diff --git a/python/src/com/jetbrains/python/formatter/PyBlock.java b/python/src/com/jetbrains/python/formatter/PyBlock.java
index e38fe04eb1b0..46908b2857d1 100644
--- a/python/src/com/jetbrains/python/formatter/PyBlock.java
+++ b/python/src/com/jetbrains/python/formatter/PyBlock.java
@@ -153,7 +153,9 @@ public class PyBlock implements ASTBlock {
         childIndent = Indent.getNoneIndent();
       }
       else {
-        childIndent = Indent.getNormalIndent();
+        childIndent = parentType == PyElementTypes.PARAMETER_LIST 
+                      ? Indent.getContinuationIndent()
+                      : Indent.getNormalIndent();
       }
     }
     else if (parentType == PyElementTypes.DICT_LITERAL_EXPRESSION || parentType == PyElementTypes.SET_LITERAL_EXPRESSION) {
@@ -483,6 +485,9 @@ public class PyBlock implements ASTBlock {
     }
 
     // constructs that imply indent for their children
+    if (_node.getElementType().equals(PyElementTypes.PARAMETER_LIST)) {
+      return Indent.getContinuationIndent();
+    }
     if (ourListElementTypes.contains(_node.getElementType()) || _node.getPsi() instanceof PyStatementPart) {
       return Indent.getNormalIndent();
     }
diff --git a/python/testData/formatter/optionalAlignForMethodParameters_after.py b/python/testData/formatter/optionalAlignForMethodParameters_after.py
index 106f655c6276..eabb21b286b7 100644
--- a/python/testData/formatter/optionalAlignForMethodParameters_after.py
+++ b/python/testData/formatter/optionalAlignForMethodParameters_after.py
@@ -1,3 +1,3 @@
 def long_method_name(bar,
-    baz):
+        baz):
     pass
diff --git a/python/testSrc/com/jetbrains/python/PyFormatterTest.java b/python/testSrc/com/jetbrains/python/PyFormatterTest.java
index fbaf356d4bb4..47a193942322 100644
--- a/python/testSrc/com/jetbrains/python/PyFormatterTest.java
+++ b/python/testSrc/com/jetbrains/python/PyFormatterTest.java
@@ -156,10 +156,10 @@ public class PyFormatterTest extends PyTestCase {
 
     String expected =
       "def method_name(\n" +
-      "    desired_impulse_response,\n" +
-      "    desired_response_parameters,\n" +
-      "    inverse_filter_length,\n" +
-      "    observed_impulse_response):\n" +
+      "        desired_impulse_response,\n" +
+      "        desired_response_parameters,\n" +
+      "        inverse_filter_length,\n" +
+      "        observed_impulse_response):\n" +
       "#  Extract from here to ...\n" +
       "    desired_impulse_response = {'dirac, '\n" +
       "    gaussian\n" +
@@ -167,8 +167,8 @@ public class PyFormatterTest extends PyTestCase {
       "    return desired, o";
     assertEquals(expected, reformatted.getText());
   }
-  
-  private void doTest() {
+
+ private void doTest() {
     myFixture.configureByFile("formatter/" + getTestName(true) + ".py");
     ApplicationManager.getApplication().runWriteAction(new Runnable() {
       @Override