diff --git a/src/compiler/parser.ts b/src/compiler/parser.ts
index e57a3fa98f390..f055c326b0a33 100644
--- a/src/compiler/parser.ts
+++ b/src/compiler/parser.ts
@@ -4695,24 +4695,7 @@ namespace ts {
                 }
             }
 
-            // Given:
-            //     x ? y => ({ y }) : z => ({ z })
-            // We try to parse the body of the first arrow function by looking at:
-            //     ({ y }) : z => ({ z })
-            // This is a valid arrow function with "z" as the return type.
-            //
-            // But, if we're in the true side of a conditional expression, this colon
-            // terminates the expression, so we cannot allow a return type if we aren't
-            // certain whether or not the preceding text was parsed as a parameter list.
-            //
-            // For example,
-            //     a() ? (b: number, c?: string): void => d() : e
-            // is determined by isParenthesizedArrowFunctionExpression to unambiguously
-            // be an arrow expression, so we allow a return type.
-            if (disallowReturnTypeInArrowFunction && token() === SyntaxKind.ColonToken) {
-                return undefined;
-            }
-
+            const hasReturnColon = token() === SyntaxKind.ColonToken;
             const type = parseReturnType(SyntaxKind.ColonToken, /*isType*/ false);
             if (type && !allowAmbiguity && typeHasArrowFunctionBlockingParseError(type)) {
                 return undefined;
@@ -4748,6 +4731,31 @@ namespace ts {
                 ? parseArrowFunctionExpressionBody(some(modifiers, isAsyncModifier), disallowReturnTypeInArrowFunction)
                 : parseIdentifier();
 
+            // Given:
+            //     x ? y => ({ y }) : z => ({ z })
+            // We try to parse the body of the first arrow function by looking at:
+            //     ({ y }) : z => ({ z })
+            // This is a valid arrow function with "z" as the return type.
+            //
+            // But, if we're in the true side of a conditional expression, this colon
+            // terminates the expression, so we cannot allow a return type if we aren't
+            // certain whether or not the preceding text was parsed as a parameter list.
+            //
+            // For example,
+            //     a() ? (b: number, c?: string): void => d() : e
+            // is determined by isParenthesizedArrowFunctionExpression to unambiguously
+            // be an arrow expression, so we allow a return type.
+            if (disallowReturnTypeInArrowFunction && hasReturnColon) {
+                // However, if the arrow function we were able to parse is followed by another colon
+                // as in:
+                //     a ? (x): string => x : null
+                // Then allow the arrow function, and treat the second colon as terminating
+                // the conditional expression.
+                if (token() !== SyntaxKind.ColonToken) {
+                    return undefined;
+                }
+            }
+
             const node = factory.createArrowFunction(modifiers, typeParameters, parameters, type, equalsGreaterThanToken, body);
             return withJSDoc(finishNode(node, pos), hasJSDoc);
         }
diff --git a/tests/baselines/reference/parserArrowFunctionExpression10.errors.txt b/tests/baselines/reference/parserArrowFunctionExpression10.errors.txt
index 43cf9de267b85..0ee29b021a1ef 100644
--- a/tests/baselines/reference/parserArrowFunctionExpression10.errors.txt
+++ b/tests/baselines/reference/parserArrowFunctionExpression10.errors.txt
@@ -1,20 +1,17 @@
 tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts(1,1): error TS2304: Cannot find name 'a'.
-tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts(1,6): error TS2304: Cannot find name 'b'.
+tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts(1,11): error TS2304: Cannot find name 'c'.
 tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts(1,17): error TS2304: Cannot find name 'd'.
-tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts(1,20): error TS1005: ';' expected.
 tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts(1,27): error TS2304: Cannot find name 'f'.
 
 
-==== tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts (5 errors) ====
+==== tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts (4 errors) ====
     a ? (b) : c => (d) : e => f
     ~
 !!! error TS2304: Cannot find name 'a'.
-         ~
-!!! error TS2304: Cannot find name 'b'.
+              ~
+!!! error TS2304: Cannot find name 'c'.
                     ~
 !!! error TS2304: Cannot find name 'd'.
-                       ~
-!!! error TS1005: ';' expected.
                               ~
 !!! error TS2304: Cannot find name 'f'.
     
\ No newline at end of file
diff --git a/tests/baselines/reference/parserArrowFunctionExpression10.js b/tests/baselines/reference/parserArrowFunctionExpression10.js
index 86e1e61bb0716..7681332637b4e 100644
--- a/tests/baselines/reference/parserArrowFunctionExpression10.js
+++ b/tests/baselines/reference/parserArrowFunctionExpression10.js
@@ -3,5 +3,4 @@ a ? (b) : c => (d) : e => f
 
