diff --git a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt
index 4872a05023d17311e928ff09618215301f187771..ae9ab6987e398335acb24de38bd3a0d5fc4385e8 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/resolve/TypeResolver.kt
@@ -24,13 +24,14 @@ import org.jetbrains.kotlin.descriptors.TypeParameterDescriptor
 import org.jetbrains.kotlin.descriptors.annotations.Annotations
 import org.jetbrains.kotlin.diagnostics.Errors
 import org.jetbrains.kotlin.diagnostics.Errors.*
+import org.jetbrains.kotlin.lexer.JetTokens
 import org.jetbrains.kotlin.psi.*
 import org.jetbrains.kotlin.psi.codeFragmentUtil.debugTypeInfo
 import org.jetbrains.kotlin.psi.debugText.getDebugText
 import org.jetbrains.kotlin.resolve.PossiblyBareType.type
 import org.jetbrains.kotlin.resolve.TypeResolver.FlexibleTypeCapabilitiesProvider
-import org.jetbrains.kotlin.resolve.calls.tasks.DynamicCallableDescriptors
 import org.jetbrains.kotlin.resolve.bindingContextUtil.recordScope
+import org.jetbrains.kotlin.resolve.calls.tasks.DynamicCallableDescriptors
 import org.jetbrains.kotlin.resolve.lazy.ForceResolveUtil
 import org.jetbrains.kotlin.resolve.lazy.LazyEntity
 import org.jetbrains.kotlin.resolve.scopes.JetScope
@@ -239,6 +240,7 @@ public class TypeResolver(
                 val receiverTypeRef = type.getReceiverTypeReference()
                 val receiverType = if (receiverTypeRef == null) null else resolveType(c.noBareTypes(), receiverTypeRef)
 
+                type.parameters.forEach { checkParameterInFunctionType(it) }
                 val parameterTypes = type.getParameters().map { resolveType(c.noBareTypes(), it.getTypeReference()!!) }
 
                 val returnTypeRef = type.getReturnTypeReference()
@@ -262,6 +264,31 @@ public class TypeResolver(
             override fun visitJetElement(element: JetElement) {
                 c.trace.report(UNSUPPORTED.on(element, "Self-types are not supported yet"))
             }
+
+            private fun checkParameterInFunctionType(param: JetParameter) {
+                if (param.hasDefaultValue()) {
+                    c.trace.report(Errors.UNSUPPORTED.on(param.defaultValue!!, "default value of parameter in function type"))
+                }
+
+                if (param.nameIdentifier != null) {
+                    for (annotationEntry in param.annotationEntries) {
+                        c.trace.report(Errors.UNSUPPORTED.on(annotationEntry, "annotation on parameter in function type"))
+                    }
+                }
+
+                val modifierList = param.modifierList
+                if (modifierList != null) {
+                    JetTokens.MODIFIER_KEYWORDS_ARRAY
+                            .map { modifierList.getModifier(it) }
+                            .filterNotNull()
+                            .forEach { c.trace.report(Errors.UNSUPPORTED.on(it, "modifier on parameter in function type"))
+                    }
+                }
+
+                param.valOrVarKeyword?.let {
+                    c.trace.report(Errors.UNSUPPORTED.on(it, "val or val on parameter in function type"))
+                }
+            }
         })
 
         return result ?: type(ErrorUtils.createErrorType(typeElement?.getDebugText() ?: "No type element"))
diff --git a/compiler/testData/diagnostics/tests/DefaultValueForParameterInFunctionType.kt b/compiler/testData/diagnostics/tests/DefaultValueForParameterInFunctionType.kt
new file mode 100644
index 0000000000000000000000000000000000000000..f9b0f6f68ac208b424ad80d3a6766186c0cf160a
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/DefaultValueForParameterInFunctionType.kt
@@ -0,0 +1,20 @@
