diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index 1b7b659e1a6b3..685b32f796fd5 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -531,7 +531,7 @@ namespace ts {
 
         function getNodeLinks(node: Node): NodeLinks {
             const nodeId = getNodeId(node);
-            return nodeLinks[nodeId] || (nodeLinks[nodeId] = {});
+            return nodeLinks[nodeId] || (nodeLinks[nodeId] = { flags: 0 });
         }
 
         function isGlobalSourceFile(node: Node) {
@@ -8185,7 +8185,7 @@ namespace ts {
             return incomplete ? { flags: 0, type } : type;
         }
 
-        function getFlowTypeOfReference(reference: Node, declaredType: Type, assumeInitialized: boolean, includeOuterFunctions: boolean) {
+        function getFlowTypeOfReference(reference: Node, declaredType: Type, assumeInitialized: boolean, flowContainer: Node) {
             let key: string;
             if (!reference.flowNode || assumeInitialized && !(declaredType.flags & TypeFlags.Narrowable)) {
                 return declaredType;
@@ -8237,7 +8237,7 @@ namespace ts {
                     else if (flow.flags & FlowFlags.Start) {
                         // Check if we should continue with the control flow of the containing function.
                         const container = (<FlowStart>flow).container;
-                        if (container && includeOuterFunctions) {
+                        if (container && container !== flowContainer && reference.kind !== SyntaxKind.PropertyAccessExpression) {
                             flow = container.flowNode;
                             continue;
                         }
@@ -8708,21 +8708,52 @@ namespace ts {
         function getControlFlowContainer(node: Node): Node {
             while (true) {
                 node = node.parent;
-                if (isFunctionLike(node) || node.kind === SyntaxKind.ModuleBlock || node.kind === SyntaxKind.SourceFile || node.kind === SyntaxKind.PropertyDeclaration) {
+                if (isFunctionLike(node) && !getImmediatelyInvokedFunctionExpression(node) ||
+                    node.kind === SyntaxKind.ModuleBlock ||
+                    node.kind === SyntaxKind.SourceFile ||
+                    node.kind === SyntaxKind.PropertyDeclaration) {
                     return node;
                 }
             }
         }
 
-        function isDeclarationIncludedInFlow(reference: Node, declaration: Declaration, includeOuterFunctions: boolean) {
-            const declarationContainer = getControlFlowContainer(declaration);
-            let container = getControlFlowContainer(reference);
-            while (container !== declarationContainer &&
-                (container.kind === SyntaxKind.FunctionExpression || container.kind === SyntaxKind.ArrowFunction) &&
-                (includeOuterFunctions || getImmediatelyInvokedFunctionExpression(<FunctionExpression>container))) {
-                container = getControlFlowContainer(container);
+        // Check if a parameter is assigned anywhere within its declaring function.
+        function isParameterAssigned(symbol: Symbol) {
+            const func = <FunctionLikeDeclaration>getRootDeclaration(symbol.valueDeclaration).parent;
+            const links = getNodeLinks(func);
+            if (!(links.flags & NodeCheckFlags.AssignmentsMarked)) {
+                links.flags |= NodeCheckFlags.AssignmentsMarked;
+                if (!hasParentWithAssignmentsMarked(func)) {
+                    markParameterAssignments(func);
+                }
+            }
+            return symbol.isAssigned || false;
+        }
+
+        function hasParentWithAssignmentsMarked(node: Node) {
+            while (true) {
+                node = node.parent;
+                if (!node) {
+                    return false;
+                }
+                if (isFunctionLike(node) && getNodeLinks(node).flags & NodeCheckFlags.AssignmentsMarked) {
+                    return true;
+                }
+            }
+        }
+
+        function markParameterAssignments(node: Node) {
+            if (node.kind === SyntaxKind.Identifier) {
+                if (isAssignmentTarget(node)) {
+                    const symbol = getResolvedSymbol(<Identifier>node);
+                    if (symbol.valueDeclaration && getRootDeclaration(symbol.valueDeclaration).kind === SyntaxKind.Parameter) {
+                        symbol.isAssigned = true;
+                    }
+                }
+            }
+            else {
+                forEachChild(node, markParameterAssignments);
             }
-            return container === declarationContainer;
         }
 
         function checkIdentifier(node: Identifier): Type {
@@ -8777,15 +8808,35 @@ namespace ts {
             checkNestedBlockScopedBinding(node, symbol);
 
