diff --git a/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaModelTests.java b/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaModelTests.java
index 29349ed9976..324b602d2b7 100644
--- a/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaModelTests.java
+++ b/org.eclipse.jdt.core.tests.model/src/org/eclipse/jdt/core/tests/model/JavaModelTests.java
@@ -310,13 +310,31 @@ public void testCreatePkgHandleInDifferentProject() throws CoreException {
 	try {
 		createJavaProject("P1", new String[] {}, "bin");
 		IFolder folder = createFolder("/P1/lib/x/y");
-		createJavaProject("P2", new String[] {}, new String[] {"/P1/lib"}, "");
+		IJavaProject p2 = createJavaProject("P2", new String[] {}, new String[] {"/P1/lib"}, "");
 		IJavaElement element = JavaCore.create(folder);
 		assertElementEquals(
 			"Unexpected element",
 			"x.y [in /P1/lib [in P2]]",
 			element
 		);
+		IFolder folder2 = createFolder("/P1/lib/x/z");
+		assertElementEquals(
+				"Unexpected element",
+				"x.z [in /P1/lib [in P2]]",
+				JavaCore.create(folder2)
+			);
+		p2.getProject().close(null);
+		assertElementEquals(
+			"Unexpected element",
+			"<null>", // closed
+			JavaCore.create(folder2)
+		);
+		p2.getProject().open(null);
+		assertElementEquals(
+				"Unexpected element",
+				"x.z [in /P1/lib [in P2]]", // open again
+				JavaCore.create(folder2)
+			);
 	} finally {
 		deleteProjects(new String[] {"P1", "P2"});
 	}
diff --git a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java
index 6cfbdc3a809..7ff36a780b7 100644
--- a/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java
+++ b/org.eclipse.jdt.core/model/org/eclipse/jdt/internal/core/JavaModelManager.java
@@ -979,7 +979,7 @@ public static IJavaElement create(IFile file, IJavaProject project) {
 		}
 		return null;
 	}
-
+	private static volatile IJavaProject lastProjectUsed;
 	/**
 	 * Returns the package fragment or package fragment root corresponding to the given folder,
 	 * its parent or great parent being the given project.
@@ -999,6 +999,14 @@ public static IJavaElement create(IFolder folder, IJavaProject project) {
 			project = JavaCore.create(folder.getProject());
 			element = determineIfOnClasspath(folder, project);
 			if (element == null) {
+				IJavaProject lastProject = lastProjectUsed;
+				if (lastProject != null) {
+					// try to avoid searching through all projects
+					element = determineIfOnClasspath(folder, lastProject);
+					if (element != null) {
+						return element;
+					}
+				}
 				// walk all projects and find one that have the given folder on its classpath
 				IJavaProject[] projects;
 				try {
@@ -1007,10 +1015,13 @@ public static IJavaElement create(IFolder folder, IJavaProject project) {
 					return null;
 				}
 				for (IJavaProject p : projects) {
-					project = p;
-					element = determineIfOnClasspath(folder, project);
-					if (element != null)
-						break;
+					if (!p.equals(lastProject)) {
+						element = determineIfOnClasspath(folder, p);
+						if (element != null) {
+							lastProjectUsed = p;
+							return element;
+						}
+					}
 				}
 			}
 		} else {