diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index d1dbc966952..14d5254e1e9 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -7757,12 +7757,6 @@ namespace ts {
 
             let returnType = getUnionType(signatures.map(getReturnTypeOfSignature));
 
-            // Issue an error if this return type isn't assignable to JSX.ElementClass
-            let elemClassType = getJsxGlobalElementClassType();
-            if (elemClassType) {
-                checkTypeRelatedTo(returnType, elemClassType, assignableRelation, node, Diagnostics.JSX_element_type_0_is_not_a_constructor_function_for_JSX_elements);
-            }
-
             return returnType;
         }
 
@@ -7813,8 +7807,27 @@ namespace ts {
                 let sym = getJsxElementTagSymbol(node);
 
                 if (links.jsxFlags & JsxFlags.ClassElement) {
+                    // Get the element instance type (the result of newing or invoking this tag)
                     let elemInstanceType = getJsxElementInstanceType(node);
 
+                    // Is this is a stateless function component? See if its single signature is
+                    // assignable to the JSX Element Type with either 0 arguments, or 1 argument
+                    // that is an object type
+                    let callSignature = getSingleCallSignature(getTypeOfSymbol(sym));
+                    let callReturnType = callSignature && getReturnTypeOfSignature(callSignature);
+                    let paramType = callSignature && (callSignature.parameters.length === 0 ? emptyObjectType : getTypeOfSymbol(callSignature.parameters[0]));
+                    if (callReturnType && isTypeAssignableTo(callReturnType, jsxElementType) && paramType.flags & TypeFlags.ObjectType) {
+                        // TODO: Things like 'ref' and 'key' are always valid, how to account for that?
+                        return paramType;
+                    }
+
+                    // Issue an error if this return type isn't assignable to JSX.ElementClass
+                    let elemClassType = getJsxGlobalElementClassType();
+                    if (elemClassType) {
+                        checkTypeRelatedTo(elemInstanceType, elemClassType, assignableRelation, node, Diagnostics.JSX_element_type_0_is_not_a_constructor_function_for_JSX_elements);
+                    }
+
+
                     if (isTypeAny(elemInstanceType)) {
                         return links.resolvedJsxType = elemInstanceType;
                     }
diff --git a/tests/baselines/reference/tsxStatelessFunctionComponents1.errors.txt b/tests/baselines/reference/tsxStatelessFunctionComponents1.errors.txt
new file mode 100644
index 00000000000..343303f4b2c
--- /dev/null
+++ b/tests/baselines/reference/tsxStatelessFunctionComponents1.errors.txt
@@ -0,0 +1,27 @@
+tests/cases/conformance/jsx/tsxStatelessFunctionComponents1.tsx(17,9): error TS2324: Property 'name' is missing in type '{ name: string; }'.
+tests/cases/conformance/jsx/tsxStatelessFunctionComponents1.tsx(17,16): error TS2339: Property 'naaame' does not exist on type '{ name: string; }'.
+
+
+==== tests/cases/conformance/jsx/tsxStatelessFunctionComponents1.tsx (2 errors) ====
+    declare module JSX {
+    	interface Element { el: any; }
+    	interface IntrinsicElements { div: any; }
+    }
+    
+    
+    function Greet(x: {name: string}) {
+    	return <div>Hello, {x}</div>;
+    }
+    function Meet({name = 'world'}) {
+    	return <div>Hello, {x}</div>;
+    }
+    
+    // OK
+    let x = <Greet name='world' />;
+    // Error
+    let y = <Greet naaame='world' />;
+            ~~~~~~~~~~~~~~~~~~~~~~~~
+!!! error TS2324: Property 'name' is missing in type '{ name: string; }'.
+                   ~~~~~~
+!!! error TS2339: Property 'naaame' does not exist on type '{ name: string; }'.
+    
\ No newline at end of file
diff --git a/tests/baselines/reference/tsxStatelessFunctionComponents1.js b/tests/baselines/reference/tsxStatelessFunctionComponents1.js
new file mode 100644
index 00000000000..35a9f03644c
--- /dev/null
+++ b/tests/baselines/reference/tsxStatelessFunctionComponents1.js
@@ -0,0 +1,32 @@
+//// [tsxStatelessFunctionComponents1.tsx]
+declare module JSX {
+	interface Element { el: any; }
+	interface IntrinsicElements { div: any; }
+}
+
+
+function Greet(x: {name: string}) {
+	return <div>Hello, {x}</div>;
+}
+function Meet({name = 'world'}) {
+	return <div>Hello, {x}</div>;
+}
+
+// OK
+let x = <Greet name='world' />;
+// Error
+let y = <Greet naaame='world' />;
+
+
+//// [tsxStatelessFunctionComponents1.jsx]
+function Greet(x) {
+    return <div>Hello, {x}</div>;
+}
+function Meet(_a) {
+    var _b = _a.name, name = _b === void 0 ? 'world' : _b;
+    return <div>Hello, {x}</div>;
+}
+// OK
+var x = <Greet name='world'/>;
+// Error
+var y = <Greet naaame='world'/>;
diff --git a/tests/cases/conformance/jsx/tsxStatelessFunctionComponents1.tsx b/tests/cases/conformance/jsx/tsxStatelessFunctionComponents1.tsx
new file mode 100644
index 00000000000..f2408632e7c
--- /dev/null
+++ b/tests/cases/conformance/jsx/tsxStatelessFunctionComponents1.tsx
@@ -0,0 +1,19 @@
+//@filename: file.tsx
+//@jsx: preserve
+declare module JSX {
+	interface Element { el: any; }
+	interface IntrinsicElements { div: any; }
+}
+
+
+function Greet(x: {name: string}) {
+	return <div>Hello, {x}</div>;
+}
+function Meet({name = 'world'}) {
+	return <div>Hello, {x}</div>;
+}
+
+// OK
+let x = <Greet name='world' />;
+// Error
+let y = <Greet naaame='world' />;