diff --git a/modules/@angular/compiler/src/i18n/extractor_merger.ts b/modules/@angular/compiler/src/i18n/extractor_merger.ts
index 45900b276b..71a1f614f3 100644
--- a/modules/@angular/compiler/src/i18n/extractor_merger.ts
+++ b/modules/@angular/compiler/src/i18n/extractor_merger.ts
@@ -54,8 +54,9 @@ enum _VisitorMode {
  */
 class _Visitor implements html.Visitor {
   // <el i18n>...</el>
-  private _inI18nNode = false;
-  private _depth: number = 0;
+  private _inI18nNode: boolean;
+  private _depth: number;
+  private _inImplicitNode: boolean;
 
   // <!--i18n-->...<!--/i18n-->
   private _blockMeaningAndDesc: string;
@@ -64,7 +65,7 @@ class _Visitor implements html.Visitor {
   private _inI18nBlock: boolean;
 
   // {<icu message>}
-  private _inIcu = false;
+  private _inIcu: boolean;
 
   private _msgCountAtSectionStart: number;
   private _errors: I18nError[];
@@ -204,12 +205,15 @@ class _Visitor implements html.Visitor {
     this._mayBeAddBlockChildren(el);
     this._depth++;
     const wasInI18nNode = this._inI18nNode;
+    const wasInImplicitNode = this._inImplicitNode;
     let childNodes: html.Node[];
 
     // Extract only top level nodes with the (implicit) "i18n" attribute if not in a block or an ICU
     // message
     const i18nAttr = _getI18nAttr(el);
-    const isImplicitI18n = this._implicitTags.some((tag: string): boolean => el.name === tag);
+    const isImplicit = this._implicitTags.some((tag: string): boolean => el.name === tag);
+    const isTopLevelImplicit = !wasInImplicitNode && isImplicit;
+    this._inImplicitNode = this._inImplicitNode || isImplicit;
 
     if (!this._isInTranslatableSection && !this._inIcu) {
       if (i18nAttr) {
@@ -217,7 +221,7 @@ class _Visitor implements html.Visitor {
         this._inI18nNode = true;
         const message = this._addMessage(el.children, i18nAttr.value);
         childNodes = this._translateMessage(el, message);
-      } else if (isImplicitI18n) {
+      } else if (isTopLevelImplicit) {
         // implicit translation
         this._inI18nNode = true;
         const message = this._addMessage(el.children);
@@ -225,7 +229,7 @@ class _Visitor implements html.Visitor {
       }
 
       if (this._mode == _VisitorMode.Extract) {
-        const isTranslatable = i18nAttr || isImplicitI18n;
+        const isTranslatable = i18nAttr || isTopLevelImplicit;
         if (isTranslatable) {
           this._openTranslatableSection(el);
         }
@@ -235,7 +239,7 @@ class _Visitor implements html.Visitor {
         }
       }
 
-      if (this._mode === _VisitorMode.Merge && !i18nAttr && !isImplicitI18n) {
+      if (this._mode === _VisitorMode.Merge && !i18nAttr && !isTopLevelImplicit) {
         childNodes = [];
         el.children.forEach(child => {
           const visited = child.visit(this, context);
@@ -247,8 +251,7 @@ class _Visitor implements html.Visitor {
         });
       }
     } else {
-      if (i18nAttr || isImplicitI18n) {
-        // TODO(vicb): we should probably allow nested implicit element (ie <div>)
+      if (i18nAttr || isTopLevelImplicit) {
         this._reportError(
             el, 'Could not mark an element as translatable inside a translatable section');
       }
@@ -276,6 +279,7 @@ class _Visitor implements html.Visitor {
 
     this._depth--;
     this._inI18nNode = wasInI18nNode;
+    this._inImplicitNode = wasInImplicitNode;
 
     if (this._mode === _VisitorMode.Merge) {
       // There are no childNodes in translatable sections - those nodes will be replace anyway
@@ -299,6 +303,7 @@ class _Visitor implements html.Visitor {
     this._msgCountAtSectionStart = void 0;
     this._errors = [];
     this._messages = [];
+    this._inImplicitNode = false;
     this._createI18nMessage = createI18nMessageFactory(interpolationConfig);
   }
 
diff --git a/modules/@angular/compiler/test/i18n/extractor_merger_spec.ts b/modules/@angular/compiler/test/i18n/extractor_merger_spec.ts
index c46b5a9add..b09da17d4f 100644
--- a/modules/@angular/compiler/test/i18n/extractor_merger_spec.ts
+++ b/modules/@angular/compiler/test/i18n/extractor_merger_spec.ts
@@ -213,6 +213,17 @@ export function main() {
           [['bold'], '', ''],
         ]);
       });
+
+      it('should allow nested implicit elements', () => {
+        let result: any[];
+
+        expect(() => {result = extract('<div>outer<div>inner</div></div>', ['div'])}).not.toThrow();
+
+        expect(result).toEqual([
+          [['outer', '<ph tag name="START_TAG_DIV">inner</ph name="CLOSE_TAG_DIV">'], '', ''],
+        ]);
+      });
+
     });
 
     describe('implicit attributes', () => {
@@ -288,12 +299,6 @@ export function main() {
       });
 
       describe('implicit elements', () => {
-        it('should report nested implicit elements', () => {
-          expect(extractErrors(`<p><b></b></p>`, ['p', 'b'])).toEqual([
-            ['Could not mark an element as translatable inside a translatable section', '<b>'],
-          ]);
-        });
-
         it('should report implicit element in translatable element', () => {
           expect(extractErrors(`<p i18n><b></b></p>`, ['b'])).toEqual([
             ['Could not mark an element as translatable inside a translatable section', '<b>'],
@@ -358,7 +363,7 @@ function parseHtml(html: string): html.Node[] {
   const htmlParser = new HtmlParser();
   const parseResult = htmlParser.parse(html, 'extractor spec', true);
   if (parseResult.errors.length > 1) {
-    throw Error(`unexpected parse errors: ${parseResult.errors.join('\n')}`);
+    throw new Error(`unexpected parse errors: ${parseResult.errors.join('\n')}`);
   }
   return parseResult.rootNodes;
 }
@@ -390,13 +395,16 @@ function fakeTranslate(
 function extract(
     html: string, implicitTags: string[] = [],
     implicitAttrs: {[k: string]: string[]} = {}): [string[], string, string][] {
-  const messages =
-      extractMessages(parseHtml(html), DEFAULT_INTERPOLATION_CONFIG, implicitTags, implicitAttrs)
-          .messages;
+  const result =
+      extractMessages(parseHtml(html), DEFAULT_INTERPOLATION_CONFIG, implicitTags, implicitAttrs);
+
+  if (result.errors.length > 0) {
+    throw new Error(`unexpected errors: ${result.errors.join('\n')}`);
+  }
 
   // clang-format off
   // https://github.com/angular/clang-format/issues/35
-  return messages.map(
+  return result.messages.map(
     message => [serializeI18nNodes(message.nodes), message.meaning, message.description, ]) as [string[], string, string][];
   // clang-format on
 }