diff --git a/core/src/main/java/org/teavm/model/optimization/Inlining.java b/core/src/main/java/org/teavm/model/optimization/Inlining.java
index 1d040e81a..e9a3e80e3 100644
--- a/core/src/main/java/org/teavm/model/optimization/Inlining.java
+++ b/core/src/main/java/org/teavm/model/optimization/Inlining.java
@@ -51,6 +51,7 @@ public class Inlining {
     public void apply(Program program, ClassReaderSource classSource) {
         List<PlanEntry> plan = buildPlan(program, classSource, 0);
         execPlan(program, plan, 0);
+        new UnreachableBasicBlockEliminator().optimize(program);
     }
 
     private void execPlan(Program program, List<PlanEntry> plan, int offset) {
diff --git a/core/src/main/java/org/teavm/model/optimization/UnreachableBasicBlockEliminator.java b/core/src/main/java/org/teavm/model/optimization/UnreachableBasicBlockEliminator.java
index 5eab5e13b..fbd6c6002 100644
--- a/core/src/main/java/org/teavm/model/optimization/UnreachableBasicBlockEliminator.java
+++ b/core/src/main/java/org/teavm/model/optimization/UnreachableBasicBlockEliminator.java
@@ -15,16 +15,15 @@
  */
 package org.teavm.model.optimization;
 
+import java.util.List;
 import org.teavm.common.IntegerStack;
 import org.teavm.model.BasicBlock;
+import org.teavm.model.Incoming;
+import org.teavm.model.Phi;
 import org.teavm.model.Program;
 import org.teavm.model.TryCatchBlock;
 import org.teavm.model.util.InstructionTransitionExtractor;
 
-/**
- *
- * @author Alexey Andreev
- */
 public class UnreachableBasicBlockEliminator {
     public void optimize(Program program) {
         if (program.basicBlockCount() == 0) {
@@ -51,6 +50,7 @@ public class UnreachableBasicBlockEliminator {
                 stack.push(tryCatch.getHandler().getIndex());
             }
         }
+
         for (int i = 0; i < reachable.length; ++i) {
             if (!reachable[i]) {
                 BasicBlock block = program.basicBlockAt(i);
@@ -66,6 +66,23 @@ public class UnreachableBasicBlockEliminator {
                 program.deleteBasicBlock(i);
             }
         }
+
+        for (int i = 0; i < program.basicBlockCount(); ++i) {
+            BasicBlock block = program.basicBlockAt(i);
+            if (block == null) {
+                continue;
+            }
+            for (Phi phi : block.getPhis()) {
+                List<Incoming> incomingList = phi.getIncomings();
+                for (int j = 0; j < incomingList.size(); ++j) {
+                    Incoming incoming = incomingList.get(j);
+                    if (!reachable[incoming.getSource().getIndex()]) {
+                        incomingList.remove(j--);
+                    }
+                }
+            }
+        }
+
         program.pack();
     }
 }
diff --git a/core/src/main/java/org/teavm/vm/TeaVM.java b/core/src/main/java/org/teavm/vm/TeaVM.java
index d61b5c434..71ccf7f87 100644
--- a/core/src/main/java/org/teavm/vm/TeaVM.java
+++ b/core/src/main/java/org/teavm/vm/TeaVM.java
@@ -444,6 +444,7 @@ public class TeaVM implements TeaVMHost, ServiceRepository {
             for (MethodHolder method : cls.getMethods()) {
                 if (method.getProgram() != null) {
                     inlining.apply(method.getProgram(), classes);
+                    new UnusedVariableElimination().optimize(method, method.getProgram());
                 }
             }
             if (wasCancelled()) {
@@ -481,10 +482,10 @@ public class TeaVM implements TeaVMHost, ServiceRepository {
                     for (MethodOptimization optimization : getOptimizations()) {
                         try {
                             changed |= optimization.optimize(method, optimizedProgram);
-                        } catch (Exception e) {
+                        } catch (Exception | AssertionError e) {
                             ListingBuilder listingBuilder = new ListingBuilder();
                             String listing = listingBuilder.buildListing(optimizedProgram, "");
-                            System.err.println("Error optimizing program for method" + method.getReference()
+                            System.err.println("Error optimizing program for method " + method.getReference()
                                     + ":\n" + listing);
                             throw new RuntimeException(e);
                         }
diff --git a/tests/src/test/java/org/teavm/vm/VMTest.java b/tests/src/test/java/org/teavm/vm/VMTest.java
index fe2367b86..b5dfc8169 100644
--- a/tests/src/test/java/org/teavm/vm/VMTest.java
+++ b/tests/src/test/java/org/teavm/vm/VMTest.java
@@ -105,6 +105,25 @@ public class VMTest {
         }
     }
 
+    @Test
+    public void inlineThrow() {
+        int x = id(23);
+        if (x == 42) {
+            x++;
+            throwException();
+            x++;
+        }
+        assertEquals(x, id(23));
+    }
+
+    private void throwException() {
+        throw new RuntimeException();
+    }
+
+    private int id(int value) {
+        return value;
+    }
+
     private static class ClassWithStaticField {
         public final static String CONST1 = "FIRST";
         public final static String CONST2 = "SECOND";