             const type = getTypeOfSymbol(localOrExportSymbol);
-            if (!(localOrExportSymbol.flags & SymbolFlags.Variable) || isAssignmentTarget(node)) {
+            const declaration = localOrExportSymbol.valueDeclaration;
+            // We only narrow variables and parameters occurring in a non-assignment position. For all other
+            // entities we simply return the declared type.
+            if (!(localOrExportSymbol.flags & SymbolFlags.Variable) || isAssignmentTarget(node) || !declaration) {
                 return type;
             }
-            const declaration = localOrExportSymbol.valueDeclaration;
-            const includeOuterFunctions = isReadonlySymbol(localOrExportSymbol);
-            const assumeInitialized = !strictNullChecks || (type.flags & TypeFlags.Any) !== 0 || !declaration ||
-                getRootDeclaration(declaration).kind === SyntaxKind.Parameter || isInAmbientContext(declaration) ||
-                !isDeclarationIncludedInFlow(node, declaration, includeOuterFunctions);
-            const flowType = getFlowTypeOfReference(node, type, assumeInitialized, includeOuterFunctions);
+            // The declaration container is the innermost function that encloses the declaration of the variable
+            // or parameter. The flow container is the innermost function starting with which we analyze the control
+            // flow graph to determine the control flow based type.
+            const isParameter = getRootDeclaration(declaration).kind === SyntaxKind.Parameter;
+            const declarationContainer = getControlFlowContainer(declaration);
+            let flowContainer = getControlFlowContainer(node);
+            // When the control flow originates in a function expression or arrow function and we are referencing
+            // a const variable or parameter from an outer function, we extend the origin of the control flow
+            // analysis to include the immediately enclosing function.
+            while (flowContainer !== declarationContainer &&
+                (flowContainer.kind === SyntaxKind.FunctionExpression || flowContainer.kind === SyntaxKind.ArrowFunction) &&
+                (isReadonlySymbol(localOrExportSymbol) || isParameter && !isParameterAssigned(localOrExportSymbol))) {
+                flowContainer = getControlFlowContainer(flowContainer);
+            }
+            // We only look for uninitialized variables in strict null checking mode, and only when we can analyze
+            // the entire control flow graph from the variable's declaration (i.e. when the flow container and
+            // declaration container are the same).
+            const assumeInitialized = !strictNullChecks || (type.flags & TypeFlags.Any) !== 0 || isParameter ||
+                flowContainer !== declarationContainer || isInAmbientContext(declaration);
+            const flowType = getFlowTypeOfReference(node, type, assumeInitialized, flowContainer);
+            // A variable is considered uninitialized when it is possible to analyze the entire control flow graph
+            // from declaration to use, and when the variable's declared type doesn't include undefined but the
+            // control flow based type does include undefined.
             if (!assumeInitialized && !(getFalsyFlags(type) & TypeFlags.Undefined) && getFalsyFlags(flowType) & TypeFlags.Undefined) {
                 error(node, Diagnostics.Variable_0_is_used_before_being_assigned, symbolToString(symbol));
                 // Return the declared type to reduce follow-on errors
@@ -9038,7 +9089,7 @@ namespace ts {
             if (isClassLike(container.parent)) {
                 const symbol = getSymbolOfNode(container.parent);
                 const type = container.flags & NodeFlags.Static ? getTypeOfSymbol(symbol) : (<InterfaceType>getDeclaredTypeOfSymbol(symbol)).thisType;
-                return getFlowTypeOfReference(node, type, /*assumeInitialized*/ true, /*includeOuterFunctions*/ true);
+                return getFlowTypeOfReference(node, type, /*assumeInitialized*/ true, /*flowContainer*/ undefined);
             }
 
             if (isInJavaScriptFile(node)) {
@@ -10699,7 +10750,7 @@ namespace ts {
                 !(prop.flags & SymbolFlags.Method && propType.flags & TypeFlags.Union)) {
                 return propType;
             }
-            return getFlowTypeOfReference(node, propType, /*assumeInitialized*/ true, /*includeOuterFunctions*/ false);
+            return getFlowTypeOfReference(node, propType, /*assumeInitialized*/ true, /*flowContainer*/ undefined);
         }
 
         function isValidPropertyAccess(node: PropertyAccessExpression | QualifiedName, propertyName: string): boolean {
diff --git a/src/compiler/types.ts b/src/compiler/types.ts
index d144c984a3fc2..8e9953ee64d3f 100644
--- a/src/compiler/types.ts
+++ b/src/compiler/types.ts
@@ -2157,6 +2157,7 @@ namespace ts {
         /* @internal */ exportSymbol?: Symbol;  // Exported symbol associated with this symbol
         /* @internal */ constEnumOnlyModule?: boolean; // True if module contains only const enums or other modules with only const enums
         /* @internal */ isReferenced?: boolean; // True if the symbol is referenced elsewhere
+        /* @internal */ isAssigned?: boolean;   // True if the symbol is a parameter with assignments
     }
 
