diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 81fd46de619..1b34952f3ae 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -11448,31 +11448,18 @@ namespace ts {
             forEach(node.declarationList.declarations, checkSourceElement);
         }
 
-        function checkGrammarDisallowedModifiersInBlockOrObjectLiteralExpression(node: Node) {
-            if (node.modifiers) {
-                if (inBlockOrObjectLiteralExpression(node)) {
-                    if (isAsyncFunctionLike(node)) {
-                        if (node.modifiers.length > 1) {
-                            return grammarErrorOnFirstToken(node, Diagnostics.Modifiers_cannot_appear_here); 
-                        }
-                    }
-                    else {
+        function checkGrammarDisallowedModifiersOnObjectLiteralExpressionMethod(node: Node) {
+            // We only disallow modifier on a method declaration if it is a property of object-literal-expression
+            if (node.modifiers && node.parent.kind === SyntaxKind.ObjectLiteralExpression){
+                if (isAsyncFunctionLike(node)) {
+                    if (node.modifiers.length > 1) {
                         return grammarErrorOnFirstToken(node, Diagnostics.Modifiers_cannot_appear_here);
                     }
                 }
-            }
-        }
-
-        function inBlockOrObjectLiteralExpression(node: Node) {
-            while (node) {
-                if (node.kind === SyntaxKind.Block || node.kind === SyntaxKind.ObjectLiteralExpression) {
-                    return true;
+                else {
+                    return grammarErrorOnFirstToken(node, Diagnostics.Modifiers_cannot_appear_here);
                 }
-
-                node = node.parent;
             }
-            
-            return false;
         }
 
         function checkExpressionStatement(node: ExpressionStatement) {
@@ -15030,7 +15017,7 @@ namespace ts {
         }
 
