diff --git a/src/System.Management.Automation/engine/parser/Parser.cs b/src/System.Management.Automation/engine/parser/Parser.cs
index 3de24603421..971e4be4808 100644
--- a/src/System.Management.Automation/engine/parser/Parser.cs
+++ b/src/System.Management.Automation/engine/parser/Parser.cs
@@ -1620,7 +1620,8 @@ private ScriptBlockAst NamedBlockListRule(Token lCurly, List<UsingStatementAst>
                                             ? lCurly.Extent
                                             : (paramBlockAst != null) ? paramBlockAst.Extent : null;
             IScriptExtent endExtent = null;
-            IScriptExtent extent;
+            IScriptExtent extent = null;
+            IScriptExtent scriptBlockExtent = null;
 
             while (true)
             {
@@ -1628,7 +1629,28 @@ private ScriptBlockAst NamedBlockListRule(Token lCurly, List<UsingStatementAst>
                 switch (blockNameToken.Kind)
                 {
                     default:
+                        // Next token is unexpected.
+                        // ErrorRecovery: if 'lCurly' is present, pretend we saw a closing curly; otherwise, eat the unexpected token.
+                        if (lCurly != null)
+                        {
+                            UngetToken(blockNameToken);
+                            scriptBlockExtent = ExtentOf(startExtent, endExtent);
+                        }
+                        else
+                        {
+                            // If "lCurly == null", then it's a ps1/psm1 file, and thus the extent is the whole file.
+                            scriptBlockExtent = _tokenizer.GetScriptExtent();
+                        }
+
+                        // Report error about the unexpected token.
+                        ReportError(blockNameToken.Extent, () => ParserStrings.MissingNamedBlocks, blockNameToken.Text);
+                        goto return_script_block_ast;
+
+                    case TokenKind.RCurly:
+                    case TokenKind.EndOfInput:
+                        // If the next token is RCurly or <eof>, handle it in 'CompleteScriptBlockBody'.
                         UngetToken(blockNameToken);
+                        extent = ExtentOf(startExtent, endExtent);
                         goto finished_named_block_list;
 
                     case TokenKind.Dynamicparam:
@@ -1687,11 +1709,9 @@ private ScriptBlockAst NamedBlockListRule(Token lCurly, List<UsingStatementAst>
                 SkipNewlinesAndSemicolons();
             }
         finished_named_block_list:
-
-            IScriptExtent scriptBlockExtent;
-            extent = ExtentOf(startExtent, endExtent);
             CompleteScriptBlockBody(lCurly, ref extent, out scriptBlockExtent);
 
+        return_script_block_ast:
             return new ScriptBlockAst(scriptBlockExtent, usingStatements, paramBlockAst, beginBlock, processBlock, endBlock,
                 dynamicParamBlock);
         }
diff --git a/src/System.Management.Automation/resources/ParserStrings.resx b/src/System.Management.Automation/resources/ParserStrings.resx
index 5f9b75345fe..fc98af9421a 100644
--- a/src/System.Management.Automation/resources/ParserStrings.resx
+++ b/src/System.Management.Automation/resources/ParserStrings.resx
@@ -493,6 +493,9 @@ The correct form is: foreach ($a in $b) {...}</value>
   <data name="DuplicateScriptCommandClause" xml:space="preserve">
     <value>Script command clause '{0}' has already been defined.</value>
   </data>
+  <data name="MissingNamedBlocks" xml:space="preserve">
+    <value>unexpected token '{0}', expected 'begin', 'process', 'end', or 'dynamicparam'.</value>
+  </data>
   <data name="MissingEndCurlyBrace" xml:space="preserve">
     <value>Missing closing '}' in statement block or type definition.</value>
   </data>
diff --git a/test/powershell/Language/Parser/Parser.Tests.ps1 b/test/powershell/Language/Parser/Parser.Tests.ps1
index 0edc62fda66..d0b434af58c 100644
--- a/test/powershell/Language/Parser/Parser.Tests.ps1
+++ b/test/powershell/Language/Parser/Parser.Tests.ps1
@@ -915,4 +915,20 @@ foo``u{2195}abc
         # Issue #2780
         { ExecuteCommand "`$herestr=@`"`n'`"'`n`"@" } | Should Not Throw
     }
+
+    It "Throw better error when statement should be put in named blocks - <name>" -TestCases @(
+        @{ script = "Function foo { [CmdletBinding()] param() DynamicParam {} Hi"; name = "function" }
+        @{ script = "{ begin {} Hi"; name = "script-block" }
+        @{ script = "begin {} Hi"; name = "script-file" }
+    ) {
+        param($script)
+
+        $err = { ExecuteCommand $script } | Should -Throw -ErrorId "ParseException" -PassThru
+        $err.Exception.InnerException.ErrorRecord.FullyQualifiedErrorId | Should -BeExactly "MissingNamedBlocks"
+    }
+
+    It "IncompleteParseException should be thrown when only ending curly is missing" {
+        $err = { ExecuteCommand "Function foo { [CmdletBinding()] param() DynamicParam {} " } | Should -Throw -ErrorId "IncompleteParseException" -PassThru
+        $err.Exception.InnerException.ErrorRecord.FullyQualifiedErrorId | Should -BeExactly "MissingEndCurlyBrace"
+    }
 }