diff --git a/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/resolver/JavaFunctionResolver.java b/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/resolver/JavaFunctionResolver.java
index 5fd1d0c797b..2939528158d 100644
--- a/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/resolver/JavaFunctionResolver.java
+++ b/compiler/frontend.java/src/org/jetbrains/jet/lang/resolve/java/resolver/JavaFunctionResolver.java
@@ -214,8 +214,16 @@ public final class JavaFunctionResolver {
             FunctionDescriptor functionDescriptor
     ) {
         for (FunctionDescriptor superFunction : superFunctions) {
-            TypeSubstitutor substitutor = SubstitutionUtils.buildDeepSubstitutor(
-                    ((ClassDescriptor) functionDescriptor.getContainingDeclaration()).getDefaultType());
+            ClassDescriptor klass = (ClassDescriptor) functionDescriptor.getContainingDeclaration();
+            List<TypeSubstitution> substitutions = Lists.newArrayList();
+            while (true) {
+                substitutions.add(SubstitutionUtils.buildDeepSubstitutor(klass.getDefaultType()).getSubstitution());
+                if (!klass.isInner()) {
+                    break;
+                }
+                klass = (ClassDescriptor) klass.getContainingDeclaration();
+            }
+            TypeSubstitutor substitutor = TypeSubstitutor.create(substitutions.toArray(new TypeSubstitution[substitutions.size()]));
             FunctionDescriptor superFunctionSubstituted = superFunction.substitute(substitutor);
 
             assert superFunctionSubstituted != null :
diff --git a/compiler/testData/loadJavaCustom/returnInnerSubclassOfSupersInner/ReturnInnerSubclassOfSupersInner.txt b/compiler/testData/loadJavaCustom/returnInnerSubclassOfSupersInner/ReturnInnerSubclassOfSupersInner.txt
new file mode 100644
index 00000000000..83e44cd68e8
--- /dev/null
+++ b/compiler/testData/loadJavaCustom/returnInnerSubclassOfSupersInner/ReturnInnerSubclassOfSupersInner.txt
@@ -0,0 +1,22 @@
+package test
+
+public trait ReturnInnerSubclassOfSupersInner : java.lang.Object {
+    
+    public open class Sub</*0*/ B> : test.ReturnInnerSubclassOfSupersInner.Super<B> {
+        public constructor Sub</*0*/ B>()
+        
+        public/*package*/ open inner class Inner : test.ReturnInnerSubclassOfSupersInner.Super.Inner {
+            public/*package*/ constructor Inner()
+            public/*package*/ open override /*1*/ fun get() : test.ReturnInnerSubclassOfSupersInner.Sub<B>?
+        }
+    }
+    
+    public open class Super</*0*/ A> : java.lang.Object {
+        public constructor Super</*0*/ A>()
+        
+        public/*package*/ open inner class Inner : java.lang.Object {
+            public/*package*/ constructor Inner()
+            public/*package*/ open fun get() : test.ReturnInnerSubclassOfSupersInner.Super<A>?
+        }
+    }
+}
diff --git a/compiler/testData/loadJavaCustom/returnInnerSubclassOfSupersInner/test/ReturnInnerSubclassOfSupersInner.java b/compiler/testData/loadJavaCustom/returnInnerSubclassOfSupersInner/test/ReturnInnerSubclassOfSupersInner.java
new file mode 100644
index 00000000000..d5104edfb6f
--- /dev/null
+++ b/compiler/testData/loadJavaCustom/returnInnerSubclassOfSupersInner/test/ReturnInnerSubclassOfSupersInner.java
@@ -0,0 +1,20 @@
+package test;
+
+//Note: this test could be written in simple load java test, but KT-3128 prevents from writing Kotlin counterpart for it
+public interface ReturnInnerSubclassOfSupersInner {
+    class Super<A> {
+        class Inner {
+            Super<A> get() {
+                throw new UnsupportedOperationException();
+            }
+        }
+    }
+
+    class Sub<B> extends Super<B> {
+        class Inner extends Super<B>.Inner {
+            Sub<B> get() {
+                throw new UnsupportedOperationException();
+            }
+        }
+    }
+}
diff --git a/compiler/tests/org/jetbrains/jet/jvm/compiler/LoadJavaCustomTest.java b/compiler/tests/org/jetbrains/jet/jvm/compiler/LoadJavaCustomTest.java
index 00f5195fd34..8dc0d6f7901 100644
--- a/compiler/tests/org/jetbrains/jet/jvm/compiler/LoadJavaCustomTest.java
+++ b/compiler/tests/org/jetbrains/jet/jvm/compiler/LoadJavaCustomTest.java
@@ -182,6 +182,18 @@ public final class LoadJavaCustomTest extends KotlinTestWithEnvironment {
                dir + "MethodTypeParameterErased.java");
     }
 
+    public void testReturnInnerSubclassOfSupersInner() throws Exception {
+        String dir = PATH + "/returnInnerSubclassOfSupersInner/";
+        doTest(dir + "ReturnInnerSubclassOfSupersInner.txt",
+               dir + "test/ReturnInnerSubclassOfSupersInner.java");
+    }
+
+    public void testReturnInnerSubclassOfSupersInnerNoCompile() throws Exception {
+        // Test is here because Java PSI used to have some differences when loading parallel generic hierarchies from cls and source code.
+        String dir = PATH + "/returnInnerSubclassOfSupersInner/";
+        doTestNoCompile(dir + "ReturnInnerSubclassOfSupersInner.txt", dir);
+    }
+
     public void testReturnNotSubtype() throws Exception {
         String dir = PATH + "/returnNotSubtype/";
         doTestNoCompile(dir + "ReturnNotSubtype.txt", dir);