diff --git a/include/swift/AST/DiagnosticsParse.def b/include/swift/AST/DiagnosticsParse.def
index 0a7bbbdae92ba..b072665a9d8c3 100644
--- a/include/swift/AST/DiagnosticsParse.def
+++ b/include/swift/AST/DiagnosticsParse.def
@@ -619,8 +619,9 @@ ERROR(expected_type_function_result,PointsToFirstBadToken,
       "expected type for function result", ())
 ERROR(generic_non_function,PointsToFirstBadToken,
       "only syntactic function types can be generic", ())
-ERROR(rethrowing_function_type,PointsToFirstBadToken,
-      "only function declarations may be marked 'rethrows'", ())
+ERROR(rethrowing_function_type,none,
+      "only function declarations may be marked 'rethrows'; "
+      "did you mean 'throws'?", ())
 ERROR(throws_in_wrong_position,none,
       "'throws' may only occur before '->'", ())
 ERROR(rethrows_in_wrong_position,none,
diff --git a/lib/Parse/ParseExpr.cpp b/lib/Parse/ParseExpr.cpp
index 2f0e577c89639..fc38af720dafc 100644
--- a/lib/Parse/ParseExpr.cpp
+++ b/lib/Parse/ParseExpr.cpp
@@ -2217,7 +2217,8 @@ parseClosureSignatureIfPresent(SmallVectorImpl<CaptureListEntry> &captureList,
       throwsLoc = consumeToken();
     } else if (Tok.is(tok::kw_rethrows)) {
       throwsLoc = consumeToken();
-      diagnose(throwsLoc, diag::rethrowing_function_type);
+      diagnose(throwsLoc, diag::rethrowing_function_type)
+        .fixItReplace(throwsLoc, "throws");
     }
 
     // Parse the optional explicit return type.
diff --git a/lib/Parse/ParseType.cpp b/lib/Parse/ParseType.cpp
index f5c68ad400f89..1ae1aecbea8ee 100644
--- a/lib/Parse/ParseType.cpp
+++ b/lib/Parse/ParseType.cpp
@@ -184,6 +184,7 @@ ParserResult<TypeRepr> Parser::parseType() {
 ///
 ///   type-function:
 ///     type-composition '->' type
+///     type-composition 'throws' '->' type
 ///
 ParserResult<TypeRepr> Parser::parseType(Diag<> MessageID,
                                          bool HandleCodeCompletion) {
@@ -203,62 +204,45 @@ ParserResult<TypeRepr> Parser::parseType(Diag<> MessageID,
     parseTypeSimpleOrComposition(MessageID, HandleCodeCompletion);
   if (ty.hasCodeCompletion())
     return makeParserCodeCompletionResult<TypeRepr>();
-
   if (ty.isNull())
     return nullptr;
+  auto tyR = ty.get();
 
-  // Parse a throws specifier.  'throw' is probably a typo for 'throws',
-  // but in local contexts we could just be at the end of a statement,
-  // so we need to check for the arrow.
-  ParserPosition beforeThrowsPos;
+  // Parse a throws specifier.
+  // Don't consume 'throws', if the next token is not '->', so we can emit a
+  // more useful diagnostic when parsing a function decl.
   SourceLoc throwsLoc;
-  bool rethrows = false;
-  if (Tok.isAny(tok::kw_throws, tok::kw_rethrows) ||
-      (Tok.is(tok::kw_throw) && peekToken().is(tok::arrow))) {
-    if (Tok.is(tok::kw_throw)) {
-      diagnose(Tok.getLoc(), diag::throw_in_function_type)
+  if (Tok.isAny(tok::kw_throws, tok::kw_rethrows, tok::kw_throw) &&
+      peekToken().is(tok::arrow)) {
+    if (Tok.isNot(tok::kw_throws)) {
+      // 'rethrows' is only allowed on function declarations for now.
+      // 'throw' is probably a typo for 'throws'.
+      Diag<> DiagID = Tok.is(tok::kw_rethrows) ?
+        diag::rethrowing_function_type : diag::throw_in_function_type;
+      diagnose(Tok.getLoc(), DiagID)
         .fixItReplace(Tok.getLoc(), "throws");
     }
-
-    beforeThrowsPos = getParserPosition();
-    rethrows = Tok.is(tok::kw_rethrows);
     throwsLoc = consumeToken();
   }
 
