diff --git a/src/compiler/compile/nodes/Element.ts b/src/compiler/compile/nodes/Element.ts
index c17817a805..aebcdfb213 100644
--- a/src/compiler/compile/nodes/Element.ts
+++ b/src/compiler/compile/nodes/Element.ts
@@ -395,7 +395,7 @@ export default class Element extends Node {
 					component.slot_outlets.add(name);
 				}
 
-				if (!(parent.type === 'InlineComponent' || (parent.type === 'Element' && /-/.test(parent.name)))) {
+				if (!(parent.type === 'InlineComponent' || within_custom_element(parent))) {
 					component.error(attribute, {
 						code: `invalid-slotted-content`,
 						message: `Element with a slot='...' attribute must be a child of a component or custom element`,
@@ -760,3 +760,12 @@ function should_have_attribute(
 		message: `A11y: <${name}> element should have ${article} ${sequence} attribute`
 	});
 }
+
+function within_custom_element(parent: INode) {
+	while (parent) {
+		if (parent.type === 'InlineComponent') return false;
+		if (parent.type === 'Element' && /-/.test(parent.name)) return true;
+		parent = parent.parent;
+	}
+	return false;
+}
\ No newline at end of file
diff --git a/test/validator/samples/component-slotted-custom-element-2/errors.json b/test/validator/samples/component-slotted-custom-element-2/errors.json
new file mode 100644
index 0000000000..b2f39aa8d2
--- /dev/null
+++ b/test/validator/samples/component-slotted-custom-element-2/errors.json
@@ -0,0 +1,9 @@
+[
+	{
+		"code": "invalid-slotted-content",
+		"message": "Element with a slot='...' attribute must be a child of a component or custom element",
+		"start": { "line": 10, "column": 9, "character": 138 },
+		"end": { "line": 10, "column": 19, "character": 148 },
+		"pos": 138
+	}
+]
diff --git a/test/validator/samples/component-slotted-custom-element-2/input.svelte b/test/validator/samples/component-slotted-custom-element-2/input.svelte
new file mode 100644
index 0000000000..221659ca4d
--- /dev/null
+++ b/test/validator/samples/component-slotted-custom-element-2/input.svelte
@@ -0,0 +1,14 @@
+<script>
+	import Nested from './Nested.svelte';
+	let thing = false;
+</script>
+
+<custom-element>
+	<Nested>
+		{#if thing}
+			<div>
+				<div slot='bar' />
+			</div>
+		{/if}
+	</Nested>
+</custom-element>
\ No newline at end of file
diff --git a/test/validator/samples/component-slotted-custom-element/errors.json b/test/validator/samples/component-slotted-custom-element/errors.json
new file mode 100644
index 0000000000..0637a088a0
--- /dev/null
+++ b/test/validator/samples/component-slotted-custom-element/errors.json
@@ -0,0 +1 @@
+[]
\ No newline at end of file
diff --git a/test/validator/samples/component-slotted-custom-element/input.svelte b/test/validator/samples/component-slotted-custom-element/input.svelte
new file mode 100644
index 0000000000..e0e27834c1
--- /dev/null
+++ b/test/validator/samples/component-slotted-custom-element/input.svelte
@@ -0,0 +1,15 @@
+<script>
+	import Nested from './Nested.svelte';
+	let thing = false;
+</script>
+
+<Nested>
+	<custom-element>
+		<div>
+			<div slot='foo' />
+		</div>
+		{#if thing}
+			<div slot='bar' />
+		{/if}
+	</custom-element>
+</Nested>
\ No newline at end of file