diff --git a/java/java-impl/src/com/intellij/refactoring/inline/InlineLocalHandler.java b/java/java-impl/src/com/intellij/refactoring/inline/InlineLocalHandler.java
index 91f642fc6546..5acb2793ca8c 100644
--- a/java/java-impl/src/com/intellij/refactoring/inline/InlineLocalHandler.java
+++ b/java/java-impl/src/com/intellij/refactoring/inline/InlineLocalHandler.java
@@ -95,11 +95,16 @@ public class InlineLocalHandler extends JavaInlineActionHandler {
         while (innerClass != containingClass && innerClass != null) {
           final PsiClass parentPsiClass = PsiTreeUtil.getParentOfType(innerClass, PsiClass.class, true);
           if (parentPsiClass == containingClass) {
-            if (innerClass instanceof PsiLambdaExpression && PsiTreeUtil.isAncestor(innerClass, local, false)) {
-              innerClassesWithUsages.add(((PsiLambdaExpression)innerClass).getBody());
-            } else {
-              innerClassesWithUsages.add(innerClass);
-            }
+            if (innerClass instanceof PsiLambdaExpression) {
+              if (PsiTreeUtil.isAncestor(innerClass, local, false)) {
+                innerClassesWithUsages.add(((PsiLambdaExpression)innerClass).getBody());
+              } else {
+                innerClassesWithUsages.add(innerClass);
+              }
+              innerClass = parentPsiClass;
+              continue;
+            } 
+            innerClassesWithUsages.add(innerClass);
             innerClassUsages.add(element);
           }
           innerClass = parentPsiClass;
diff --git a/java/java-tests/testData/refactoring/inlineLocal/LocalVarInsideLambdaBodyWriteUsage.java b/java/java-tests/testData/refactoring/inlineLocal/LocalVarInsideLambdaBodyWriteUsage.java
new file mode 100644
index 000000000000..1590aa542843
--- /dev/null
+++ b/java/java-tests/testData/refactoring/inlineLocal/LocalVarInsideLambdaBodyWriteUsage.java
@@ -0,0 +1,10 @@
+class Test {
+  {
+    Runnable x = () -> {
+      int hello = 9;
+      System.out.println(hello);
+      ++hello;
+      System.out.println(he<caret>llo);
+    };
+  }
+}
\ No newline at end of file
diff --git a/java/java-tests/testSrc/com/intellij/refactoring/inline/InlineLocalTest.java b/java/java-tests/testSrc/com/intellij/refactoring/inline/InlineLocalTest.java
index 0b1c432113e1..f6ded4007a4e 100644
--- a/java/java-tests/testSrc/com/intellij/refactoring/inline/InlineLocalTest.java
+++ b/java/java-tests/testSrc/com/intellij/refactoring/inline/InlineLocalTest.java
@@ -162,6 +162,11 @@ public class InlineLocalTest extends LightCodeInsightTestCase {
     doTest(true);
   }
 
+  public void testLocalVarInsideLambdaBodyWriteUsage() throws Exception {
+    doTest(true, "Cannot perform refactoring.\n" +
+                 "Variable 'hello' is accessed for writing.");
+  }
+
   private void doTest(final boolean inlineDef, String conflictMessage) throws Exception {
     try {
       doTest(inlineDef);