diff --git a/python/src/com/jetbrains/python/editor/PythonCopyPasteProcessor.java b/python/src/com/jetbrains/python/editor/PythonCopyPasteProcessor.java
index 62b8eadb8e40..49826cb049cd 100644
--- a/python/src/com/jetbrains/python/editor/PythonCopyPasteProcessor.java
+++ b/python/src/com/jetbrains/python/editor/PythonCopyPasteProcessor.java
@@ -2,18 +2,17 @@ package com.jetbrains.python.editor;
 
 import com.intellij.codeInsight.CodeInsightSettings;
 import com.intellij.codeInsight.editorActions.CopyPastePreProcessor;
-import com.intellij.openapi.editor.CaretModel;
-import com.intellij.openapi.editor.Document;
-import com.intellij.openapi.editor.Editor;
-import com.intellij.openapi.editor.RawText;
+import com.intellij.openapi.editor.*;
 import com.intellij.openapi.project.Project;
 import com.intellij.openapi.util.text.CharFilter;
 import com.intellij.openapi.util.text.StringUtil;
 import com.intellij.psi.PsiElement;
 import com.intellij.psi.PsiFile;
 import com.intellij.psi.PsiWhiteSpace;
+import com.intellij.psi.codeStyle.CodeStyleSettingsManager;
 import com.intellij.psi.util.PsiTreeUtil;
 import com.intellij.psi.util.PsiUtilCore;
+import com.jetbrains.python.PythonFileType;
 import com.jetbrains.python.psi.PyFile;
 import com.jetbrains.python.psi.PyStringLiteralExpression;
 
@@ -52,7 +51,18 @@ public class PythonCopyPasteProcessor implements CopyPastePreProcessor {
       if (StringUtil.countChars(text, '\n') > 0 || StringUtil.startsWithWhitespace(text)) { //2, 3, 4 case from doc
         final PsiElement element = PsiUtilCore.getElementAtOffset(file, caretOffset - 1);
         if (PsiTreeUtil.getParentOfType(element, PyStringLiteralExpression.class) != null) return text;
-        caretModel.moveToOffset(lineStartOffset);
+
+        final SelectionModel selectionModel = editor.getSelectionModel();
+        if (selectionModel.getSelectionStart() != selectionModel.getSelectionEnd()) {
+          final int line = document.getLineNumber(selectionModel.getSelectionStart());
+          final int lineOffset = getLineStartSafeOffset(document, line);
+          final PsiElement ws = file.findElementAt(lineOffset);
+          int offset = ws instanceof PsiWhiteSpace? ws.getTextRange().getEndOffset() : lineOffset;
+          caretModel.moveToOffset(offset);
+          selectionModel.setSelection(offset, selectionModel.getSelectionEnd());
+        }
+        else
+          caretModel.moveToOffset(lineStartOffset);
         String spaceString;
         int indent = 0;
 
@@ -69,12 +79,17 @@ public class PythonCopyPasteProcessor implements CopyPastePreProcessor {
             if (indent < 0)
               indent = StringUtil.isEmptyOrSpaces(spaceString) ? spaceString.length() : 0;
 