 
 //// [parserArrowFunctionExpression10.js]
-a ? (b) : function (c) { return (d); };
-(function (e) { return f; });
+a ? function (b) { return (d); } : function (e) { return f; };
diff --git a/tests/baselines/reference/parserArrowFunctionExpression10.symbols b/tests/baselines/reference/parserArrowFunctionExpression10.symbols
index f30f0b3e3ca49..df391a0be345d 100644
--- a/tests/baselines/reference/parserArrowFunctionExpression10.symbols
+++ b/tests/baselines/reference/parserArrowFunctionExpression10.symbols
@@ -1,5 +1,6 @@
 === tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts ===
 a ? (b) : c => (d) : e => f
->c : Symbol(c, Decl(parserArrowFunctionExpression10.ts, 0, 9))
+>b : Symbol(b, Decl(parserArrowFunctionExpression10.ts, 0, 5))
+>c : Symbol(c)
 >e : Symbol(e, Decl(parserArrowFunctionExpression10.ts, 0, 20))
 
diff --git a/tests/baselines/reference/parserArrowFunctionExpression10.types b/tests/baselines/reference/parserArrowFunctionExpression10.types
index 8ec7d69c29559..e4149fe4cbb5c 100644
--- a/tests/baselines/reference/parserArrowFunctionExpression10.types
+++ b/tests/baselines/reference/parserArrowFunctionExpression10.types
@@ -1,11 +1,9 @@
 === tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression10.ts ===
 a ? (b) : c => (d) : e => f
->a ? (b) : c => (d) : any
+>a ? (b) : c => (d) : e => f : (b: any) => c
 >a : any
->(b) : any
+>(b) : c => (d) : (b: any) => c
 >b : any
->c => (d) : (c: any) => any
->c : any
 >(d) : any
 >d : any
 >e => f : (e: any) => any
diff --git a/tests/baselines/reference/parserArrowFunctionExpression15.js b/tests/baselines/reference/parserArrowFunctionExpression15.js
new file mode 100644
index 0000000000000..a18efc84f0975
--- /dev/null
+++ b/tests/baselines/reference/parserArrowFunctionExpression15.js
@@ -0,0 +1,6 @@
+//// [parserArrowFunctionExpression15.ts]
+false ? (param): string => param : null
+
+
+//// [parserArrowFunctionExpression15.js]
+false ? function (param) { return param; } : null;
diff --git a/tests/baselines/reference/parserArrowFunctionExpression15.symbols b/tests/baselines/reference/parserArrowFunctionExpression15.symbols
new file mode 100644
index 0000000000000..7cb354c7dc912
--- /dev/null
+++ b/tests/baselines/reference/parserArrowFunctionExpression15.symbols
@@ -0,0 +1,5 @@
+=== tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression15.ts ===
+false ? (param): string => param : null
+>param : Symbol(param, Decl(parserArrowFunctionExpression15.ts, 0, 9))
+>param : Symbol(param, Decl(parserArrowFunctionExpression15.ts, 0, 9))
+
diff --git a/tests/baselines/reference/parserArrowFunctionExpression15.types b/tests/baselines/reference/parserArrowFunctionExpression15.types
new file mode 100644
index 0000000000000..4640763862112
--- /dev/null
+++ b/tests/baselines/reference/parserArrowFunctionExpression15.types
@@ -0,0 +1,9 @@
+=== tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression15.ts ===
+false ? (param): string => param : null
+>false ? (param): string => param : null : (param: any) => string
+>false : false
+>(param): string => param : (param: any) => string
+>param : any
+>param : any
+>null : null
+
diff --git a/tests/baselines/reference/parserArrowFunctionExpression16.js b/tests/baselines/reference/parserArrowFunctionExpression16.js
new file mode 100644
index 0000000000000..8d0404c91c853
--- /dev/null
+++ b/tests/baselines/reference/parserArrowFunctionExpression16.js
@@ -0,0 +1,6 @@
+//// [parserArrowFunctionExpression16.ts]
+true ? false ? (param): string => param : null : null
+
+
+//// [parserArrowFunctionExpression16.js]
+true ? false ? function (param) { return param; } : null : null;
diff --git a/tests/baselines/reference/parserArrowFunctionExpression16.symbols b/tests/baselines/reference/parserArrowFunctionExpression16.symbols
new file mode 100644
index 0000000000000..f2a4ff04df134
--- /dev/null
+++ b/tests/baselines/reference/parserArrowFunctionExpression16.symbols
@@ -0,0 +1,5 @@
+=== tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression16.ts ===
+true ? false ? (param): string => param : null : null
+>param : Symbol(param, Decl(parserArrowFunctionExpression16.ts, 0, 16))
+>param : Symbol(param, Decl(parserArrowFunctionExpression16.ts, 0, 16))
+
diff --git a/tests/baselines/reference/parserArrowFunctionExpression16.types b/tests/baselines/reference/parserArrowFunctionExpression16.types
new file mode 100644
index 0000000000000..fffd623adac0d
--- /dev/null
+++ b/tests/baselines/reference/parserArrowFunctionExpression16.types
@@ -0,0 +1,12 @@
+=== tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression16.ts ===
+true ? false ? (param): string => param : null : null
+>true ? false ? (param): string => param : null : null : (param: any) => string
+>true : true
+>false ? (param): string => param : null : (param: any) => string
+>false : false
+>(param): string => param : (param: any) => string
+>param : any
+>param : any
+>null : null
+>null : null
+
diff --git a/tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression15.ts b/tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression15.ts
new file mode 100644
index 0000000000000..3348d24bfebe4
--- /dev/null
+++ b/tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression15.ts
@@ -0,0 +1 @@
+false ? (param): string => param : null
diff --git a/tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression16.ts b/tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression16.ts
new file mode 100644
index 0000000000000..9a19bfdb6cfc1
--- /dev/null
+++ b/tests/cases/conformance/parser/ecmascript5/ArrowFunctionExpressions/parserArrowFunctionExpression16.ts
@@ -0,0 +1 @@
+true ? false ? (param): string => param : null : null