--- a/langtools/src/share/classes/com/sun/tools/javac/comp/LambdaToMethod.java	Wed Nov 07 17:20:12 2012 -0800
+++ b/langtools/src/share/classes/com/sun/tools/javac/comp/LambdaToMethod.java	Tue Nov 13 08:06:00 2012 -0800
@@ -1120,10 +1120,10 @@
             if (context != null
                     && tree.encl == null
                     && tree.def == null
-                    && tree.type.getEnclosingType().hasTag(NONE)) {
+                    && !tree.type.getEnclosingType().hasTag(NONE)) {
                 Type encl = tree.type.getEnclosingType();
                 Type current = context.owner.enclClass().type;
-                while (current.hasTag(NONE)) {
+                while (!current.hasTag(NONE)) {
                     if (current.tsym.isSubClass(encl.tsym, types)) {
                         return true;
                     }

--- /dev/null	Thu Jan 01 00:00:00 1970 +0000
+++ b/langtools/test/tools/javac/lambda/InnerConstructor.java	Tue Nov 13 08:06:00 2012 -0800
@@ -0,0 +1,48 @@
+/*
+ * Copyright (c) 2012, 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.
+ */
+
+/*
+ * @test
+ * @summary Regression test JDK-8003306 inner class constructor in lambda
+ * @author  Robert Field
+ * @compile -XDallowLambda InnerConstructor.java
+ */
+
+class InnerConstructor {
+
+    public void testLambdaWithInnerConstructor() {
+        System.out.printf("%s should be %s\n", seq1().m().toString(), "Cbl:nada");
+    }
+
+    Ib1 seq1() {
+        return () -> new Cbl();
+    }
+
+    class Cbl {
+        Cbl() {  }
+    }
+
+    interface Ib1 {
+        Object m();
+    }
+}