-            final String trimmed = StringUtil.trimLeading(strings.get(0));    //decrease indent if needed
-            if (trimmed.startsWith("def ") || trimmed.startsWith("if ") || trimmed.startsWith("try:") ||
-                trimmed.startsWith("class ") || trimmed.startsWith("for ") || trimmed.startsWith("elif ") ||
-                trimmed.startsWith("else:") || trimmed.startsWith("except") || trimmed.startsWith("while ")) {
-              indent = StringUtil.findFirst(spaceString, CharFilter.NOT_WHITESPACE_FILTER) / 2;
-              if (indent < 0) indent = 0;
+            if (indent == CodeStyleSettingsManager.getSettings(project).getIndentSize(PythonFileType.INSTANCE)) {
+              indent = 0;
+            }
+            else {
+              final String trimmed = StringUtil.trimLeading(strings.get(0));    //decrease indent if needed
+              if (trimmed.startsWith("def ") || trimmed.startsWith("if ") || trimmed.startsWith("try:") ||
+                  trimmed.startsWith("class ") || trimmed.startsWith("for ") || trimmed.startsWith("elif ") ||
+                  trimmed.startsWith("else:") || trimmed.startsWith("except") || trimmed.startsWith("while ")) {
+                indent = StringUtil.findFirst(spaceString, CharFilter.NOT_WHITESPACE_FILTER) / 2;
+                if (indent < 0) indent = 0;
+              }
             }
           }
         }
diff --git a/python/testData/copyPaste/Selection1.after.py b/python/testData/copyPaste/Selection1.after.py
new file mode 100644
index 000000000000..3db8d323445a
--- /dev/null
+++ b/python/testData/copyPaste/Selection1.after.py
@@ -0,0 +1,9 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+    if True:
+        a = 1
+        b = 2
\ No newline at end of file
diff --git a/python/testData/copyPaste/Selection1.dst.py b/python/testData/copyPaste/Selection1.dst.py
new file mode 100644
index 000000000000..4b58920ffbcb
--- /dev/null
+++ b/python/testData/copyPaste/Selection1.dst.py
@@ -0,0 +1,7 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+    <selection>c = 3</selection><caret>
\ No newline at end of file
diff --git a/python/testData/copyPaste/Selection1.src.py b/python/testData/copyPaste/Selection1.src.py
new file mode 100644
index 000000000000..f9659c9f6340
--- /dev/null
+++ b/python/testData/copyPaste/Selection1.src.py
@@ -0,0 +1,7 @@
+
+<selection>if True:
+    a = 1
+    b = 2
+</selection>
+def f():
+    c = 3
\ No newline at end of file
diff --git a/python/testData/copyPaste/Selection2.after.py b/python/testData/copyPaste/Selection2.after.py
new file mode 100644
index 000000000000..3db8d323445a
--- /dev/null
+++ b/python/testData/copyPaste/Selection2.after.py
@@ -0,0 +1,9 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+    if True:
+        a = 1
+        b = 2
\ No newline at end of file
diff --git a/python/testData/copyPaste/Selection2.dst.py b/python/testData/copyPaste/Selection2.dst.py
new file mode 100644
index 000000000000..b35eab3629eb
--- /dev/null
+++ b/python/testData/copyPaste/Selection2.dst.py
@@ -0,0 +1,7 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+<selection>    c = 3</selection><caret>
\ No newline at end of file
diff --git a/python/testData/copyPaste/Selection2.src.py b/python/testData/copyPaste/Selection2.src.py
new file mode 100644
index 000000000000..f9659c9f6340
--- /dev/null
+++ b/python/testData/copyPaste/Selection2.src.py
@@ -0,0 +1,7 @@
+
+<selection>if True:
+    a = 1
+    b = 2
+</selection>
+def f():
+    c = 3
\ No newline at end of file
diff --git a/python/testData/copyPaste/Selection3.after.py b/python/testData/copyPaste/Selection3.after.py
new file mode 100644
index 000000000000..224eea87ee5f
--- /dev/null
+++ b/python/testData/copyPaste/Selection3.after.py
@@ -0,0 +1,8 @@
+if True:
+    a = 1
+    b = 2
+
+def f():
+    if True:
+        a = 1
+        b = 2
diff --git a/python/testData/copyPaste/Selection3.dst.py b/python/testData/copyPaste/Selection3.dst.py
new file mode 100644
index 000000000000..0c35503621d5
--- /dev/null
+++ b/python/testData/copyPaste/Selection3.dst.py
@@ -0,0 +1,7 @@
+if True:
+    a = 1
+    b = 2
+
+def f():
+<selection>    c = 3
+<caret></selection>
\ No newline at end of file
diff --git a/python/testData/copyPaste/Selection3.src.py b/python/testData/copyPaste/Selection3.src.py
new file mode 100644
index 000000000000..f9659c9f6340
--- /dev/null
+++ b/python/testData/copyPaste/Selection3.src.py
@@ -0,0 +1,7 @@
+
+<selection>if True:
+    a = 1
+    b = 2
+</selection>
+def f():
+    c = 3
\ No newline at end of file
diff --git a/python/testData/copyPaste/SelectionReverse1.after.py b/python/testData/copyPaste/SelectionReverse1.after.py
new file mode 100644
index 000000000000..e5f402ade765
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse1.after.py
@@ -0,0 +1,10 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+    if True:
+        a = 1
+        b = 2
+
diff --git a/python/testData/copyPaste/SelectionReverse1.dst.py b/python/testData/copyPaste/SelectionReverse1.dst.py
new file mode 100644
index 000000000000..cd914e1332c1
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse1.dst.py
@@ -0,0 +1,7 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+    <caret><selection>c = 3</selection>
diff --git a/python/testData/copyPaste/SelectionReverse1.src.py b/python/testData/copyPaste/SelectionReverse1.src.py
new file mode 100644
index 000000000000..f9659c9f6340
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse1.src.py
@@ -0,0 +1,7 @@
+
+<selection>if True:
+    a = 1
+    b = 2
+</selection>
+def f():
+    c = 3
\ No newline at end of file
diff --git a/python/testData/copyPaste/SelectionReverse2.after.py b/python/testData/copyPaste/SelectionReverse2.after.py
new file mode 100644
index 000000000000..7c5d73080073
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse2.after.py
@@ -0,0 +1,9 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+    if True:
+        a = 1
+        b = 2
diff --git a/python/testData/copyPaste/SelectionReverse2.dst.py b/python/testData/copyPaste/SelectionReverse2.dst.py
new file mode 100644
index 000000000000..290cc92f6940
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse2.dst.py
@@ -0,0 +1,7 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+<caret><selection>    c = 3</selection>
\ No newline at end of file
diff --git a/python/testData/copyPaste/SelectionReverse2.src.py b/python/testData/copyPaste/SelectionReverse2.src.py
new file mode 100644
index 000000000000..f9659c9f6340
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse2.src.py
@@ -0,0 +1,7 @@
+
+<selection>if True:
+    a = 1
+    b = 2
+</selection>
+def f():
+    c = 3
\ No newline at end of file
diff --git a/python/testData/copyPaste/SelectionReverse3.after.py b/python/testData/copyPaste/SelectionReverse3.after.py
new file mode 100644
index 000000000000..7c5d73080073
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse3.after.py
@@ -0,0 +1,9 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+    if True:
+        a = 1
+        b = 2
diff --git a/python/testData/copyPaste/SelectionReverse3.dst.py b/python/testData/copyPaste/SelectionReverse3.dst.py
new file mode 100644
index 000000000000..2a5eda88518b
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse3.dst.py
@@ -0,0 +1,8 @@
+
+if True:
+    a = 1
+    b = 2
+
+def f():
+<caret><selection>    c = 3
+</selection>
\ No newline at end of file
diff --git a/python/testData/copyPaste/SelectionReverse3.src.py b/python/testData/copyPaste/SelectionReverse3.src.py
new file mode 100644
index 000000000000..f9659c9f6340
--- /dev/null
+++ b/python/testData/copyPaste/SelectionReverse3.src.py
@@ -0,0 +1,7 @@
+
+<selection>if True:
+    a = 1
+    b = 2
+</selection>
+def f():
+    c = 3
\ No newline at end of file
diff --git a/python/testData/copyPaste/multiLine/IndentInnerFunction1.after.py b/python/testData/copyPaste/multiLine/IndentInnerFunction1.after.py
index 49521da959a8..291a28f46f39 100644
--- a/python/testData/copyPaste/multiLine/IndentInnerFunction1.after.py
+++ b/python/testData/copyPaste/multiLine/IndentInnerFunction1.after.py
@@ -1,7 +1,6 @@
 def foo(self):
     x = 1
     y = 2
-
     def foo(self):
         x = 1
         y = 2
diff --git a/python/testData/copyPaste/multiLine/IndentInnerFunction2.after.py b/python/testData/copyPaste/multiLine/IndentInnerFunction2.after.py
index 933900cac4f5..b3d0376b4ecd 100644
--- a/python/testData/copyPaste/multiLine/IndentInnerFunction2.after.py
+++ b/python/testData/copyPaste/multiLine/IndentInnerFunction2.after.py
@@ -1,9 +1,8 @@
 def foo(self):
     x = 1
     y = 2
-
-    def foo(self):
-        x = 1
-        y = 2
+       def foo(self):
+           x = 1
+           y = 2
 
