diff --git a/lib.terminalemulator/nbproject/project.properties b/lib.terminalemulator/nbproject/project.properties
--- a/lib.terminalemulator/nbproject/project.properties
+++ b/lib.terminalemulator/nbproject/project.properties
@@ -37,7 +37,7 @@
 # Contributor(s):
 is.autoload=true
 javac.compilerargs=-Xlint -Xlint:-serial
-javac.source=1.7
+javac.source=1.8
 javadoc.arch=${basedir}/arch.xml
 javadoc.apichanges=${basedir}/apichanges.xml
 nbm.homepage=http://wiki.netbeans.org/TerminalEmulator
diff --git a/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/Highlight.java b/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/Highlight.java
new file mode 100644
--- /dev/null
+++ b/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/Highlight.java
@@ -0,0 +1,173 @@
+/*
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS HEADER.
+ *
+ * Copyright (c) 2017 Oracle and/or its affiliates. All rights reserved.
+ *
+ * Oracle and Java are registered trademarks of Oracle and/or its affiliates.
+ * Other names may be trademarks of their respective owners.
+ *
+ * The contents of this file are subject to the terms of either the GNU
+ * General Public License Version 2 only ("GPL") or the Common
+ * Development and Distribution License("CDDL") (collectively, the
+ * "License"). You may not use this file except in compliance with the
+ * License. You can obtain a copy of the License at
+ * http://www.netbeans.org/cddl-gplv2.html
+ * or nbbuild/licenses/CDDL-GPL-2-CP. See the License for the
+ * specific language governing permissions and limitations under the
+ * License.  When distributing the software, include this License Header
+ * Notice in each file and include the License file at
+ * nbbuild/licenses/CDDL-GPL-2-CP.  Oracle designates this
+ * particular file as subject to the "Classpath" exception as provided
+ * by Oracle in the GPL Version 2 section of the License file that
+ * accompanied this code. If applicable, add the following below the
+ * License Header, with the fields enclosed by brackets [] replaced by
+ * your own identifying information:
+ * "Portions Copyrighted [year] [name of copyright owner]"
+ *
+ * If you wish your version of this file to be governed by only the CDDL
+ * or only the GPL Version 2, indicate your decision by adding
+ * "[Contributor] elects to include this software in this distribution
+ * under the [CDDL or GPL Version 2] license." If you do not indicate a
+ * single choice of license, a recipient has the option to distribute
+ * your version of this file under either the CDDL, the GPL Version 2 or
+ * to extend the choice of license to its licensees as provided above.
+ * However, if you add GPL Version 2 code and therefore, elected the GPL
+ * Version 2 license, then the option applies only if the new code is
+ * made subject to such option by the copyright holder.
+ *
+ * Contributor(s):
+ */
+package org.netbeans.lib.terminalemulator;
+
+import java.awt.Color;
+import java.awt.Dimension;
+import java.awt.Graphics;
+import java.awt.Point;
+import java.awt.Rectangle;
+import java.util.Arrays;
+
+/**
+ * @author Ilia Gromov
+ */
+public class Highlight {
+
+    private final Term term;
+    private final State state;
+
+    private Extent[] highlightExtents = new Extent[0];
+
+    Highlight(Term term, State state) {
+        this.term = term;
+        this.state = state;
+    }
+
+    public Extent[] getHighlightExtents() {
+        Extent[] copy = new Extent[highlightExtents.length];
+        for (int i = 0; i < highlightExtents.length; i++) {
+            Extent x = highlightExtents[i];
+            copy[i] = new Extent(x.begin, x.end);
+        }
+        return copy;
+    }
+
+    public void setHighlightExtents(Extent[] highlightExtents) {
+        this.highlightExtents = Arrays.copyOf(highlightExtents, highlightExtents.length);
+        for (Extent extent : highlightExtents) {
+            extent.order();
+        }
+    }
+
+    // properties:
+    private Color color = new Color(230, 230, 255);  // swing color
+
+    void setColor(Color color) {
+        this.color = color;
+    }
+
+    Color getColor() {
+        return color;
+    }
+
+    private Color xor_color = Color.white;
+
+    void setXORColor(Color color) {
+        xor_color = color;
+    }
+
+    Color getXORColor() {
+        return xor_color;
+    }
+
+    /**
+     * Select inside one line Rows and columns are in absolute coords.
+     */
+    private void paint(Graphics g, int row, int bcol, int ecol) {
+
+        // Instead of doing this SHOULD clip the Extent to what's in view
+        // Row is outside the view
+        if (row < state.firstx) {
+            return;
+        }
+        if (row > state.firstx + state.rows) {
+            return;
+        }
+
+        // Construct the rectangle we're going to paint
+        BCoord begin = new BCoord(row, bcol);
+        BCoord end = new BCoord(row, ecol);
+
+        begin = term.toViewCoord(begin);
+        end = term.toViewCoord(end);
+
+        //Hotfix for issue 40189
+        if (begin == null || end == null) {
+            return;
+        }
+
+        int lw;		// width of last character in selection
+        Line l = term.buf().lineAt(row);
+        lw = l.width(term.metrics(), ecol);
+
+        Point pbegin = term.toPixel(begin);
+        Point pend = term.toPixel(end);
+        pend.y += term.metrics().height;
+        pend.x += term.metrics().width * lw;	// xterm actually doesn't do this
+
+        Dimension dim = new Dimension(pend.x - pbegin.x,
+                pend.y - pbegin.y);
+        Rectangle rect = new Rectangle(pbegin, dim);
+
+        if (term.isSelectionXOR()) {
+            g.setXORMode(xor_color);
+        } else {
+            g.setColor(color);
+        }
+
+        g.fillRect(rect.x, rect.y, rect.width, rect.height);
+    }
+
+    void paint(final Graphics g) {
+        /*
+	 * Paint the selection.
+         */
+
+        for (Extent x : highlightExtents) {
+            if (x == null) {
+                continue;
+            }
+            x.order();
+
+            // DEBUG System.out.println("Sel.paint extent: " + x);	// NOI18N
+            term.visitLines(x.begin, x.end, true, new LineVisitor() {
+                public boolean visit(Line l, int row, int bcol, int ecol) {
+                    paint(g, row, bcol, ecol);
+                    return true;
+                }
+            });
+        }
+    }
+
+    public void clear() {
+        highlightExtents = new Extent[0];
+    }
+}
diff --git a/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/Term.java b/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/Term.java
--- a/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/Term.java
+++ b/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/Term.java
@@ -255,6 +255,8 @@
 
