diff --git a/compiler/java/com/google/dart/compiler/parser/DartParser.java b/compiler/java/com/google/dart/compiler/parser/DartParser.java
index ee69b4128fa..83482536987 100644
--- a/compiler/java/com/google/dart/compiler/parser/DartParser.java
+++ b/compiler/java/com/google/dart/compiler/parser/DartParser.java
@@ -974,7 +974,7 @@ public class DartParser extends CompletionHooksParserBase {
   private DartNode parseFieldOrMethod(boolean allowStatic) {
     beginClassMember();
     Modifiers modifiers = Modifiers.NONE;
-    if (optionalPseudoKeyword(STATIC_KEYWORD)) {
+    if (peek(1) != Token.LPAREN && optionalPseudoKeyword(STATIC_KEYWORD)) {
       if (!allowStatic) {
         reportError(position(), ParserErrorCode.TOP_LEVEL_CANNOT_BE_STATIC);
       } else {
diff --git a/compiler/javatests/com/google/dart/compiler/parser/SyntaxTest.java b/compiler/javatests/com/google/dart/compiler/parser/SyntaxTest.java
index 78510d7d6e2..e3178944b56 100644
--- a/compiler/javatests/com/google/dart/compiler/parser/SyntaxTest.java
+++ b/compiler/javatests/com/google/dart/compiler/parser/SyntaxTest.java
@@ -576,6 +576,24 @@ public class SyntaxTest extends AbstractParserTest {
             "  typedef();",
             "}"));
   }
+  
+  /**
+   * We should be able to parse "static(abstract) => 42" top-level function.
+   * <p>
+   * http://code.google.com/p/dart/issues/detail?id=1197
+   */
+  public void test_staticAsFunctionName() {
+    DartUnit unit = parseUnit(
+        getName(),
+        Joiner.on("\n").join(
+            "// filler filler filler filler filler filler filler filler filler filler",
+            "static(abstract) => 42;",
+            ""));
+    assertEquals(1, unit.getTopLevelNodes().size());
+    DartMethodDefinition method = (DartMethodDefinition) unit.getTopLevelNodes().get(0);
+    assertEquals("static", method.getName().toSource());
+    assertEquals("abstract", method.getFunction().getParameters().get(0).getName().toSource());
+  }
 
   /**
    * The token 'super' is valid by itself (not as a qualifier or assignment selector) in only some
diff --git a/tests/language/language.status b/tests/language/language.status
index 837bf764755..f4a9a2ee899 100644
--- a/tests/language/language.status
+++ b/tests/language/language.status
@@ -100,7 +100,6 @@ private_member3_negative_test: Fail       # Issue 2383
 pseudo_kw_illegal_test/08: Fail # Issue 356
 pseudo_kw_illegal_test/10: Fail # Issue 356
 pseudo_kw_illegal_test/14: Fail # Issue 356
-pseudo_kw_test: Fail           # Issue 356
 scope_negative_test: Fail      # Runtime only test, rewrite as multitest
 static_call_wrong_argument_count_negative_test: Fail # Runtime only test, rewrite as multitest
 switch7_negative_test: Fail    # Issue 3658