diff --git a/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.js b/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.js
index 01bd6f267ed..317017c9acc 100644
--- a/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.js
+++ b/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.js
@@ -41,6 +41,15 @@ function foo4(x: number | string | boolean) {
                 : x.toString(); // number
         })(x); // x here is narrowed to number | boolean
 }
+// Type guards affect nested function expressions, but not nested function declarations
+function foo5(x: number | string | boolean) {
+    if (typeof x === "string") {
+        var y = x; // string;
+        function foo() {
+            var z = x; // number | string | boolean, type guard has no effect
+        }
+    }
+}
 module m {
     var x: number | string | boolean;
     module m2 {
@@ -96,6 +105,15 @@ function foo4(x) {
         return typeof x === "boolean" ? x.toString() : x.toString(); // number
     })(x); // x here is narrowed to number | boolean
 }
+// Type guards affect nested function expressions, but not nested function declarations
+function foo5(x) {
+    if (typeof x === "string") {
+        var y = x; // string;
+        function foo() {
+            var z = x; // number | string | boolean, type guard has no effect
+        }
+    }
+}
 var m;
 (function (m) {
     var x;
diff --git a/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.types b/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.types
index ec844960f5d..3d914b5c80b 100644
--- a/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.types
+++ b/tests/baselines/reference/typeGuardsInFunctionAndModuleBlock.types
@@ -173,6 +173,29 @@ function foo4(x: number | string | boolean) {
         })(x); // x here is narrowed to number | boolean
 >x : number | boolean
 }
+// Type guards affect nested function expressions, but not nested function declarations
+function foo5(x: number | string | boolean) {
+>foo5 : (x: string | number | boolean) => void
+>x : string | number | boolean
+
+    if (typeof x === "string") {
+>typeof x === "string" : boolean
+>typeof x : string
+>x : string | number | boolean
+
+        var y = x; // string;
+>y : string
+>x : string
+
+        function foo() {
+>foo : () => void
+
+            var z = x; // number | string | boolean, type guard has no effect
+>z : string | number | boolean
+>x : string | number | boolean
+        }
+    }
+}
 module m {
 >m : typeof m
 
diff --git a/tests/cases/conformance/expressions/typeGuards/typeGuardsInFunctionAndModuleBlock.ts b/tests/cases/conformance/expressions/typeGuards/typeGuardsInFunctionAndModuleBlock.ts
index 2727375294c..ec23b75b590 100644
--- a/tests/cases/conformance/expressions/typeGuards/typeGuardsInFunctionAndModuleBlock.ts
+++ b/tests/cases/conformance/expressions/typeGuards/typeGuardsInFunctionAndModuleBlock.ts
@@ -40,6 +40,15 @@ function foo4(x: number | string | boolean) {
                 : x.toString(); // number
         })(x); // x here is narrowed to number | boolean
 }
+// Type guards affect nested function expressions, but not nested function declarations
+function foo5(x: number | string | boolean) {
+    if (typeof x === "string") {
+        var y = x; // string;
+        function foo() {
+            var z = x; // number | string | boolean, type guard has no effect
+        }
+    }
+}
 module m {
     var x: number | string | boolean;
     module m2 {