diff --git a/src/rules/onlyArrowFunctionsRule.ts b/src/rules/onlyArrowFunctionsRule.ts
index 5d144558884..ad7734e071b 100644
--- a/src/rules/onlyArrowFunctionsRule.ts
+++ b/src/rules/onlyArrowFunctionsRule.ts
@@ -56,16 +56,31 @@ export class Rule extends Lint.Rules.AbstractRule {
 
 class OnlyArrowFunctionsWalker extends Lint.RuleWalker {
     public visitFunctionDeclaration(node: ts.FunctionDeclaration) {
-        if (!node.asteriskToken && !this.hasOption(OPTION_ALLOW_DECLARATIONS)) {
-            this.addFailure(this.createFailure(node.getStart(), "function".length, Rule.FAILURE_STRING));
+        if (!this.hasOption(OPTION_ALLOW_DECLARATIONS)) {
+            this.failUnlessExempt(node);
         }
         super.visitFunctionDeclaration(node);
     }
 
     public visitFunctionExpression(node: ts.FunctionExpression) {
-        if (!node.asteriskToken) {
+        this.failUnlessExempt(node);
+        super.visitFunctionExpression(node);
+    }
+
+    private failUnlessExempt(node: ts.FunctionLikeDeclaration) {
+        if (!functionIsExempt(node)) {
             this.addFailure(this.createFailure(node.getStart(), "function".length, Rule.FAILURE_STRING));
         }
-        super.visitFunctionExpression(node);
     }
 }
+
+/** Generator functions and functions explicitly declaring `this` are allowed. */
+function functionIsExempt(node: ts.FunctionLikeDeclaration) {
+    return node.asteriskToken || hasThisParameter(node);
+}
+
+function hasThisParameter(node: ts.FunctionLikeDeclaration) {
+    const first = node.parameters[0];
+    return first && first.name.kind === ts.SyntaxKind.Identifier &&
+        (first.name as ts.Identifier).originalKeywordKind === ts.SyntaxKind.ThisKeyword;
+}
diff --git a/test/rules/only-arrow-functions/allow-declarations/test.ts.lint b/test/rules/only-arrow-functions/allow-declarations/test.ts.lint
index 22dbf05bec4..6b0ce7a08a8 100644
--- a/test/rules/only-arrow-functions/allow-declarations/test.ts.lint
+++ b/test/rules/only-arrow-functions/allow-declarations/test.ts.lint
@@ -20,4 +20,7 @@ function () {
 function* generator() {}
 let generator = function*() {}
 
+function hasThisParameter(this) {}
+let hasThisParameter = function(this) {}
+
 [0]: non-arrow functions are forbidden
diff --git a/test/rules/only-arrow-functions/default/test.ts.lint b/test/rules/only-arrow-functions/default/test.ts.lint
index ddacd8e2fc5..bad11677983 100644
--- a/test/rules/only-arrow-functions/default/test.ts.lint
+++ b/test/rules/only-arrow-functions/default/test.ts.lint
@@ -23,4 +23,7 @@ function () {
 function* generator() {}
 let generator = function*() {}
 
+function hasThisParameter(this) {}
+let hasThisParameter = function(this) {}
+
 [0]: non-arrow functions are forbidden