diff --git a/src/services/formatting/formatting.ts b/src/services/formatting/formatting.ts
index c34585c5bca..22602d6031c 100644
--- a/src/services/formatting/formatting.ts
+++ b/src/services/formatting/formatting.ts
@@ -1152,23 +1152,6 @@ namespace ts.formatting {
         }
     }
 
-    /**
-     * Gets the indentation level of the multi-line comment enclosing position,
-     * and a negative value if the position is not in a multi-line comment.
-     *
-     * @param precedingToken Must be the result of `findPrecedingToken(position, sourceFile)`.
-     */
-    export function getIndentationOfEnclosingMultiLineComment(sourceFile: SourceFile, position: number, precedingToken: Node | undefined, options: EditorSettings): number {
-        const range = getRangeOfEnclosingComment(sourceFile, position, /*onlyMultiLine*/ true, precedingToken || null); // tslint:disable-line:no-null-keyword
-        if (range) {
-            const commentStart = range.pos;
-            const commentLineStart = getLineStartPositionForPosition(commentStart, sourceFile);
-            const { column, character } = SmartIndenter.findFirstNonWhitespaceCharacterAndColumn(commentLineStart, commentStart, sourceFile, options);
-            return column + /*length after whitespace ends*/ range.pos - (commentLineStart + character);
-        }
-        return -1;
-    }
-
     /**
      * @param precedingToken pass `null` if preceding token was already computed and result was `undefined`.
      */
diff --git a/src/services/formatting/smartIndenter.ts b/src/services/formatting/smartIndenter.ts
index c868ce04847..5af93bc025f 100644
--- a/src/services/formatting/smartIndenter.ts
+++ b/src/services/formatting/smartIndenter.ts
@@ -32,9 +32,28 @@ namespace ts.formatting {
             }
 
             const precedingToken = findPrecedingToken(position, sourceFile);
-            const indentationOfEnclosingMultiLineComment = getIndentationOfEnclosingMultiLineComment(sourceFile, position, precedingToken, options);
-            if (indentationOfEnclosingMultiLineComment >= 0) {
-                return indentationOfEnclosingMultiLineComment;
+
+            const enclosingCommentRange = getRangeOfEnclosingComment(sourceFile, position, /*onlyMultiLine*/ true, precedingToken || null); // tslint:disable-line:no-null-keyword
+            if (enclosingCommentRange) {
+                const previousLine = getLineAndCharacterOfPosition(sourceFile, position).line - 1;
+                const commentStartLine = getLineAndCharacterOfPosition(sourceFile, enclosingCommentRange.pos).line;
+
+                Debug.assert(commentStartLine >= 0);
+
+                if (previousLine <= commentStartLine) {
+                    return findFirstNonWhitespaceColumn(getStartPositionOfLine(commentStartLine, sourceFile), position, sourceFile, options);
+                }
+
+                // get first character of previous line -- if it is '*', move back one more character (or stay at 0)
+                const startPostionOfLine = getStartPositionOfLine(previousLine, sourceFile);
+                const { column, character } = findFirstNonWhitespaceCharacterAndColumn(startPostionOfLine, position, sourceFile, options);
+
+                if (column === 0) {
+                    return column;
+                }
+
+                const firstNonWhitespaceCharacterCode = sourceFile.text.charCodeAt(startPostionOfLine + character);
+                return firstNonWhitespaceCharacterCode === CharacterCodes.asterisk ? column - 1 : column;
             }
 
             if (!precedingToken) {