diff --git a/gcc/ChangeLog b/gcc/ChangeLog
index d326fc9d1013..afc52add5633 100644
--- a/gcc/ChangeLog
+++ b/gcc/ChangeLog
@@ -1,5 +1,9 @@
 2008-08-29  Jakub Jelinek  <jakub@redhat.com>
 
+	PR c/37261
+	* fold-const.c (fold_binary): In (X | C1) & C2 canonicalization
+	compute new & and | in type rather than TREE_TYPE (arg0).
+
 	* dwarf2out.c (fortran_common): Update comment.
 	(gen_variable_die): Swap com_die and var_die variables in Fortran
 	COMMON block handling code.
diff --git a/gcc/fold-const.c b/gcc/fold-const.c
index af1643376f1b..01936bd55fd5 100644
--- a/gcc/fold-const.c
+++ b/gcc/fold-const.c
@@ -10737,14 +10737,13 @@ fold_binary (enum tree_code code, tree type, tree op0, tree op1)
 	  && TREE_CODE (arg1) == INTEGER_CST
 	  && TREE_CODE (TREE_OPERAND (arg0, 1)) == INTEGER_CST)
 	{
-	  tree tmp1 = fold_convert (TREE_TYPE (arg0), arg1);
-	  tree tmp2 = fold_build2 (BIT_AND_EXPR, TREE_TYPE (arg0),
-				   TREE_OPERAND (arg0, 0), tmp1);
-	  tree tmp3 = fold_build2 (BIT_AND_EXPR, TREE_TYPE (arg0),
-				   TREE_OPERAND (arg0, 1), tmp1);
+	  tree tmp1 = fold_convert (type, arg1);
+	  tree tmp2 = fold_convert (type, TREE_OPERAND (arg0, 0));
+	  tree tmp3 = fold_convert (type, TREE_OPERAND (arg0, 1));
+	  tmp2 = fold_build2 (BIT_AND_EXPR, type, tmp2, tmp1);
+	  tmp3 = fold_build2 (BIT_AND_EXPR, type, tmp3, tmp1);
 	  return fold_convert (type,
-			       fold_build2 (BIT_IOR_EXPR, TREE_TYPE (arg0),
-					    tmp2, tmp3));
+			       fold_build2 (BIT_IOR_EXPR, type, tmp2, tmp3));
 	}
 
       /* (X | Y) & Y is (X, Y).  */
diff --git a/gcc/testsuite/ChangeLog b/gcc/testsuite/ChangeLog
index 5f0d09e62d1d..7cae5e979d26 100644
--- a/gcc/testsuite/ChangeLog
+++ b/gcc/testsuite/ChangeLog
@@ -1,4 +1,7 @@
-2008-08-22  Jakub Jelinek  <jakub@redhat.com>
+2008-08-29  Jakub Jelinek  <jakub@redhat.com>
+
+	PR c/37261
+	* gcc.dg/pr37261.c: New test.
 
 	PR fortran/23057
 	* gfortran.dg/debug/pr35154-dwarf2.f: Adjust for replacement
diff --git a/gcc/testsuite/gcc.dg/pr37261.c b/gcc/testsuite/gcc.dg/pr37261.c
new file mode 100644
index 000000000000..a05ada148c1f
--- /dev/null
+++ b/gcc/testsuite/gcc.dg/pr37261.c
@@ -0,0 +1,15 @@
+/* PR c/37261 */
+/* { dg-do compile } */
+/* { dg-options "-O2 -fdump-tree-optimized" } */
+
+unsigned
+foo (int x)
+{
+  unsigned a = ((x & 1) | 2) & 0x80000000;	/* { dg-bogus "integer overflow in expression" } */
+  unsigned b = ((x & 2) | 2) & 0x80000000;	/* { dg-bogus "integer overflow in expression" } */
+  unsigned c = ((x & 4) | 2) & 0x80000000;	/* { dg-bogus "integer overflow in expression" } */
+  return a + b + c;
+}
+
+/* { dg-final { scan-tree-dump "return 0" "optimized" } } */
+/* { dg-final { cleanup-tree-dump "optimized" } } */