diff --git a/src/services/documentHighlights.ts b/src/services/documentHighlights.ts
index b5c92cc1b3f17..37faabf7b5328 100644
--- a/src/services/documentHighlights.ts
+++ b/src/services/documentHighlights.ts
@@ -178,6 +178,7 @@ export namespace DocumentHighlights {
             case SyntaxKind.YieldKeyword:
                 return highlightSpans(getYieldOccurrences(node));
             case SyntaxKind.InKeyword:
+            case SyntaxKind.OutKeyword:
                 return undefined;
             default:
                 return isModifierKind(node.kind) && (isDeclaration(node.parent) || isVariableStatement(node.parent))
diff --git a/tests/baselines/reference/documentHighlightVarianceModifiers.baseline.jsonc b/tests/baselines/reference/documentHighlightVarianceModifiers.baseline.jsonc
new file mode 100644
index 0000000000000..47fa7bc9d212a
--- /dev/null
+++ b/tests/baselines/reference/documentHighlightVarianceModifiers.baseline.jsonc
@@ -0,0 +1,11 @@
+// === documentHighlights ===
+// === /tests/cases/fourslash/documentHighlightVarianceModifiers.ts ===
+// type TFoo<Value> = { value: Value };
+// type TBar</*HIGHLIGHTS*/in out Value> = TFoo<Value>;
+
+
+
+// === documentHighlights ===
+// === /tests/cases/fourslash/documentHighlightVarianceModifiers.ts ===
+// type TFoo<Value> = { value: Value };
+// type TBar<in /*HIGHLIGHTS*/out Value> = TFoo<Value>;
\ No newline at end of file
diff --git a/tests/cases/fourslash/documentHighlightVarianceModifiers.ts b/tests/cases/fourslash/documentHighlightVarianceModifiers.ts
new file mode 100644
index 0000000000000..05bfa6913eb77
--- /dev/null
+++ b/tests/cases/fourslash/documentHighlightVarianceModifiers.ts
@@ -0,0 +1,6 @@
+/// <reference path='fourslash.ts'/>
+
+//// type TFoo<Value> = { value: Value };
+//// type TBar<[|in|] [|out|] Value> = TFoo<Value>;
+
+verify.baselineDocumentHighlights();