diff --git a/crates/hir-def/src/body/lower.rs b/crates/hir-def/src/body/lower.rs
index d31340fe8f..611031eb8c 100644
--- a/crates/hir-def/src/body/lower.rs
+++ b/crates/hir-def/src/body/lower.rs
@@ -505,6 +505,7 @@ impl ExprCollector<'_> {
                     .map(|it| Interned::new(TypeRef::from_ast(&this.ctx(), it)));
 
                 let prev_is_lowering_generator = mem::take(&mut this.is_lowering_generator);
+                let prev_try_block_label = this.current_try_block_label.take();
 
                 let body = this.collect_expr_opt(e.body());
 
@@ -520,11 +521,11 @@ impl ExprCollector<'_> {
                 } else {
                     ClosureKind::Closure
                 };
-                this.is_lowering_generator = prev_is_lowering_generator;
                 let capture_by =
                     if e.move_token().is_some() { CaptureBy::Value } else { CaptureBy::Ref };
                 this.is_lowering_generator = prev_is_lowering_generator;
                 this.current_binding_owner = prev_binding_owner;
+                this.current_try_block_label = prev_try_block_label;
                 this.body.exprs[result_expr_id] = Expr::Closure {
                     args: args.into(),
                     arg_types: arg_types.into(),
diff --git a/crates/ide-diagnostics/src/handlers/break_outside_of_loop.rs b/crates/ide-diagnostics/src/handlers/break_outside_of_loop.rs
index 89aa437d75..7baa7b6426 100644
--- a/crates/ide-diagnostics/src/handlers/break_outside_of_loop.rs
+++ b/crates/ide-diagnostics/src/handlers/break_outside_of_loop.rs
@@ -132,6 +132,24 @@ fn test() {
      // ^^^^^^^ error: can't break with a value in this position
     }
 }
+"#,
+        );
+    }
+
+    #[test]
+    fn try_block_desugaring_inside_closure() {
+        // regression test for #14701
+        check_diagnostics(
+            r#"
+//- minicore: option, try
+fn test() {
+    try {
+        || {
+            let x = Some(2);
+            Some(x?)
+        };
+    };
+}
 "#,
         );
     }