     /* @internal */
@@ -2209,23 +2210,24 @@ namespace ts {
         AsyncMethodWithSuper                = 0x00000800,  // An async method that reads a value from a member of 'super'.
         AsyncMethodWithSuperBinding         = 0x00001000,  // An async method that assigns a value to a member of 'super'.
         CaptureArguments                    = 0x00002000,  // Lexical 'arguments' used in body (for async functions)
-        EnumValuesComputed                  = 0x00004000, // Values for enum members have been computed, and any errors have been reported for them.
-        LexicalModuleMergesWithClass        = 0x00008000, // Instantiated lexical module declaration is merged with a previous class declaration.
-        LoopWithCapturedBlockScopedBinding  = 0x00010000, // Loop that contains block scoped variable captured in closure
-        CapturedBlockScopedBinding          = 0x00020000, // Block-scoped binding that is captured in some function
-        BlockScopedBindingInLoop            = 0x00040000, // Block-scoped binding with declaration nested inside iteration statement
-        ClassWithBodyScopedClassBinding     = 0x00080000, // Decorated class that contains a binding to itself inside of the class body.
-        BodyScopedClassBinding              = 0x00100000, // Binding to a decorated class inside of the class's body.
-        NeedsLoopOutParameter               = 0x00200000, // Block scoped binding whose value should be explicitly copied outside of the converted loop
+        EnumValuesComputed                  = 0x00004000,  // Values for enum members have been computed, and any errors have been reported for them.
+        LexicalModuleMergesWithClass        = 0x00008000,  // Instantiated lexical module declaration is merged with a previous class declaration.
+        LoopWithCapturedBlockScopedBinding  = 0x00010000,  // Loop that contains block scoped variable captured in closure
+        CapturedBlockScopedBinding          = 0x00020000,  // Block-scoped binding that is captured in some function
+        BlockScopedBindingInLoop            = 0x00040000,  // Block-scoped binding with declaration nested inside iteration statement
+        ClassWithBodyScopedClassBinding     = 0x00080000,  // Decorated class that contains a binding to itself inside of the class body.
+        BodyScopedClassBinding              = 0x00100000,  // Binding to a decorated class inside of the class's body.
+        NeedsLoopOutParameter               = 0x00200000,  // Block scoped binding whose value should be explicitly copied outside of the converted loop
+        AssignmentsMarked                   = 0x00400000,  // Parameter assignments have been marked
     }
 