-  // Handle type-function if we have an arrow.
-  SourceLoc arrowLoc;
-  if (consumeIf(tok::arrow, arrowLoc)) {
+  if (Tok.is(tok::arrow)) {
+    // Handle type-function if we have an arrow.
+    SourceLoc arrowLoc = consumeToken();
     ParserResult<TypeRepr> SecondHalf =
       parseType(diag::expected_type_function_result);
     if (SecondHalf.hasCodeCompletion())
       return makeParserCodeCompletionResult<TypeRepr>();
     if (SecondHalf.isNull())
       return nullptr;
-    if (rethrows) {
-      // 'rethrows' is only allowed on function declarations for now.
-      diagnose(throwsLoc, diag::rethrowing_function_type);
-    }
-    auto fnTy = new (Context) FunctionTypeRepr(generics, ty.get(),
-                                               throwsLoc,
-                                               arrowLoc,
-                                               SecondHalf.get());
-    return makeParserResult(applyAttributeToType(fnTy, inoutLoc, attrs));
-  } else if (throwsLoc.isValid()) {
-    // Don't consume 'throws', so we can emit a more useful diagnostic when
-    // parsing a function decl.
-    restoreParserPosition(beforeThrowsPos);
-  }
-  
-  // Only function types may be generic.
-  if (generics) {
+    tyR = new (Context) FunctionTypeRepr(generics, tyR, throwsLoc, arrowLoc,
+                                         SecondHalf.get());
+  } else if (generics) {
+    // Only function types may be generic.
     auto brackets = generics->getSourceRange();
     diagnose(brackets.Start, diag::generic_non_function);
   }
 
-  if (ty.isNonNull() && !ty.hasCodeCompletion()) {
-    ty = makeParserResult(applyAttributeToType(ty.get(), inoutLoc, attrs));
-  }
-  return ty;
+  return makeParserResult(applyAttributeToType(tyR, inoutLoc, attrs));
 }
 
 ParserResult<TypeRepr> Parser::parseTypeForInheritance(
diff --git a/test/Parse/errors.swift b/test/Parse/errors.swift
index ab0de0b993dc0..75ad002f9ddbf 100644
--- a/test/Parse/errors.swift
+++ b/test/Parse/errors.swift
@@ -122,6 +122,13 @@ func postRethrows2(_ f: () throws -> Int) -> rethrows Int { // expected-error{{'
   return try f()
 }
 
+func incompleteThrowType() {
+  // FIXME: Bad recovery for incomplete function type.
+  let _: () throws
+  // expected-error @-1 {{consecutive statements on a line must be separated by ';'}}
+  // expected-error @-2 {{expected expression}}
+}
+
 // rdar://21328447
 func fixitThrow0() throw {} // expected-error{{expected throwing specifier; did you mean 'throws'?}} {{20-25=throws}}
 func fixitThrow1() throw -> Int {} // expected-error{{expected throwing specifier; did you mean 'throws'?}} {{20-25=throws}}
diff --git a/test/decl/func/rethrows.swift b/test/decl/func/rethrows.swift
index 5bced2f1e88fa..6d4c78a18e8f9 100644
--- a/test/decl/func/rethrows.swift
+++ b/test/decl/func/rethrows.swift
@@ -3,9 +3,9 @@
 /** Basics *******************************************************************/
 
 // Function types can't be rethrows right now.
-let r1 = {() rethrows -> Int in 0} // expected-error {{only function declarations may be marked 'rethrows'}}
-let r2 : () rethrows -> Int = { 0 } // expected-error {{only function declarations may be marked 'rethrows'}}
-let r3 : Optional<() rethrows -> ()> = nil // expected-error {{only function declarations may be marked 'rethrows'}}
+let r1 = {() rethrows -> Int in 0} // expected-error {{only function declarations may be marked 'rethrows'; did you mean 'throws'?}} {{14-22=throws}}
+let r2 : () rethrows -> Int = { 0 } // expected-error {{only function declarations may be marked 'rethrows'; did you mean 'throws'?}} {{13-21=throws}}
+let r3 : Optional<() rethrows -> ()> = nil // expected-error {{only function declarations may be marked 'rethrows'; did you mean 'throws'?}} {{22-30=throws}}
 
 func f1(_ f: () throws -> ()) rethrows { try f() }
 func f2(_ f: () -> ()) rethrows { f() } // expected-error {{'rethrows' function must take a throwing function argument}}