diff --git a/python/src/com/jetbrains/python/codeInsight/completion/OverwriteEqualsInsertHandler.java b/python/src/com/jetbrains/python/codeInsight/completion/OverwriteEqualsInsertHandler.java
new file mode 100644
index 000000000000..1fb1070c5de8
--- /dev/null
+++ b/python/src/com/jetbrains/python/codeInsight/completion/OverwriteEqualsInsertHandler.java
@@ -0,0 +1,41 @@
+/*
+ * Copyright 2000-2013 JetBrains s.r.o.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+package com.jetbrains.python.codeInsight.completion;
+
+import com.intellij.codeInsight.completion.InsertHandler;
+import com.intellij.codeInsight.completion.InsertionContext;
+import com.intellij.codeInsight.lookup.Lookup;
+import com.intellij.codeInsight.lookup.LookupElement;
+import com.intellij.openapi.editor.Document;
+
+/**
+ * @author yole
+ */
+public class OverwriteEqualsInsertHandler implements InsertHandler<LookupElement> {
+  public static OverwriteEqualsInsertHandler INSTANCE = new OverwriteEqualsInsertHandler();
+
+  @Override
+  public void handleInsert(InsertionContext context, LookupElement item) {
+    if (context.getCompletionChar() != Lookup.REPLACE_SELECT_CHAR) {
+      return;
+    }
+    Document doc = context.getDocument();
+    int tailOffset = context.getTailOffset();
+    if (doc.getCharsSequence().charAt(tailOffset) == '=') {
+      doc.deleteString(tailOffset, tailOffset+1);
+    }
+  }
+}
diff --git a/python/src/com/jetbrains/python/psi/PyUtil.java b/python/src/com/jetbrains/python/psi/PyUtil.java
index 1baf3c4f2871..e939857703d2 100644
--- a/python/src/com/jetbrains/python/psi/PyUtil.java
+++ b/python/src/com/jetbrains/python/psi/PyUtil.java
@@ -54,6 +54,7 @@ import com.intellij.util.containers.HashSet;
 import com.jetbrains.python.PyBundle;
 import com.jetbrains.python.PyNames;
 import com.jetbrains.python.PyTokenTypes;
+import com.jetbrains.python.codeInsight.completion.OverwriteEqualsInsertHandler;
 import com.jetbrains.python.codeInsight.controlflow.ScopeOwner;
 import com.jetbrains.python.codeInsight.dataflow.scope.ScopeUtil;
 import com.jetbrains.python.codeInsight.stdlib.PyNamedTupleType;
@@ -888,6 +889,7 @@ public class PyUtil {
 
   public static LookupElement createNamedParameterLookup(String name) {
     LookupElementBuilder lookupElementBuilder = LookupElementBuilder.create(name + "=").withIcon(PlatformIcons.PARAMETER_ICON);
+    lookupElementBuilder = lookupElementBuilder.withInsertHandler(OverwriteEqualsInsertHandler.INSTANCE);
     return PrioritizedLookupElement.withGrouping(lookupElementBuilder, 1);
   }
 
diff --git a/python/testSrc/com/jetbrains/python/PythonCompletionTest.java b/python/testSrc/com/jetbrains/python/PythonCompletionTest.java
index c00e632a21eb..ccc3623adb6a 100644
--- a/python/testSrc/com/jetbrains/python/PythonCompletionTest.java
+++ b/python/testSrc/com/jetbrains/python/PythonCompletionTest.java
@@ -16,6 +16,7 @@
 package com.jetbrains.python;
 
 import com.intellij.codeInsight.completion.impl.CamelHumpMatcher;
+import com.intellij.codeInsight.lookup.Lookup;
 import com.intellij.codeInsight.lookup.LookupElement;
 import com.jetbrains.python.documentation.DocStringFormat;
 import com.jetbrains.python.documentation.PyDocumentationSettings;
@@ -583,4 +584,15 @@ public class PythonCompletionTest extends PyTestCase {
                                               "f('foo').<caret>\n");
     assertTrue(results.contains("lower"));
   }
+
+  public void testOverwriteEqualsSign() {  // PY-1337
+    doTestByText("def foo(school=None, kiga=None): pass\n" +
+                 "\n" +
+                 "foo(<caret>school=None)");
+    myFixture.type("sch");
+    myFixture.finishLookup(Lookup.REPLACE_SELECT_CHAR);
+    myFixture.checkResult("def foo(school=None, kiga=None): pass\n" +
+                          "\n" +
+                          "foo(school=None)");
+  }
 }