diff --git a/src/main/java/com/microsoft/sqlserver/jdbc/IOBuffer.java b/src/main/java/com/microsoft/sqlserver/jdbc/IOBuffer.java
index bb709307d..2c918f639 100644
--- a/src/main/java/com/microsoft/sqlserver/jdbc/IOBuffer.java
+++ b/src/main/java/com/microsoft/sqlserver/jdbc/IOBuffer.java
@@ -6988,6 +6988,35 @@ final short peekStatusFlag() {
         return 0;
     }
 
+    final int peekReturnValueStatus() throws SQLServerException {
+        // Ensure that we have a packet to read from.
+        if (!ensurePayload()) {
+            throwInvalidTDS();
+        }
+
+        // In order to parse the 'status' value, we need to skip over the following properties in the TDS packet
+        // payload: TDS token type (1 byte value), ordinal/length (2 byte value), parameter name length value (1 byte value) and
+        // the number of bytes that make the parameter name (need to be calculated).
+        //
+        // 'offset' starts at 4 because tdsTokenType + ordinal/length + parameter name length value is 4 bytes. So, we
+        // skip 4 bytes immediateley.
+        int offset = 4;
+        int paramNameLength = currentPacket.payload[payloadOffset + 3];
+
+        // Check if parameter name is set. If it's set, it should be > 0. In which case, we add the
+        // additional bytes to skip.
+        if (paramNameLength > 0) {
+            // Each character in unicode is 2 bytes
+            offset += 2 * paramNameLength;
+        }
+
+        if (payloadOffset + offset <= currentPacket.payloadLength) {
+            return currentPacket.payload[payloadOffset + offset] & 0xFF;
+        }
+
+        return -1;
+    }
+
     final int readUnsignedByte() throws SQLServerException {
         // Ensure that we have a packet to read from.
         if (!ensurePayload())
diff --git a/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerCallableStatement.java b/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerCallableStatement.java
index 5e278406d..5c1393f9a 100644
--- a/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerCallableStatement.java
+++ b/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerCallableStatement.java
@@ -192,7 +192,7 @@ private Parameter getOutParameter(int i) throws SQLServerException {
             return inOutParam[i - 1];
         }
 
-        if (inOutParam[i - 1].isReturnValue() && bReturnValueSyntax && !isCursorable(executeMethod) && !isTVPType) {
+        if (inOutParam[i - 1].isReturnValue() && bReturnValueSyntax && !isCursorable(executeMethod) && !isTVPType && returnValueStatus != 2) {
             return inOutParam[i - 1];
         }
 
@@ -341,7 +341,7 @@ boolean onRetValue(TDSReader tdsReader) throws SQLServerException {
         OutParamHandler outParamHandler = new OutParamHandler();
 
         if (bReturnValueSyntax && (nOutParamsAssigned == 0) && !isCursorable(executeMethod) && !isTVPType
-                && SQLServerConnection.isCallRemoteProcDirectValid(userSQL, inOutParam.length, bReturnValueSyntax)) {
+                && SQLServerConnection.isCallRemoteProcDirectValid(userSQL, inOutParam.length, bReturnValueSyntax) && returnValueStatus != 2) {
             nOutParamsAssigned++;
         }
 
@@ -389,7 +389,7 @@ boolean onRetValue(TDSReader tdsReader) throws SQLServerException {
                 outParamIndex = outParamHandler.srv.getOrdinalOrLength();
 
                 if (bReturnValueSyntax && !isCursorable(executeMethod) && !isTVPType && SQLServerConnection
-                        .isCallRemoteProcDirectValid(userSQL, inOutParam.length, bReturnValueSyntax)) {
+                        .isCallRemoteProcDirectValid(userSQL, inOutParam.length, bReturnValueSyntax) && returnValueStatus != 2) {
                     outParamIndex++;
                 } else {
                     // Statements need to have their out param indices adjusted by the number
diff --git a/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerStatement.java b/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerStatement.java
index 2035e1fd1..3559fc99f 100644
--- a/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerStatement.java
+++ b/src/main/java/com/microsoft/sqlserver/jdbc/SQLServerStatement.java
@@ -56,6 +56,7 @@ public class SQLServerStatement implements ISQLServerStatement {
     /**
      * Always update serialVersionUID when prompted.
      */
+
     private static final long serialVersionUID = -4421134713913331507L;
 
     final static char LEFT_CURLY_BRACKET = 123;
@@ -66,6 +67,9 @@ public class SQLServerStatement implements ISQLServerStatement {
     /** response buffer adaptive flag */
     boolean isResponseBufferingAdaptive = false;
 
+    /** TDS token return value status **/
+    int returnValueStatus;
+
     final boolean getIsResponseBufferingAdaptive() {
         return isResponseBufferingAdaptive;
     }
@@ -1627,11 +1631,21 @@ boolean onRetStatus(TDSReader tdsReader) throws SQLServerException {
 
             @Override
             boolean onRetValue(TDSReader tdsReader) throws SQLServerException {
+                // Status: A value of 0x01 means the return value corresponds to an output parameter from
+                // a stored procedure. If it's 0x02 then the value corresponds to a return value from a
+                // user defined function.
+                //
+                // If it's a return value from a user defined function, we need to return false from this method
+                // so that the return value is not skipped.
+                int status = tdsReader.peekReturnValueStatus();
+
+                SQLServerStatement.this.returnValueStatus = status;
+
                 // We are only interested in return values that are statement OUT parameters,
                 // in which case we need to stop parsing and let CallableStatement take over.
                 // A RETVALUE token appearing in the execution results, but before any RETSTATUS
                 // token, is a TEXTPTR return value that should be ignored.
-                if (moreResults && null == procedureRetStatToken) {
+                if (moreResults && null == procedureRetStatToken && status != 2) {
                     Parameter p = new Parameter(
                             Util.shouldHonorAEForParameters(stmtColumnEncriptionSetting, connection));
                     p.skipRetValStatus(tdsReader);