 z = 3
\ No newline at end of file
diff --git a/python/testData/copyPaste/multiLine/IndentTopLevel.after.py b/python/testData/copyPaste/multiLine/IndentTopLevel.after.py
index 675d73067acc..ad8dfc390761 100644
--- a/python/testData/copyPaste/multiLine/IndentTopLevel.after.py
+++ b/python/testData/copyPaste/multiLine/IndentTopLevel.after.py
@@ -1,8 +1,6 @@
 def f():
     a = 1
     b = 2
-
-
 def f():
     a = 1
     b = 2
diff --git a/python/testSrc/com/jetbrains/python/PyCopyPasteTest.java b/python/testSrc/com/jetbrains/python/PyCopyPasteTest.java
index 77fcbd378d0d..a0f89efd79a3 100644
--- a/python/testSrc/com/jetbrains/python/PyCopyPasteTest.java
+++ b/python/testSrc/com/jetbrains/python/PyCopyPasteTest.java
@@ -47,6 +47,30 @@ public class PyCopyPasteTest extends PyTestCase {
     doTest();
   }
 
+  public void testSelection1() { //PY-6994
+    doTest();
+  }
+
+  public void testSelection2() { //PY-6994
+    doTest();
+  }
+
+  public void testSelection3() { //PY-6994
+    doTest();
+  }
+
+  public void testSelectionReverse1() { //PY-6994
+    doTest();
+  }
+
+  public void testSelectionReverse2() { //PY-6994
+    doTest();
+  }
+
+  public void testSelectionReverse3() { //PY-6994
+    doTest();
+  }
+
   public void testIndent11() {
     doTestSingleLine();
   }