diff --git a/modules/@angular/language-service/src/typescript_host.ts b/modules/@angular/language-service/src/typescript_host.ts
index 66f413193f..f47ef5df44 100644
--- a/modules/@angular/language-service/src/typescript_host.ts
+++ b/modules/@angular/language-service/src/typescript_host.ts
@@ -571,25 +571,7 @@ class TypeScriptSymbolQuery implements SymbolQuery {
       private program: ts.Program, private checker: ts.TypeChecker, private source: ts.SourceFile,
       private fetchPipes: () => SymbolTable) {}
 
-  getTypeKind(symbol: Symbol): BuiltinType {
-    const type = this.getTsTypeOf(symbol);
-    if (type) {
-      if (type.flags & ts.TypeFlags.Any) {
-        return BuiltinType.Any;
-      } else if (
-          type.flags &
-          (ts.TypeFlags.String | ts.TypeFlags.StringLike | ts.TypeFlags.StringLiteral)) {
-        return BuiltinType.String;
-      } else if (type.flags & (ts.TypeFlags.Number | ts.TypeFlags.NumberLike)) {
-        return BuiltinType.Number;
-      } else if (type.flags & (ts.TypeFlags.Undefined)) {
-        return BuiltinType.Undefined;
-      } else if (type.flags & (ts.TypeFlags.Null)) {
-        return BuiltinType.Null;
-      }
-    }
-    return BuiltinType.Other;
-  }
+  getTypeKind(symbol: Symbol): BuiltinType { return typeKindOf(this.getTsTypeOf(symbol)); }
 
   getBuiltinType(kind: BuiltinType): Symbol {
     // TODO: Replace with typeChecker API when available.
@@ -1223,4 +1205,35 @@ function getTypeParameterOf(type: ts.Type, name: string): ts.Type {
       return typeArguments[0];
     }
   }
+}
+
+function typeKindOf(type: ts.Type): BuiltinType {
+  if (type) {
+    if (type.flags & ts.TypeFlags.Any) {
+      return BuiltinType.Any;
+    } else if (
+        type.flags & (ts.TypeFlags.String | ts.TypeFlags.StringLike | ts.TypeFlags.StringLiteral)) {
+      return BuiltinType.String;
+    } else if (type.flags & (ts.TypeFlags.Number | ts.TypeFlags.NumberLike)) {
+      return BuiltinType.Number;
+    } else if (type.flags & (ts.TypeFlags.Undefined)) {
+      return BuiltinType.Undefined;
+    } else if (type.flags & (ts.TypeFlags.Null)) {
+      return BuiltinType.Null;
+    } else if (type.flags & ts.TypeFlags.Union) {
+      // If all the constituent types of a union are the same kind, it is also that kind.
+      let candidate: BuiltinType;
+      const unionType = type as ts.UnionType;
+      if (unionType.types.length > 0) {
+        candidate = typeKindOf(unionType.types[0]);
+        for (const subType of unionType.types) {
+          if (candidate != typeKindOf(subType)) {
+            return BuiltinType.Other;
+          }
+        }
+      }
+      return candidate;
+    }
+  }
+  return BuiltinType.Other;
 }
\ No newline at end of file
diff --git a/modules/@angular/language-service/test/diagnostics_spec.ts b/modules/@angular/language-service/test/diagnostics_spec.ts
index effcdae7b0..8327449c66 100644
--- a/modules/@angular/language-service/test/diagnostics_spec.ts
+++ b/modules/@angular/language-service/test/diagnostics_spec.ts
@@ -121,6 +121,15 @@ describe('diagnostics', () => {
           code, fileName => { expect(() => ngService.getDiagnostics(fileName)).not.toThrow(); });
     });
 
+    it('should not report an error for sub-types of string', () => {
+      const code =
+          ` @Component({template: \`<div *ngIf="something === 'foo'"></div>\`}) export class MyComponent { something: 'foo' | 'bar'; }`;
+      addCode(code, fileName => {
+        const diagnostics = ngService.getDiagnostics(fileName);
+        onlyModuleDiagnostics(diagnostics);
+      });
+    });
+
     function addCode(code: string, cb: (fileName: string, content?: string) => void) {
       const fileName = '/app/app.component.ts';
       const originalContent = mockHost.getFileContent(fileName);
@@ -137,6 +146,13 @@ describe('diagnostics', () => {
     function onlyModuleDiagnostics(diagnostics: Diagnostics) {
       // Expect only the 'MyComponent' diagnostic
       expect(diagnostics.length).toBe(1);
+      if (diagnostics.length > 1) {
+        for (const diagnostic of diagnostics) {
+          if (diagnostic.message.indexOf('MyComponent') >= 0) continue;
+          console.error(`(${diagnostic.span.start}:${diagnostic.span.end}): ${diagnostic.message}`);
+        }
+        return;
+      }
       expect(diagnostics[0].message.indexOf('MyComponent') >= 0).toBeTruthy();
     }
   });