diff --git a/src/PhpSpreadsheet/Reader/Xlsx.php b/src/PhpSpreadsheet/Reader/Xlsx.php
index 3a75edf6..5dc48ff8 100644
--- a/src/PhpSpreadsheet/Reader/Xlsx.php
+++ b/src/PhpSpreadsheet/Reader/Xlsx.php
@@ -1280,7 +1280,7 @@ class Xlsx extends BaseReader
                                     }
 
                                     // Valid range?
-                                    if (stripos((string) $definedName, '#REF!') !== false || $extractedRange == '') {
+                                    if ($extractedRange == '') {
                                         continue;
                                     }
 
@@ -1350,7 +1350,7 @@ class Xlsx extends BaseReader
                                 $extractedRange = (string) $definedName;
 
                                 // Valid range?
-                                if (stripos((string) $definedName, '#REF!') !== false || $extractedRange == '') {
+                                if ($extractedRange == '') {
                                     continue;
                                 }
 
@@ -1398,6 +1398,9 @@ class Xlsx extends BaseReader
                                         $locatedSheet = $excel->getSheetByName($extractedSheetName);
                                     }
 
+                                    if ($locatedSheet === null && !DefinedName::testIfFormula($definedRange)) {
+                                        $definedRange = '#REF!';
+                                    }
                                     $excel->addDefinedName(DefinedName::createInstance((string) $definedName['name'], $locatedSheet, $definedRange, false));
                                 }
                             }
diff --git a/tests/PhpSpreadsheetTests/Reader/Xlsx/NamedRangeTest.php b/tests/PhpSpreadsheetTests/Reader/Xlsx/NamedRangeTest.php
new file mode 100644
index 00000000..e4090d98
--- /dev/null
+++ b/tests/PhpSpreadsheetTests/Reader/Xlsx/NamedRangeTest.php
@@ -0,0 +1,22 @@
+<?php
+
+namespace PhpOffice\PhpSpreadsheetTests\Reader\Xlsx;
+
+use PhpOffice\PhpSpreadsheet\Reader\Xlsx;
+use PHPUnit\Framework\TestCase;
+
+class NamedRangeTest extends TestCase
+{
+    public static function testBug1686b(): void
+    {
+        $xlsxFile = 'tests/data/Reader/XLSX/bug1686b.xlsx';
+        $reader = new Xlsx();
+        $spreadsheet = $reader->load($xlsxFile);
+        $sheet = $spreadsheet->getActiveSheet();
+        self::assertEquals(2.1, $sheet->getCell('A1')->getCalculatedValue());
+        self::assertEquals('#REF!', $sheet->getCell('A2')->getCalculatedValue());
+        self::assertEquals('#REF!', $sheet->getCell('A3')->getCalculatedValue());
+        self::assertEquals('#NAME?', $sheet->getCell('A4')->getCalculatedValue());
+        self::assertEquals('#REF!', $sheet->getCell('A5')->getCalculatedValue());
+    }
+}
diff --git a/tests/data/Reader/XLSX/bug1686b.xlsx b/tests/data/Reader/XLSX/bug1686b.xlsx
new file mode 100644
index 00000000..d496c5c7
Binary files /dev/null and b/tests/data/Reader/XLSX/bug1686b.xlsx differ