+// !DIAGNOSTICS: -UNUSED_PARAMETER -UNUSED_VARIABLE
+
+fun f(x: Int = 0) {}
+
+val inVal: (x: Int = <!UNSUPPORTED!>0<!>)->Unit = {}
+
+fun inParam(fn: (x: Int = <!UNSUPPORTED!>0<!>)->Unit) {}
+
+fun inParamNested(fn1: (fn2: (n: Int = <!UNSUPPORTED!>0<!>)->Unit)->Unit) {}
+
+fun inReturn(): (x: Int = <!UNSUPPORTED!>0<!>)->Unit = {}
+
+class A : (x: Int = <!UNSUPPORTED!>0<!>)->Unit {
+    override fun invoke(p1: Int) {
+        var lambda: (x: Int = <!UNSUPPORTED!>0<!>)->Unit = {}
+    }
+
+    val prop: (x: Int = <!UNSUPPORTED!>0<!>)->Unit
+        get(): (x: Int = <!UNSUPPORTED!>0<!>)->Unit = {}
+}
diff --git a/compiler/testData/diagnostics/tests/DefaultValueForParameterInFunctionType.txt b/compiler/testData/diagnostics/tests/DefaultValueForParameterInFunctionType.txt
new file mode 100644
index 0000000000000000000000000000000000000000..bbe0664d451b8da90a3b20d40de51183f7df2dad
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/DefaultValueForParameterInFunctionType.txt
@@ -0,0 +1,16 @@
+package
+
+public val inVal: (kotlin.Int) -> kotlin.Unit
+public fun f(/*0*/ x: kotlin.Int = ...): kotlin.Unit
+public fun inParam(/*0*/ fn: (kotlin.Int) -> kotlin.Unit): kotlin.Unit
+public fun inParamNested(/*0*/ fn1: ((kotlin.Int) -> kotlin.Unit) -> kotlin.Unit): kotlin.Unit
+public fun inReturn(): (kotlin.Int) -> kotlin.Unit
+
+public final class A : (kotlin.Int) -> kotlin.Unit {
+    public constructor A()
+    public final val prop: (kotlin.Int) -> kotlin.Unit
+    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*/ fun invoke(/*0*/ p1: kotlin.Int): kotlin.Unit
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
diff --git a/compiler/testData/diagnostics/tests/annotations/annotationOnParameterInFunctionType.kt b/compiler/testData/diagnostics/tests/annotations/annotationOnParameterInFunctionType.kt
new file mode 100644
index 0000000000000000000000000000000000000000..a105dfc5bfa0b61066771ae2971687ae729d735d
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/annotations/annotationOnParameterInFunctionType.kt
@@ -0,0 +1,29 @@
+// !DIAGNOSTICS: -UNUSED_PARAMETER -UNUSED_VARIABLE
+
+annotation class Ann
+
+fun f(@Ann x: Int) {}
+
+val inVal: (<!UNSUPPORTED!>@Ann<!> x: Int)->Unit = {}
+
+fun inParam(fn: (<!UNSUPPORTED!>@Ann<!> x: Int)->Unit) {}
+
+fun inParamNested(fn1: (fn2: (<!UNSUPPORTED!>@Ann<!> n: Int)->Unit)->Unit) {}
+
+fun inReturn(): (<!UNSUPPORTED!>@Ann<!> x: Int)->Unit = {}
+
+class A : (@<!DEBUG_INFO_MISSING_UNRESOLVED!>Ann<!> Int)->Unit {
+    override fun invoke(p1: Int) {
+        var lambda: (<!UNSUPPORTED!>@Ann<!> x: Int)->Unit = {}
+    }
+
+    val prop: (<!UNSUPPORTED!>@Ann<!> x: Int)->Unit
+        get(): (<!UNSUPPORTED!>@Ann<!> x: Int)->Unit = {}
+}
+
+@Target(AnnotationTarget.TYPE)
+annotation class TypeAnn
+
+val onType: (@TypeAnn A).(<!UNSUPPORTED!>@Ann<!> a: @TypeAnn A, @<!DEBUG_INFO_MISSING_UNRESOLVED!>TypeAnn<!> A)->@<!DEBUG_INFO_MISSING_UNRESOLVED!>TypeAnn<!> A? = <!EXPECTED_PARAMETERS_NUMBER_MISMATCH!>{<!> null }
+
+fun (@TypeAnn A).extFun(@Ann a: @TypeAnn A): @<!DEBUG_INFO_MISSING_UNRESOLVED!>TypeAnn<!> A? = null
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/annotations/annotationOnParameterInFunctionType.txt b/compiler/testData/diagnostics/tests/annotations/annotationOnParameterInFunctionType.txt
new file mode 100644
index 0000000000000000000000000000000000000000..ef3339c5fdada18cb42b89cdc184a1bc9001b2e6
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/annotations/annotationOnParameterInFunctionType.txt
@@ -0,0 +1,32 @@
+package
+
+public val inVal: (kotlin.Int) -> kotlin.Unit
+public val onType: @TypeAnn() A.(@TypeAnn() A, A) -> A?
