diff --git a/idea/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java b/idea/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java
index 822d622ff77..5be9feb485d 100644
--- a/idea/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java
+++ b/idea/src/org/jetbrains/jet/lang/types/JetTypeInferrer.java
@@ -120,7 +120,6 @@ public class JetTypeInferrer {
         return resolutionResult.isSuccess() ? resolutionResult.getFunctionDescriptor() : null;
     }
 
-
     private OverloadDomain getOverloadDomain(
             @NotNull final JetScope scope,
             @NotNull JetExpression calleeExpression,
@@ -409,7 +408,7 @@ public class JetTypeInferrer {
             expression.accept(this);
             if (result != null) {
                 trace.recordExpressionType(expression, result);
-                if (JetStandardClasses.isNothing(result)) {
+                if (JetStandardClasses.isNothing(result) && !result.isNullable()) {
                     markDominatedExpressionsAsUnreachable(expression);
                 }
             }
diff --git a/idea/testData/checker/UnreachableCode.jet b/idea/testData/checker/UnreachableCode.jet
index 899e8167678..f06223709ed 100644
--- a/idea/testData/checker/UnreachableCode.jet
+++ b/idea/testData/checker/UnreachableCode.jet
@@ -151,3 +151,11 @@ fun foo(a : Nothing) : Unit {
 fun fail() : Nothing {
   throw new java.lang.RuntimeException()
 }
+
+fun nullIsNotNothing() : Unit {
+    val x : Int? = 1
+    if (x != null) {
+         return
+    }
+    fail()
+}
\ No newline at end of file