diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 07ceaa13563..6dd49bb46da 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -749,12 +749,10 @@ namespace ts {
             return _jsxNamespace;
         }
 
-        function getEmitResolver(sourceFile: SourceFile, cancellationToken: CancellationToken, ignoreDiagnostics?: boolean) {
+        function getEmitResolver(sourceFile: SourceFile, cancellationToken: CancellationToken) {
             // Ensure we have all the type information in place for this file so that all the
             // emitter questions of this resolver will return the right information.
-            if (!ignoreDiagnostics) {
-                getDiagnostics(sourceFile, cancellationToken);
-            }
+            getDiagnostics(sourceFile, cancellationToken);
             return emitResolver;
         }
 
diff --git a/src/compiler/program.ts b/src/compiler/program.ts
index 0c9f5765605..95df0a61731 100755
--- a/src/compiler/program.ts
+++ b/src/compiler/program.ts
@@ -1179,7 +1179,7 @@ namespace ts {
             // This is because in the -out scenario all files need to be emitted, and therefore all
             // files need to be type checked. And the way to specify that all files need to be type
             // checked is to not pass the file to getEmitResolver.
-            const emitResolver = getDiagnosticsProducingTypeChecker().getEmitResolver((options.outFile || options.out) ? undefined : sourceFile, cancellationToken, emitOnlyDtsFiles);
+            const emitResolver = getDiagnosticsProducingTypeChecker().getEmitResolver((options.outFile || options.out) ? undefined : sourceFile, cancellationToken);
 
             performance.mark("beforeEmit");
 
diff --git a/src/compiler/types.ts b/src/compiler/types.ts
index f6ca2f45d34..3d040f4592f 100644
--- a/src/compiler/types.ts
+++ b/src/compiler/types.ts
@@ -2892,7 +2892,7 @@ namespace ts {
         // Should not be called directly.  Should only be accessed through the Program instance.
         /* @internal */ getDiagnostics(sourceFile?: SourceFile, cancellationToken?: CancellationToken): Diagnostic[];
         /* @internal */ getGlobalDiagnostics(): Diagnostic[];
-        /* @internal */ getEmitResolver(sourceFile?: SourceFile, cancellationToken?: CancellationToken, ignoreDiagnostics?: boolean): EmitResolver;
+        /* @internal */ getEmitResolver(sourceFile?: SourceFile, cancellationToken?: CancellationToken): EmitResolver;
 
         /* @internal */ getNodeCount(): number;
         /* @internal */ getIdentifierCount(): number;
diff --git a/src/harness/unittests/tscWatchMode.ts b/src/harness/unittests/tscWatchMode.ts
index a2b79b00dc7..6915a6ad37d 100644
--- a/src/harness/unittests/tscWatchMode.ts
+++ b/src/harness/unittests/tscWatchMode.ts
@@ -1086,6 +1086,33 @@ namespace ts.tscWatch {
             // This should be 0
             host.checkTimeoutQueueLengthAndRun(0);
         });
+
+        it("shouldnt report error about unused function incorrectly when file changes from global to module", () => {
+            const getFileContent = (asModule: boolean) => `
+                    function one() {}
+                    ${asModule ? "export " : ""}function two() {
+                      return function three() {
+                        one();
+                      }
+                    }`;
+            const file: FileOrFolder = {
+                path: "/a/b/file.ts",
+                content: getFileContent(/*asModule*/ false)
+            };
+            const files = [file, libFile];
+            const host = createWatchedSystem(files);
+            const watch = createWatchOfFilesAndCompilerOptions([file.path], host, {
+                noUnusedLocals: true
+            });
+            checkProgramActualFiles(watch(), files.map(file => file.path));
+            checkOutputErrors(host, [], ExpectedOutputErrorsPosition.AfterCompilationStarting);
+
+            file.content = getFileContent(/*asModule*/ true);
+            host.reloadFS(files);
+            host.runQueuedTimeoutCallbacks();
+            checkProgramActualFiles(watch(), files.map(file => file.path));
+            checkOutputErrors(host, [], ExpectedOutputErrorsPosition.AfterFileChangeDetected);
+        });
     });
 
     describe("tsc-watch emit with outFile or out setting", () => {