     /* @internal */
     export interface NodeLinks {
+        flags?: NodeCheckFlags;           // Set of flags specific to Node
         resolvedType?: Type;              // Cached type of type node
         resolvedSignature?: Signature;    // Cached signature of signature node or call expression
         resolvedSymbol?: Symbol;          // Cached name resolution result
         resolvedIndexInfo?: IndexInfo;    // Cached indexing info resolution result
-        flags?: NodeCheckFlags;           // Set of flags specific to Node
         enumMemberValue?: number;         // Constant value of enum member
         isVisible?: boolean;              // Is this node visible
         hasReportedStatementInAmbientContext?: boolean;  // Cache boolean if we report statements in ambient context
diff --git a/tests/baselines/reference/implicitConstParameters.errors.txt b/tests/baselines/reference/implicitConstParameters.errors.txt
new file mode 100644
index 0000000000000..95ff60d71f809
--- /dev/null
+++ b/tests/baselines/reference/implicitConstParameters.errors.txt
@@ -0,0 +1,65 @@
+tests/cases/compiler/implicitConstParameters.ts(39,27): error TS2532: Object is possibly 'undefined'.
+tests/cases/compiler/implicitConstParameters.ts(45,27): error TS2532: Object is possibly 'undefined'.
+
+
+==== tests/cases/compiler/implicitConstParameters.ts (2 errors) ====
+    
+    function doSomething(cb: () => void) {
+        cb();
+    }
+    
+    function fn(x: number | string) {
+      if (typeof x === 'number') {
+          doSomething(() => x.toFixed());
+      }
+    }
+    
+    function f1(x: string | undefined) {
+        if (!x) {
+            return;
+        }
+        doSomething(() => x.length);
+    }
+    
+    function f2(x: string | undefined) {
+        if (x) {
+            doSomething(() => {
+                doSomething(() => x.length);
+            });
+        }
+    }
+    
+    function f3(x: string | undefined) {
+        inner();
+        function inner() {
+            if (x) {
+                doSomething(() => x.length);
+            }
+        }
+    }
+    
+    function f4(x: string | undefined) {
+        x = "abc";  // causes x to be considered non-const
+        if (x) {
+            doSomething(() => x.length);
+                              ~
+!!! error TS2532: Object is possibly 'undefined'.
+        }
+    }
+    
+    function f5(x: string | undefined) {
+        if (x) {
+            doSomething(() => x.length);
+                              ~
+!!! error TS2532: Object is possibly 'undefined'.
+        }
+        x = "abc";  // causes x to be considered non-const
+    }
+    
+    
+    function f6(x: string | undefined) {
+        const y = x || "";
+        if (x) {
+            doSomething(() => y.length);
+        }
+    }
\ No newline at end of file
diff --git a/tests/baselines/reference/implicitConstParameters.js b/tests/baselines/reference/implicitConstParameters.js
new file mode 100644
index 0000000000000..a5faf5b125354
--- /dev/null
+++ b/tests/baselines/reference/implicitConstParameters.js
@@ -0,0 +1,106 @@
+//// [implicitConstParameters.ts]
+
+function doSomething(cb: () => void) {
+    cb();
+}
+
+function fn(x: number | string) {
+  if (typeof x === 'number') {
+      doSomething(() => x.toFixed());
+  }
+}
+
+function f1(x: string | undefined) {
+    if (!x) {
+        return;
+    }
+    doSomething(() => x.length);
+}
+
+function f2(x: string | undefined) {
+    if (x) {
+        doSomething(() => {
+            doSomething(() => x.length);
+        });
+    }
+}
+
+function f3(x: string | undefined) {
+    inner();
+    function inner() {
+        if (x) {
+            doSomething(() => x.length);
+        }
+    }
+}
+
+function f4(x: string | undefined) {
+    x = "abc";  // causes x to be considered non-const
+    if (x) {
+        doSomething(() => x.length);
+    }
+}
+
+function f5(x: string | undefined) {
+    if (x) {
+        doSomething(() => x.length);
+    }
+    x = "abc";  // causes x to be considered non-const
+}
+
+
+function f6(x: string | undefined) {
+    const y = x || "";
+    if (x) {
+        doSomething(() => y.length);
+    }
+}
+
+//// [implicitConstParameters.js]
+function doSomething(cb) {
+    cb();
+}
+function fn(x) {
+    if (typeof x === 'number') {
+        doSomething(function () { return x.toFixed(); });
+    }
+}
+function f1(x) {
+    if (!x) {
+        return;
+    }
+    doSomething(function () { return x.length; });
+}
+function f2(x) {
+    if (x) {
+        doSomething(function () {
+            doSomething(function () { return x.length; });
+        });
+    }
+}
+function f3(x) {
+    inner();
+    function inner() {
+        if (x) {
+            doSomething(function () { return x.length; });
+        }
+    }
+}
+function f4(x) {
+    x = "abc"; // causes x to be considered non-const
+    if (x) {
+        doSomething(function () { return x.length; });
+    }
+}
+function f5(x) {
+    if (x) {
+        doSomething(function () { return x.length; });
+    }
+    x = "abc"; // causes x to be considered non-const
+}
+function f6(x) {
+    var y = x || "";
+    if (x) {
+        doSomething(function () { return y.length; });
+    }
+}
diff --git a/tests/cases/compiler/implicitConstParameters.ts b/tests/cases/compiler/implicitConstParameters.ts
new file mode 100644
index 0000000000000..97996789124f6
--- /dev/null
+++ b/tests/cases/compiler/implicitConstParameters.ts
@@ -0,0 +1,57 @@
+// @strictNullChecks: true
+
+function doSomething(cb: () => void) {
+    cb();
+}
+
+function fn(x: number | string) {
+  if (typeof x === 'number') {
+      doSomething(() => x.toFixed());
+  }
+}
+
+function f1(x: string | undefined) {
+    if (!x) {
+        return;
+    }
+    doSomething(() => x.length);
+}
+
+function f2(x: string | undefined) {
+    if (x) {
+        doSomething(() => {
+            doSomething(() => x.length);
+        });
+    }
+}
+
+function f3(x: string | undefined) {
+    inner();
+    function inner() {
+        if (x) {
+            doSomething(() => x.length);
+        }
+    }
+}
+
+function f4(x: string | undefined) {
+    x = "abc";  // causes x to be considered non-const
+    if (x) {
+        doSomething(() => x.length);
+    }
+}
+
+function f5(x: string | undefined) {
+    if (x) {
+        doSomething(() => x.length);
+    }
+    x = "abc";  // causes x to be considered non-const
+}
+
+
+function f6(x: string | undefined) {
+    const y = x || "";
+    if (x) {
+        doSomething(() => y.length);
+    }
+}
\ No newline at end of file