diff --git a/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/GroovyBlock.java b/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/GroovyBlock.java
index bf11e6bde1bd..461613df0222 100644
--- a/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/GroovyBlock.java
+++ b/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/GroovyBlock.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2000-2011 JetBrains s.r.o.
+ * Copyright 2000-2012 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.
@@ -35,6 +35,7 @@ import org.jetbrains.plugins.groovy.lang.groovydoc.psi.api.GrDocTag;
 import org.jetbrains.plugins.groovy.lang.parser.GroovyElementTypes;
 import org.jetbrains.plugins.groovy.lang.psi.GroovyFileBase;
 import org.jetbrains.plugins.groovy.lang.psi.api.auxiliary.GrListOrMap;
+import org.jetbrains.plugins.groovy.lang.psi.api.auxiliary.modifiers.annotation.GrAnnotationArgumentList;
 import org.jetbrains.plugins.groovy.lang.psi.api.statements.*;
 import org.jetbrains.plugins.groovy.lang.psi.api.statements.arguments.GrArgumentList;
 import org.jetbrains.plugins.groovy.lang.psi.api.statements.branch.GrBreakStatement;
@@ -225,6 +226,9 @@ public class GroovyBlock implements Block, GroovyElementTypes, ASTBlock {
     if (psiParent instanceof GrIfStatement || psiParent instanceof GrLoopStatement) {
       return new ChildAttributes(Indent.getNormalIndent(), null);
     }
+    if (psiParent instanceof GrAnnotationArgumentList) {
+      return new ChildAttributes(Indent.getContinuationIndent(), null);
+    }
     return new ChildAttributes(Indent.getNoneIndent(), null);
   }
 
diff --git a/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/processors/GroovyIndentProcessor.java b/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/processors/GroovyIndentProcessor.java
index 28f1db1db6a3..5b30c3700971 100644
--- a/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/processors/GroovyIndentProcessor.java
+++ b/plugins/groovy/src/org/jetbrains/plugins/groovy/formatter/processors/GroovyIndentProcessor.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2000-2009 JetBrains s.r.o.
+ * Copyright 2000-2012 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.
@@ -50,7 +50,7 @@ import org.jetbrains.plugins.groovy.lang.psi.api.statements.typedef.members.GrMe
  */
 public abstract class GroovyIndentProcessor implements GroovyElementTypes {
   public static final int GDOC_COMMENT_INDENT = 1;
-  private static TokenSet GSTRING_TOKENS_INNER = TokenSet.create(mGSTRING_BEGIN,mGSTRING_CONTENT,mGSTRING_END,mDOLLAR);
+  private static final TokenSet GSTRING_TOKENS_INNER = TokenSet.create(mGSTRING_BEGIN,mGSTRING_CONTENT,mGSTRING_END,mDOLLAR);
 
   /**
    * Calculates indent, based on code style, between parent block and child node
@@ -117,6 +117,16 @@ public abstract class GroovyIndentProcessor implements GroovyElementTypes {
       return isLabelIndentAbsolute ? Indent.getAbsoluteLabelIndent() : Indent.getLabelIndent();
     }
 
+    if (parentType == ANNOTATION) {
+      if (childType == ANNOTATION_ARGUMENTS) return Indent.getContinuationIndent();
+      return Indent.getNoneIndent();
+    }
+
+    if (parentType == ANNOTATION_ARGUMENTS) {
+      if (childType == mLPAREN || childType == mRPAREN) return Indent.getNoneIndent();
+      return Indent.getContinuationIndent();
+    }
+
     // for control structures
     if (psiParent instanceof GrControlStatement) {
       return getControlIndent(psiParent, child);
diff --git a/plugins/groovy/test/org/jetbrains/plugins/groovy/lang/formatter/FormatterTest.groovy b/plugins/groovy/test/org/jetbrains/plugins/groovy/lang/formatter/FormatterTest.groovy
index 90a1d302ccee..020a4119f3be 100644
--- a/plugins/groovy/test/org/jetbrains/plugins/groovy/lang/formatter/FormatterTest.groovy
+++ b/plugins/groovy/test/org/jetbrains/plugins/groovy/lang/formatter/FormatterTest.groovy
@@ -252,6 +252,9 @@ public class FormatterTest extends GroovyFormatterTestCase {
   void testPackageDef1() { doTest() }
   void testPackageDef2() { doTest() }
 
+  void testAnnotationArgs1() { doTest() }
+  void testAnnotationArgs2() { doTest() }
+
   private void doGeeseTest() {
     GroovyCodeStyleSettings customSettings = myTempSettings.getCustomSettings(GroovyCodeStyleSettings.class);
     boolean oldvalue = customSettings.USE_FLYING_GEESE_BRACES;
diff --git a/plugins/groovy/testdata/groovy/formatter/annotationArgs1.test b/plugins/groovy/testdata/groovy/formatter/annotationArgs1.test
new file mode 100644
index 000000000000..a3a4f776f9b2
--- /dev/null
+++ b/plugins/groovy/testdata/groovy/formatter/annotationArgs1.test
@@ -0,0 +1,9 @@
+@Foo(
+arg
+)
+class Foo{}
+-----
+@Foo(
+    arg
+)
+class Foo {}
\ No newline at end of file
diff --git a/plugins/groovy/testdata/groovy/formatter/annotationArgs2.test b/plugins/groovy/testdata/groovy/formatter/annotationArgs2.test
new file mode 100644
index 000000000000..ad7907cede6a
--- /dev/null
+++ b/plugins/groovy/testdata/groovy/formatter/annotationArgs2.test
@@ -0,0 +1,11 @@
+@Foo
+(
+arg
+)
+class Foo{}
+-----
+@Foo
+    (
+        arg
+    )
+class Foo {}
\ No newline at end of file