     private State st = new State();
     private Sel sel = new Sel(this, st);
+    private Highlight highlight = new Highlight(this, st);
+
     private transient Ops ops = new OpsImpl();
     private int top_margin = 0;		// 0 means default (see topMargin())
     private int bot_margin = 0;
@@ -3198,6 +3200,7 @@
             // draw over this. Lines that are attributed end up doing some
             // redundant work repainting.
 
+            highlight.paint(g);
             sel.paint(g);
         }
 
@@ -5396,6 +5399,24 @@
         repaint(false);
     }
 
+    public Extent[] getHighlightExtents() {
+        return highlight.getHighlightExtents();
+    }
+
+    public void setHighlightExtents(Extent[] extents) {
+        for (Extent extent : extents) {
+            extent.begin.clip(buf.nlines(), buf.totalCols(), firsta);
+            extent.end.clip(buf.nlines(), buf.totalCols(), firsta);
+        }
+        highlight.setHighlightExtents(extents);
+        repaint(false);
+    }
+
+    public void clearHighlight() {
+        highlight.clear();
+        repaint(false);
+    }
+
     /**
      * Set whether slections automatically get copied to the systemSelection
      * when the selection is completed (the button is released).
diff --git a/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/support/HiglightMatchesFindState.java b/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/support/HiglightMatchesFindState.java
new file mode 100644
--- /dev/null
+++ b/lib.terminalemulator/src/org/netbeans/lib/terminalemulator/support/HiglightMatchesFindState.java
@@ -0,0 +1,122 @@
+/*
+ * DO NOT ALTER OR REMOVE COPYRIGHT NOTICES OR THIS HEADER.
+ *
+ * Copyright (c) 2017 Oracle and/or its affiliates. All rights reserved.
+ *
+ * Oracle and Java are registered trademarks of Oracle and/or its affiliates.
+ * Other names may be trademarks of their respective owners.
+ *
+ * The contents of this file are subject to the terms of either the GNU
+ * General Public License Version 2 only ("GPL") or the Common
+ * Development and Distribution License("CDDL") (collectively, the
+ * "License"). You may not use this file except in compliance with the
+ * License. You can obtain a copy of the License at
+ * http://www.netbeans.org/cddl-gplv2.html
+ * or nbbuild/licenses/CDDL-GPL-2-CP. See the License for the
+ * specific language governing permissions and limitations under the
+ * License.  When distributing the software, include this License Header
+ * Notice in each file and include the License file at
+ * nbbuild/licenses/CDDL-GPL-2-CP.  Oracle designates this
+ * particular file as subject to the "Classpath" exception as provided
+ * by Oracle in the GPL Version 2 section of the License file that
+ * accompanied this code. If applicable, add the following below the
+ * License Header, with the fields enclosed by brackets [] replaced by
+ * your own identifying information:
+ * "Portions Copyrighted [year] [name of copyright owner]"
+ *
+ * If you wish your version of this file to be governed by only the CDDL
+ * or only the GPL Version 2, indicate your decision by adding
+ * "[Contributor] elects to include this software in this distribution
+ * under the [CDDL or GPL Version 2] license." If you do not indicate a
+ * single choice of license, a recipient has the option to distribute
+ * your version of this file under either the CDDL, the GPL Version 2 or
+ * to extend the choice of license to its licensees as provided above.