         function checkGrammarMethod(node: MethodDeclaration) {
-            if (checkGrammarDisallowedModifiersInBlockOrObjectLiteralExpression(node) ||
+            if (checkGrammarDisallowedModifiersOnObjectLiteralExpressionMethod(node) ||
                 checkGrammarFunctionLikeDeclaration(node) ||
                 checkGrammarForGenerator(node)) {
                 return true;
diff --git a/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.js b/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.js
new file mode 100644
index 00000000000..d571a4143ee
--- /dev/null
+++ b/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.js
@@ -0,0 +1,25 @@
+//// [modifierOnClassDeclarationMemberInFunction.ts]
+
+function f() {
+    class C {
+        public baz = 1;
+        static foo() { }
+        public bar() { }
+    }
+}
+
+//// [modifierOnClassDeclarationMemberInFunction.js]
+function f() {
+    var C = (function () {
+        function C() {
+            this.baz = 1;
+        }
+        C.foo = function () { };
+        C.prototype.bar = function () { };
+        return C;
+    })();
+}
+
+
+//// [modifierOnClassDeclarationMemberInFunction.d.ts]
+declare function f(): void;
diff --git a/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.symbols b/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.symbols
new file mode 100644
index 00000000000..a411bee09cb
--- /dev/null
+++ b/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.symbols
@@ -0,0 +1,18 @@
+=== tests/cases/conformance/classes/classDeclarations/modifierOnClassDeclarationMemberInFunction.ts ===
+
+function f() {
+>f : Symbol(f, Decl(modifierOnClassDeclarationMemberInFunction.ts, 0, 0))
+
+    class C {
+>C : Symbol(C, Decl(modifierOnClassDeclarationMemberInFunction.ts, 1, 14))
+
+        public baz = 1;
+>baz : Symbol(baz, Decl(modifierOnClassDeclarationMemberInFunction.ts, 2, 13))
+
+        static foo() { }
+>foo : Symbol(C.foo, Decl(modifierOnClassDeclarationMemberInFunction.ts, 3, 23))
+
+        public bar() { }
+>bar : Symbol(bar, Decl(modifierOnClassDeclarationMemberInFunction.ts, 4, 24))
+    }
+}
diff --git a/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.types b/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.types
new file mode 100644
index 00000000000..dfd482a6bc8
--- /dev/null
+++ b/tests/baselines/reference/modifierOnClassDeclarationMemberInFunction.types
@@ -0,0 +1,19 @@
+=== tests/cases/conformance/classes/classDeclarations/modifierOnClassDeclarationMemberInFunction.ts ===
+
+function f() {
+>f : () => void
+
+    class C {
+>C : C
+
+        public baz = 1;
+>baz : number
+>1 : number
+
+        static foo() { }
+>foo : () => void
+
+        public bar() { }
+>bar : () => void
+    }
+}
diff --git a/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.js b/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.js
new file mode 100644
index 00000000000..e43e8dd8203
--- /dev/null
+++ b/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.js
@@ -0,0 +1,25 @@
+//// [modifierOnClassExpressionMemberInFunction.ts]
+
+function g() {
+    var x = class C {
+        public prop1 = 1;
+        private foo() { }
+        static prop2 = 43;
+    }
+}
+
+//// [modifierOnClassExpressionMemberInFunction.js]
+function g() {
+    var x = (function () {
+        function C() {
+            this.prop1 = 1;
+        }
+        C.prototype.foo = function () { };
+        C.prop2 = 43;
+        return C;
+    })();
+}
+
+
+//// [modifierOnClassExpressionMemberInFunction.d.ts]
+declare function g(): void;
diff --git a/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.symbols b/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.symbols
new file mode 100644
index 00000000000..d603d96dcda
--- /dev/null
+++ b/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.symbols
@@ -0,0 +1,19 @@
+=== tests/cases/conformance/classes/classExpressions/modifierOnClassExpressionMemberInFunction.ts ===
+
+function g() {
+>g : Symbol(g, Decl(modifierOnClassExpressionMemberInFunction.ts, 0, 0))
+
+    var x = class C {
+>x : Symbol(x, Decl(modifierOnClassExpressionMemberInFunction.ts, 2, 7))
+>C : Symbol(C, Decl(modifierOnClassExpressionMemberInFunction.ts, 2, 11))
+
+        public prop1 = 1;
+>prop1 : Symbol(C.prop1, Decl(modifierOnClassExpressionMemberInFunction.ts, 2, 21))
+
+        private foo() { }
+>foo : Symbol(C.foo, Decl(modifierOnClassExpressionMemberInFunction.ts, 3, 25))
+
+        static prop2 = 43;
+>prop2 : Symbol(C.prop2, Decl(modifierOnClassExpressionMemberInFunction.ts, 4, 25))
+    }
+}
diff --git a/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.types b/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.types
new file mode 100644
index 00000000000..87a200ee56e
--- /dev/null
+++ b/tests/baselines/reference/modifierOnClassExpressionMemberInFunction.types
@@ -0,0 +1,22 @@
+=== tests/cases/conformance/classes/classExpressions/modifierOnClassExpressionMemberInFunction.ts ===
+
+function g() {
+>g : () => void
+
+    var x = class C {
+>x : typeof C
+>class C {        public prop1 = 1;        private foo() { }        static prop2 = 43;    } : typeof C
+>C : typeof C
+
+        public prop1 = 1;
+>prop1 : number
+>1 : number
+
+        private foo() { }
+>foo : () => void
+
+        static prop2 = 43;
+>prop2 : number
+>43 : number
+    }
+}
diff --git a/tests/cases/conformance/classes/classDeclarations/modifierOnClassDeclarationMemberInFunction.ts b/tests/cases/conformance/classes/classDeclarations/modifierOnClassDeclarationMemberInFunction.ts
new file mode 100644
index 00000000000..f0d7c355e3b
--- /dev/null
+++ b/tests/cases/conformance/classes/classDeclarations/modifierOnClassDeclarationMemberInFunction.ts
@@ -0,0 +1,9 @@
+// @declaration: true
+
+function f() {
+    class C {
+        public baz = 1;
+        static foo() { }
+        public bar() { }
+    }
+}
\ No newline at end of file
diff --git a/tests/cases/conformance/classes/classExpressions/modifierOnClassExpressionMemberInFunction.ts b/tests/cases/conformance/classes/classExpressions/modifierOnClassExpressionMemberInFunction.ts
new file mode 100644
index 00000000000..100c04a1d31
--- /dev/null
+++ b/tests/cases/conformance/classes/classExpressions/modifierOnClassExpressionMemberInFunction.ts
@@ -0,0 +1,10 @@
+// @declaration: true
+// @declaration: true
+
+function g() {
+    var x = class C {
+        public prop1 = 1;
+        private foo() { }
+        static prop2 = 43;
+    }
+}
\ No newline at end of file