--- a/nashorn/src/jdk.scripting.nashorn/share/classes/jdk/nashorn/internal/parser/Parser.java	Fri Jun 05 19:05:37 2015 +0530
+++ b/nashorn/src/jdk.scripting.nashorn/share/classes/jdk/nashorn/internal/parser/Parser.java	Mon Jun 08 13:57:44 2015 +0530
@@ -2668,8 +2668,12 @@
             name = getIdent();
             verifyStrictIdent(name, "function name");
         } else if (isStatement) {
-            // Nashorn extension: anonymous function statements
-            if (env._no_syntax_extensions) {
+            // Nashorn extension: anonymous function statements.
+            // Do not allow anonymous function statement if extensions
+            // are now allowed. But if we are reparsing then anon function
+            // statement is possible - because it was used as function
+            // expression in surrounding code.
+            if (env._no_syntax_extensions && reparsedFunction == null) {
                 expect(IDENT);
             }
         }

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/nashorn/test/script/basic/JDK-8085802.js	Mon Jun 08 13:57:44 2015 +0530
@@ -0,0 +1,35 @@
+/*
+ * Copyright (c) 2015 Oracle and/or its affiliates. All rights reserved.
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS FILE HEADER.
+ * 
+ * This code is free software; you can redistribute it and/or modify it
+ * under the terms of the GNU General Public License version 2 only, as
+ * published by the Free Software Foundation.
+ * 
+ * This code is distributed in the hope that it will be useful, but WITHOUT
+ * ANY WARRANTY; without even the implied warranty of MERCHANTABILITY or
+ * FITNESS FOR A PARTICULAR PURPOSE.  See the GNU General Public License
+ * version 2 for more details (a copy is included in the LICENSE file that
+ * accompanied this code).
+ * 
+ * You should have received a copy of the GNU General Public License version
+ * 2 along with this work; if not, write to the Free Software Foundation,
+ * Inc., 51 Franklin St, Fifth Floor, Boston, MA 02110-1301 USA.
+ * 
+ * Please contact Oracle, 500 Oracle Parkway, Redwood Shores, CA 94065 USA
+ * or visit www.oracle.com if you need additional information or have any
+ * questions.
+ */
+
+/**
+ * JDK-8085802: Nashorn -nse option causes parse error on anonymous function definition
+ *
+ * @test
+ * @run
+ * @option -nse
+ */
+
+// even with -nse passed, the following should run fine
+// because anonymous function is used as expression here
+
+(function (){})()