+public fun f(/*0*/ @Ann() x: kotlin.Int): kotlin.Unit
+public fun inParam(/*0*/ fn: (kotlin.Int) -> kotlin.Unit): kotlin.Unit
+public fun inParamNested(/*0*/ fn1: ((kotlin.Int) -> kotlin.Unit) -> kotlin.Unit): kotlin.Unit
+public fun inReturn(): (kotlin.Int) -> kotlin.Unit
+public fun @TypeAnn() A.extFun(/*0*/ @Ann() a: @TypeAnn() A): A?
+
+public final class A : (kotlin.Int) -> kotlin.Unit {
+    public constructor A()
+    public final val prop: (kotlin.Int) -> kotlin.Unit
+    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*/ fun invoke(/*0*/ p1: kotlin.Int): kotlin.Unit
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
+
+@kotlin.annotation.annotation() public final class Ann : kotlin.Annotation {
+    public constructor Ann()
+    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
+}
+
+@kotlin.annotation.Target(allowedTargets = {AnnotationTarget.TYPE}) @kotlin.annotation.annotation() public final class TypeAnn : kotlin.Annotation {
+    public constructor TypeAnn()
+    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/testData/diagnostics/tests/incompleteCode/diagnosticWithSyntaxError/typeReferenceError.kt b/compiler/testData/diagnostics/tests/incompleteCode/diagnosticWithSyntaxError/typeReferenceError.kt
index c8f114d1c624d91ac2b035bf84f6accb659e770d..d01e25e24dcffc081563c34f2e9d93b0f2965530 100644
--- a/compiler/testData/diagnostics/tests/incompleteCode/diagnosticWithSyntaxError/typeReferenceError.kt
+++ b/compiler/testData/diagnostics/tests/incompleteCode/diagnosticWithSyntaxError/typeReferenceError.kt
@@ -1,4 +1,3 @@
 package typeReferenceError
 
-<!ABSTRACT_MEMBER_NOT_IMPLEMENTED!>class Pair<!><<!SYNTAX!><!>:(val c: <!SYNTAX!><!SYNTAX!><!>fun<!><!SYNTAX!><!> <!UNRESOLVED_REFERENCE!>main<!>()
-
+<!ABSTRACT_MEMBER_NOT_IMPLEMENTED!>class Pair<!><<!SYNTAX!><!>:(<!UNSUPPORTED!>val<!> c: <!SYNTAX!><!SYNTAX!><!>fun<!><!SYNTAX!><!> <!UNRESOLVED_REFERENCE!>main<!>()
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/modifiers/modifierOnParameterInFunctionType.kt b/compiler/testData/diagnostics/tests/modifiers/modifierOnParameterInFunctionType.kt
new file mode 100644
index 0000000000000000000000000000000000000000..10a3ad8302f5cc5ed91c22de9f25bce1c9411fa1
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/modifiers/modifierOnParameterInFunctionType.kt
@@ -0,0 +1,52 @@
+// !DIAGNOSTICS: -UNUSED_PARAMETER -UNUSED_VARIABLE
+
+fun f(vararg x: Int) {}
+
+val inVal: (<!UNSUPPORTED!>vararg<!> x: Int)->Unit = {}
+
+fun inParam(fn: (<!UNSUPPORTED!>vararg<!> x: Int)->Unit) {}
+
+fun inParamNested(fn1: (fn2: (<!UNSUPPORTED!>vararg<!> n: Int)->Unit)->Unit) {}
+
+fun inReturn(): (<!UNSUPPORTED!>vararg<!> x: Int)->Unit = {}
+
+class A : (<!UNSUPPORTED!>vararg<!> x: Int)->Unit {
+    override fun invoke(p1: Int) {
+        var lambda: (<!UNSUPPORTED!>vararg<!> x: Int)->Unit = {}
+    }
+
+    val prop: (<!UNSUPPORTED!>vararg<!> x: Int)->Unit
+        get(): (<!UNSUPPORTED!>vararg<!> x: Int)->Unit = {}
+}
+
+val allProhibited: (<!UNSUPPORTED!>abstract<!>
+                    <!UNSUPPORTED!>annotation<!>
+                    <!UNSUPPORTED!>companion<!>
+                    <!UNSUPPORTED!>const<!>
+                    <!UNSUPPORTED!>crossinline<!>
+                    <!UNSUPPORTED!>data<!>
+                    <!UNSUPPORTED!>enum<!>
+                    <!UNSUPPORTED!>external<!>
+                    <!UNSUPPORTED!>final<!>
+                    <!UNSUPPORTED!>in<!>
+                    <!UNSUPPORTED!>inline<!>
+                    <!UNSUPPORTED!>inner<!>
+                    <!UNSUPPORTED!>internal<!>
+                    <!UNSUPPORTED!>lateinit<!>
+                    <!UNSUPPORTED!>noinline<!>
+                    <!UNSUPPORTED!>open<!>
+                    <!UNSUPPORTED!>operator<!>
+                    <!UNSUPPORTED!>out<!>
+                    <!UNSUPPORTED!>override<!>
+                    <!UNSUPPORTED!>private<!>
+                    <!UNSUPPORTED!>protected<!>
