Index: flang/lib/Parser/preprocessor.cpp
===================================================================
--- flang/lib/Parser/preprocessor.cpp
+++ flang/lib/Parser/preprocessor.cpp
@@ -416,6 +416,26 @@
   return tokens;
 }
 
+static std::string getFileName(const std::string &fileNamePath,
+    const TokenSequence &dir, Prescanner &prescanner, size_t tokenPosition) {
+  int offset = 0;
+  int numberOfSkippedCharacters = 0;
+  // skip outer quotation marks
+  if (fileNamePath.length() > 2 && fileNamePath[0] == '\"') {
+    if (fileNamePath[fileNamePath.length() - 1] != '\"') {
+      prescanner.Say(
+          dir.GetTokenProvenanceRange(tokenPosition), "missing '\"'"_err_en_US);
+      return std::string();
+    } else {
+      offset = 1;
+      numberOfSkippedCharacters = 2;
+    }
+  }
+
+  return fileNamePath.substr(
+      offset, fileNamePath.length() - numberOfSkippedCharacters);
+}
+
 void Preprocessor::Directive(const TokenSequence &dir, Prescanner &prescanner) {
   std::size_t tokens{dir.SizeInTokens()};
   std::size_t j{dir.SkipBlanks(0)};
@@ -444,7 +464,36 @@
     nameToken = dir.TokenAt(j);
   }
   if (dirName == "line") {
-    // #line is ignored
+    std::optional<std::string> prependPath;
+    if (const auto *currentFile{allSources_.GetSourceFile(j)}) {
+      prependPath = DirectoryName(currentFile->path());
+    }
+    std::string fileNamePath{dir.TokenAt(j).ToString()};
+    std::string fileName = getFileName(fileNamePath, dir, prescanner, j);
+    if (fileName.empty())
+      return;
+    std::string buf;
+    llvm::raw_string_ostream error{buf};
+    // Read original file to get propper token localization
+    const SourceFile *originalFile{
+        allSources_.Open(fileName, error, std::move(prependPath))};
+    if (!originalFile) {
+      prescanner.Say(dir.GetTokenProvenanceRange(j), "line error %s"_err_en_US,
+          error.str());
+    } else if (originalFile->bytes() > 0) {
+      ProvenanceRange fileRange{
+          allSources_.AddIncludedFile(*originalFile, dir.GetProvenanceRange())};
+      Prescanner{prescanner}
+          .set_encoding(originalFile->encoding())
+          .Prescan(fileRange);
+    }
+    // Skip tokens from preprocessed file which are located in the original file
+    while (!prescanner.IsAtEnd()) {
+      if (!prescanner.IsNextLinePreprocessorDirective()) {
+        prescanner.NextLine();
+        continue;
+      }
+    }
   } else if (dirName == "define") {
     if (nameToken.empty()) {
       prescanner.Say(dir.GetTokenProvenanceRange(j < tokens ? j : tokens - 1),
Index: flang/test/Driver/save-temps-token-localization.f90
===================================================================
--- /dev/null
+++ flang/test/Driver/save-temps-token-localization.f90
@@ -0,0 +1,16 @@
+! Ensure -save-temps flag does not have influence on error diagnostic
+
+!--------------------------
+! FLANG DRIVER (flang)
+!--------------------------
+! RUN: not %flang -save-temps %s  2>&1 | FileCheck %s --check-prefix=WITH_SAVE_TEMPS
+
+
+! WITH_SAVE_TEMPS: save-temps-token-localization.f90:14:3: error: No explicit type declared for 'ij' 
+
+subroutine test
+  implicit none
+  integer :: i
+  ij=10
+  print *,i
+end subroutine