diff --git a/src/testdir/test_vim9_func.vim b/src/testdir/test_vim9_func.vim
index 030ff83..79bb9d8 100644
--- a/src/testdir/test_vim9_func.vim
+++ b/src/testdir/test_vim9_func.vim
Binary files differ
diff --git a/src/version.c b/src/version.c
index ca353c2..d4fd17e 100644
--- a/src/version.c
+++ b/src/version.c
@@ -705,6 +705,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    976,
+/**/
     975,
 /**/
     974,
diff --git a/src/vim9cmds.c b/src/vim9cmds.c
index c7fa60a..f8ebfb1 100644
--- a/src/vim9cmds.c
+++ b/src/vim9cmds.c
@@ -602,7 +602,9 @@
 	return NULL;
     }
     unwind_locals(cctx, scope->se_local_count, TRUE);
-    if (!cctx->ctx_had_return)
+    if (!cctx->ctx_had_return && !cctx->ctx_had_throw)
+	// the previous if block didn't end in a "return" or a "throw"
+	// statement.
 	scope->se_u.se_if.is_had_return = FALSE;
 
     if (cctx->ctx_skip == SKIP_NOT)
@@ -749,7 +751,9 @@
 	return NULL;
     }
     unwind_locals(cctx, scope->se_local_count, TRUE);
-    if (!cctx->ctx_had_return)
+    if (!cctx->ctx_had_return && !cctx->ctx_had_throw)
+	// the previous if block didn't end in a "return" or a "throw"
+	// statement.
 	scope->se_u.se_if.is_had_return = FALSE;
     scope->se_u.se_if.is_seen_else = TRUE;
 
@@ -821,7 +825,9 @@
     }
     ifscope = &scope->se_u.se_if;
     unwind_locals(cctx, scope->se_local_count, TRUE);
-    if (!cctx->ctx_had_return)
+    if (!cctx->ctx_had_return && !cctx->ctx_had_throw)
+	// the previous if block didn't end in a "return" or a "throw"
+	// statement.
 	ifscope->is_had_return = FALSE;
 
     if (scope->se_u.se_if.is_if_label >= 0)
diff --git a/src/vim9compile.c b/src/vim9compile.c
index c8a50cf..a2dd77a 100644
--- a/src/vim9compile.c
+++ b/src/vim9compile.c
@@ -4407,7 +4407,16 @@
 				     cctx->ctx_had_return ? "return" : "throw");
 	    return FAIL;
 	}
-	cctx->ctx_had_throw = FALSE;
+
+	// When processing the end of an if-else block, don't clear the
+	// "ctx_had_throw" flag.  If an if-else block ends in a "throw"
+	// statement, then it is considered to end in a "return" statement.
+	// The "ctx_had_throw" is cleared immediately after processing the
+	// if-else block ending statement.
+	// Otherwise, clear the "had_throw" flag.
+	if (ea.cmdidx != CMD_else && ea.cmdidx != CMD_elseif
+						&& ea.cmdidx != CMD_endif)
+	    cctx->ctx_had_throw = FALSE;
 
 	p = skipwhite(p);
 	if (ea.cmdidx != CMD_SIZE
@@ -4474,13 +4483,16 @@
 	    case CMD_elseif:
 		    line = compile_elseif(p, cctx);
 		    cctx->ctx_had_return = FALSE;
+		    cctx->ctx_had_throw = FALSE;
 		    break;
 	    case CMD_else:
 		    line = compile_else(p, cctx);
 		    cctx->ctx_had_return = FALSE;
+		    cctx->ctx_had_throw = FALSE;
 		    break;
 	    case CMD_endif:
 		    line = compile_endif(p, cctx);
+		    cctx->ctx_had_throw = FALSE;
 		    break;
 
 	    case CMD_while:
@@ -4695,7 +4707,7 @@
 }
 
 /*
- * When compiling a def function, if it doesn not have an explicit return
+ * When compiling a def function, if it doesn't have an explicit return
  * statement, then generate a default return instruction.  For an object
  * constructor, return the object.
  */