+ * However, if you add GPL Version 2 code and therefore, elected the GPL
+ * Version 2 license, then the option applies only if the new code is
+ * made subject to such option by the copyright holder.
+ *
+ * Contributor(s):
+ */
+package org.netbeans.lib.terminalemulator.support;
+
+import java.util.ArrayList;
+import java.util.List;
+import java.util.regex.Matcher;
+import java.util.regex.Pattern;
+import org.netbeans.lib.terminalemulator.Coord;
+import org.netbeans.lib.terminalemulator.Extent;
+import org.netbeans.lib.terminalemulator.LogicalLineVisitor;
+import org.netbeans.lib.terminalemulator.Term;
+
+/**
+ *
+ * @author Ilia Gromov
+ */
+public class HiglightMatchesFindState implements FindState {
+
+    private final FindState findState;
+    private final Term term;
+
+    public HiglightMatchesFindState(FindState findState, Term term) {
+        this.findState = findState;
+        this.term = term;
+    }
+
+    @Override
+    public void setPattern(String pattern) {
+        findState.setPattern(pattern);
+    }
+
+    @Override
+    public String getPattern() {
+        return findState.getPattern();
+    }
+
+    @Override
+    public void setVisible(boolean visible) {
+        findState.setVisible(visible);
+        if (!visible) {
+            term.clearHighlight();
+        }
+    }
+
+    @Override
+    public boolean isVisible() {
+        return findState.isVisible();
+    }
+
+    private void findAll() {
+        Pattern pattern = Pattern.compile(getPattern(), Pattern.LITERAL);
+        List<Extent> extents = new ArrayList<>();
+        term.visitLogicalLines(null, null, new LogicalLineVisitor() {
+            @Override
+            public boolean visit(int line, Coord begin, Coord end, String text) {
+                Matcher matcher = pattern.matcher(text);
+                while (matcher.find()) {
+                    Extent extent = term.extentInLogicalLine(begin, matcher.start(), getPattern().length());
+                    extents.add(extent);
+                }
+                return true;
+            }
+        });
+        term.setHighlightExtents(extents.toArray(new Extent[0]));
+    }
+
+    @Override
+    public void next() {
+        findAll();
+        findState.next();
+    }
+
+    @Override
+    public void prev() {
+        findAll();
+        findState.prev();
+
+    }
+
+    @Override
+    public Status getStatus() {
+        return findState.getStatus();
+    }
+}
diff --git a/terminal.nb/src/org/netbeans/modules/terminal/ioprovider/Terminal.java b/terminal.nb/src/org/netbeans/modules/terminal/ioprovider/Terminal.java
--- a/terminal.nb/src/org/netbeans/modules/terminal/ioprovider/Terminal.java
+++ b/terminal.nb/src/org/netbeans/modules/terminal/ioprovider/Terminal.java
@@ -132,6 +132,7 @@
 import org.netbeans.lib.terminalemulator.TermAdapter;
 import org.netbeans.lib.terminalemulator.TermListener;
 import org.netbeans.lib.terminalemulator.TermStream;
+import org.netbeans.lib.terminalemulator.support.HiglightMatchesFindState;
 import org.netbeans.modules.terminal.nb.actions.ActionFactory;
 import org.netbeans.modules.terminal.nb.actions.PinTabAction;
 import org.netbeans.modules.terminal.api.IOResizable;
@@ -377,7 +378,7 @@
 
         this.term.setCursorVisible(true);
 
-        findState = new DefaultFindState(term);
+        findState = new HiglightMatchesFindState(new DefaultFindState(term), term);
 
         term.setHorizontallyScrollable(false);
         term.setEmulation("xterm");	// NOI18N