diff --git a/mysql-test/r/sp.result b/mysql-test/r/sp.result
index f5ed4fbd901..11d6ff02756 100644
--- a/mysql-test/r/sp.result
+++ b/mysql-test/r/sp.result
@@ -7087,6 +7087,26 @@ COUNT(DISTINCT d)
 2
 DROP FUNCTION f1;
 DROP TABLE t1, t2;
+#
+# Bug#12663165 SP DEAD CODE REMOVAL DOESN'T UNDERSTAND CONTINUE HANDLERS
+#
+DROP FUNCTION IF EXISTS f1;
+CREATE FUNCTION f1() RETURNS INT
+BEGIN
+DECLARE CONTINUE HANDLER FOR SQLEXCEPTION BEGIN END;
+BEGIN
+DECLARE CONTINUE HANDLER FOR SQLEXCEPTION RETURN f1();
+BEGIN
+DECLARE CONTINUE HANDLER FOR SQLEXCEPTION RETURN f1();
+RETURN f1();
+END;
+END;
+RETURN 1;
+END $
+SELECT f1();
+f1()
+1
+DROP FUNCTION f1;
 # ------------------------------------------------------------------
 # -- End of 5.1 tests
 # ------------------------------------------------------------------
diff --git a/mysql-test/t/sp.test b/mysql-test/t/sp.test
index 141d1604065..ae4e1dd588e 100644
--- a/mysql-test/t/sp.test
+++ b/mysql-test/t/sp.test
@@ -8397,6 +8397,35 @@ DROP FUNCTION f1;
 DROP TABLE t1, t2;
 
 
+--echo #
+--echo # Bug#12663165 SP DEAD CODE REMOVAL DOESN'T UNDERSTAND CONTINUE HANDLERS
+--echo #
+
+--disable_warnings
+DROP FUNCTION IF EXISTS f1;
+--enable_warnings
+
+delimiter $;
+CREATE FUNCTION f1() RETURNS INT
+BEGIN
+  DECLARE CONTINUE HANDLER FOR SQLEXCEPTION BEGIN END;
+  BEGIN
+    DECLARE CONTINUE HANDLER FOR SQLEXCEPTION RETURN f1();
+    BEGIN
+     DECLARE CONTINUE HANDLER FOR SQLEXCEPTION RETURN f1();
+     RETURN f1();
+    END;
+  END;
+RETURN 1;
+END $ 
+delimiter ;$
+
+# This used to cause an assertion.
+SELECT f1();
+
+DROP FUNCTION f1;
+
+
 --echo # ------------------------------------------------------------------
 --echo # -- End of 5.1 tests
 --echo # ------------------------------------------------------------------
diff --git a/sql/sp_head.cc b/sql/sp_head.cc
index 8bea0be0f56..dec76615ec7 100644
--- a/sql/sp_head.cc
+++ b/sql/sp_head.cc
@@ -3356,6 +3356,23 @@ sp_instr_hpush_jump::opt_mark(sp_head *sp, List<sp_instr> *leads)
     m_optdest= sp->get_instr(m_dest);
   }
   sp->add_mark_lead(m_dest, leads);
+
+  /*
+    For continue handlers, all instructions in the scope of the handler
+    are possible leads. For example, the instruction after freturn might
+    be executed if the freturn triggers the condition handled by the
+    continue handler.
+
+    m_dest marks the start of the handler scope. It's added as a lead
+    above, so we start on m_dest+1 here.
+    m_opt_hpop is the hpop marking the end of the handler scope.
+  */
+  if (m_type == SP_HANDLER_CONTINUE)
+  {
+    for (uint scope_ip= m_dest+1; scope_ip <= m_opt_hpop; scope_ip++)
+      sp->add_mark_lead(scope_ip, leads);
+  }
+
   return m_ip+1;
 }
 
diff --git a/sql/sp_head.h b/sql/sp_head.h
index da490527f42..a026ac47221 100644
--- a/sql/sp_head.h
+++ b/sql/sp_head.h
@@ -1000,7 +1000,7 @@ class sp_instr_hpush_jump : public sp_instr_jump
 public:
 
   sp_instr_hpush_jump(uint ip, sp_pcontext *ctx, int htype, uint fp)
-    : sp_instr_jump(ip, ctx), m_type(htype), m_frame(fp)
+    : sp_instr_jump(ip, ctx), m_type(htype), m_frame(fp), m_opt_hpop(0)
   {
     m_cond.empty();
   }
@@ -1022,6 +1022,15 @@ public:
     return m_ip;
   }
 
+  virtual void backpatch(uint dest, sp_pcontext *dst_ctx)
+  {
+    DBUG_ASSERT(!m_dest || !m_opt_hpop);
+    if (!m_dest)
+      m_dest= dest;
+    else
+      m_opt_hpop= dest;
+  }
+
   inline void add_condition(struct sp_cond_type *cond)
   {
     m_cond.push_front(cond);
@@ -1031,6 +1040,7 @@ private:
 
   int m_type;			///< Handler type
   uint m_frame;
+  uint m_opt_hpop;              // hpop marking end of handler scope.
   List<struct sp_cond_type> m_cond;
 
 }; // class sp_instr_hpush_jump : public sp_instr_jump
diff --git a/sql/sql_yacc.yy b/sql/sql_yacc.yy
index facbc6d3e95..7e7ff7e91ca 100644
--- a/sql/sql_yacc.yy
+++ b/sql/sql_yacc.yy
@@ -2532,9 +2532,15 @@ sp_decl:
             sp_instr_hpush_jump *i=
               new sp_instr_hpush_jump(sp->instructions(), ctx, $2,
 	                              ctx->current_var_count());
-            if (i == NULL ||
-	        sp->add_instr(i) ||
-                sp->push_backpatch(i, ctx->push_label((char *)"", 0)))
+            if (i == NULL || sp->add_instr(i))
+              MYSQL_YYABORT;
+
+            /* For continue handlers, mark end of handler scope. */
+            if ($2 == SP_HANDLER_CONTINUE &&
+                sp->push_backpatch(i, ctx->last_label()))
+              MYSQL_YYABORT;
+
+            if (sp->push_backpatch(i, ctx->push_label(empty_c_string, 0)))
               MYSQL_YYABORT;
           }
           sp_hcond_list sp_proc_stmt