+                    <!UNSUPPORTED!>public<!>
+                    <!UNSUPPORTED!>reified<!>
+                    <!UNSUPPORTED!>sealed<!>
+                    <!UNSUPPORTED!>tailrec<!>
+                    <!UNSUPPORTED!>vararg<!>
+
+                    x: Int)->Unit = {}
+
+val valProhibited: (<!UNSUPPORTED!>val<!> x: Int)->Unit = {}
+val varProhibited: (<!UNSUPPORTED!>var<!> x: Int)->Unit = {}
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/modifiers/modifierOnParameterInFunctionType.txt b/compiler/testData/diagnostics/tests/modifiers/modifierOnParameterInFunctionType.txt
new file mode 100644
index 0000000000000000000000000000000000000000..94ed5d88f43ff05b0e326fe3ce931793806d82cc
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/modifiers/modifierOnParameterInFunctionType.txt
@@ -0,0 +1,19 @@
+package
+
+public val allProhibited: (kotlin.Int) -> kotlin.Unit
+public val inVal: (kotlin.Int) -> kotlin.Unit
+public val valProhibited: (kotlin.Int) -> kotlin.Unit
+public val varProhibited: (kotlin.Int) -> kotlin.Unit
+public fun f(/*0*/ vararg x: kotlin.Int /*kotlin.IntArray*/): kotlin.Unit
+public fun inParam(/*0*/ fn: (kotlin.Int) -> kotlin.Unit): kotlin.Unit
+public fun inParamNested(/*0*/ fn1: ((kotlin.Int) -> kotlin.Unit) -> kotlin.Unit): kotlin.Unit
+public fun inReturn(): (kotlin.Int) -> kotlin.Unit
+
+public final class A : (kotlin.Int) -> kotlin.Unit {
+    public constructor A()
+    public final val prop: (kotlin.Int) -> kotlin.Unit
+    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*/ fun invoke(/*0*/ p1: kotlin.Int): kotlin.Unit
+    public open override /*1*/ /*fake_override*/ fun toString(): kotlin.String
+}
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
index 8879a5e32e16ed5604760e621f549e61094410cf..fd9dd0ef3d5a3e112f1a6acc4bc7f2dff2f6ea14 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/JetDiagnosticsTestGenerated.java
@@ -175,6 +175,12 @@ public class JetDiagnosticsTestGenerated extends AbstractJetDiagnosticsTest {
             doTest(fileName);
         }
 
+        @TestMetadata("DefaultValueForParameterInFunctionType.kt")
+        public void testDefaultValueForParameterInFunctionType() throws Exception {
+            String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/DefaultValueForParameterInFunctionType.kt");
+            doTest(fileName);
+        }
+
         @TestMetadata("DefaultValuesTypechecking.kt")
         public void testDefaultValuesTypechecking() throws Exception {
             String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/DefaultValuesTypechecking.kt");
@@ -777,6 +783,12 @@ public class JetDiagnosticsTestGenerated extends AbstractJetDiagnosticsTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("annotationOnParameterInFunctionType.kt")
+            public void testAnnotationOnParameterInFunctionType() throws Exception {
+                String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/annotations/annotationOnParameterInFunctionType.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("AnnotationsForClasses.kt")
             public void testAnnotationsForClasses() throws Exception {
                 String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/annotations/AnnotationsForClasses.kt");
@@ -9411,6 +9423,12 @@ public class JetDiagnosticsTestGenerated extends AbstractJetDiagnosticsTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("modifierOnParameterInFunctionType.kt")
+            public void testModifierOnParameterInFunctionType() throws Exception {
+                String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/modifiers/modifierOnParameterInFunctionType.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("NoLocalVisibility.kt")
             public void testNoLocalVisibility() throws Exception {
                 String fileName = JetTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/modifiers/NoLocalVisibility.kt");