diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index fcf5c3854c960..fffdac0b17b56 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -35664,8 +35664,8 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
             const functionFlags = getFunctionFlags(func);
             const type = returnType && unwrapReturnType(returnType, functionFlags);
 
-            // Functions with an explicitly specified 'undefined, 'void', 'any' or 'unknown' return type don't need any return expressions.
-            if (type && maybeTypeOfKind(type, TypeFlags.Undefined | TypeFlags.Void | TypeFlags.Any | TypeFlags.Unknown)) {
+            // Functions with an explicitly specified 'undefined, 'void' or 'any' return type don't need any return expressions.
+            if (type && maybeTypeOfKind(type, TypeFlags.Undefined | TypeFlags.Void | TypeFlags.Any)) {
                 return;
             }
 
@@ -35691,7 +35691,7 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
                     error(errorNode, Diagnostics.A_function_whose_declared_type_is_neither_void_nor_any_must_return_a_value);
                 }
             }
-            else if (type && strictNullChecks) {
+            else if (type && strictNullChecks && !isTypeAssignableTo(undefinedType, type)) {
                 error(errorNode, Diagnostics.Function_lacks_ending_return_statement_and_return_type_does_not_include_undefined);
             }
             else if (compilerOptions.noImplicitReturns) {
diff --git a/tests/baselines/reference/unknownType1.errors.txt b/tests/baselines/reference/unknownType1.errors.txt
index f86564eb5ce8b..32034c8e2b9d9 100644
--- a/tests/baselines/reference/unknownType1.errors.txt
+++ b/tests/baselines/reference/unknownType1.errors.txt
@@ -20,6 +20,7 @@ tests/cases/conformance/types/unknown/unknownType1.ts(128,5): error TS2322: Type
 tests/cases/conformance/types/unknown/unknownType1.ts(129,5): error TS2322: Type 'number' is not assignable to type '{ [x: string]: unknown; }'.
 tests/cases/conformance/types/unknown/unknownType1.ts(143,29): error TS2698: Spread types may only be created from object types.
 tests/cases/conformance/types/unknown/unknownType1.ts(144,29): error TS2698: Spread types may only be created from object types.
+tests/cases/conformance/types/unknown/unknownType1.ts(150,17): error TS2847: A function whose declared type is neither 'undefined', 'void', nor 'any' must return a value.
 tests/cases/conformance/types/unknown/unknownType1.ts(156,14): error TS2700: Rest types may only be created from object types.
 tests/cases/conformance/types/unknown/unknownType1.ts(162,5): error TS2564: Property 'a' has no initializer and is not definitely assigned in the constructor.
 tests/cases/conformance/types/unknown/unknownType1.ts(170,9): error TS2322: Type 'T' is not assignable to type '{}'.
@@ -27,7 +28,7 @@ tests/cases/conformance/types/unknown/unknownType1.ts(171,9): error TS2322: Type
 tests/cases/conformance/types/unknown/unknownType1.ts(181,5): error TS2322: Type 'T' is not assignable to type '{}'.
 
 
-==== tests/cases/conformance/types/unknown/unknownType1.ts (26 errors) ====
+==== tests/cases/conformance/types/unknown/unknownType1.ts (27 errors) ====
     // In an intersection everything absorbs unknown
     
     type T00 = unknown & null;  // null
@@ -221,6 +222,8 @@ tests/cases/conformance/types/unknown/unknownType1.ts(181,5): error TS2322: Type
     // Functions with unknown return type don't need return expressions
     
     function f27(): unknown {
+                    ~~~~~~~
+!!! error TS2847: A function whose declared type is neither 'undefined', 'void', nor 'any' must return a value.
     }
     
     // Rest type cannot be created from unknown