <!CYCLIC_INHERITANCE_HIERARCHY!>A.I<!> {
+    interface I
+}
+
+// Similar to 'classIndirectlyInheritsNested.kt'
+object D : <!CYCLIC_INHERITANCE_HIERARCHY!>E<!>() {
+    open class NestedD
+}
+
+open class E : <!CYCLIC_INHERITANCE_HIERARCHY!>D.NestedD<!>()
+
+
+
+// Similar to 'twoClassesWithNestedCycle.kt'
+object G : <!CYCLIC_INHERITANCE_HIERARCHY!>H.NestedH<!>() {
+    open class NestedG
+}
+object H : <!CYCLIC_INHERITANCE_HIERARCHY!>G.NestedG<!>() {
+    open class NestedH
+}
+
diff --git a/compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.txt b/compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.txt
new file mode 100644
index 00000000000..2504b42fc83
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.txt
@@ -0,0 +1,48 @@
+package
+
+public object A {
+    private constructor A()
+
+    public interface I {
+        public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+        public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+        public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+    }
+}
+
+public object D {
+    private constructor D()
+
+    public open class NestedD {
+        public constructor NestedD()
+        public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+        public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+        public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+    }
+}
+
+public open class E {
+    public constructor E()
+}
+
+public object G {
+    private constructor G()
+
+    public open class NestedG {
+        public constructor NestedG()
+        public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+        public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+        public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+    }
+}
+
+public object H {
+    private constructor H()
+
+    public open class NestedH {
+        public constructor NestedH()
+        public open override /*1*/ /*fake_override*/ fun equals(/*0*/ other: kotlin.Any?): kotlin.Boolean
+        public open override /*1*/ /*fake_override*/ fun hashCode(): kotlin.Int
+        public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+    }
+}
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
index 7c96b8660b1..0742ef41725 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
@@ -4825,6 +4825,12 @@ public class DiagnosticsTestGenerated extends AbstractDiagnosticsTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("objectInheritsNested.kt")
+            public void testObjectInheritsNested() throws Exception {
+                String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("twoClassesWithNestedCycle.kt")
             public void testTwoClassesWithNestedCycle() throws Exception {
                 String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/cyclicHierarchy/twoClassesWithNestedCycle.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
index dfa8522e249..e85d05d584d 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/javac/DiagnosticsUsingJavacTestGenerated.java
@@ -4825,6 +4825,12 @@ public class DiagnosticsUsingJavacTestGenerated extends AbstractDiagnosticsUsing
                 doTest(fileName);
             }
 
+            @TestMetadata("objectInheritsNested.kt")
+            public void testObjectInheritsNested() throws Exception {
+                String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/cyclicHierarchy/objectInheritsNested.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("twoClassesWithNestedCycle.kt")
             public void testTwoClassesWithNestedCycle() throws Exception {
                 String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/cyclicHierarchy/twoClassesWithNestedCycle.kt");