diff --git a/python/python-psi-impl/src/com/jetbrains/python/refactoring/extractmethod/PyExtractMethodUtil.java b/python/python-psi-impl/src/com/jetbrains/python/refactoring/extractmethod/PyExtractMethodUtil.java
index eb30fe12c209..d26fc2a4e903 100644
--- a/python/python-psi-impl/src/com/jetbrains/python/refactoring/extractmethod/PyExtractMethodUtil.java
+++ b/python/python-psi-impl/src/com/jetbrains/python/refactoring/extractmethod/PyExtractMethodUtil.java
@@ -736,9 +736,11 @@ public final class PyExtractMethodUtil {
         myFunction = s -> {
           ScopeOwner owner = parent;
           while (owner != null) {
-            final Scope scope = ControlFlowCache.getScope(owner);
-            if (scope.containsDeclaration(s)) {
-              return false;
+            if (!(owner instanceof PyClass)) {
+              final Scope scope = ControlFlowCache.getScope(owner);
+              if (scope.containsDeclaration(s)) {
+                return false;
+              }
             }
             owner = ScopeUtil.getScopeOwner(owner);
           }
diff --git a/python/testData/refactoring/extractmethod/InnerFunctionWithSameNameAsOuterMethod.after.py b/python/testData/refactoring/extractmethod/InnerFunctionWithSameNameAsOuterMethod.after.py
new file mode 100644
index 000000000000..417b4f068212
--- /dev/null
+++ b/python/testData/refactoring/extractmethod/InnerFunctionWithSameNameAsOuterMethod.after.py
@@ -0,0 +1,9 @@
+class A:
+    def foo(self): ...
+
+    def bar(self):
+        def baz():
+            foo()
+
+        def foo():
+            print('baz')
\ No newline at end of file
diff --git a/python/testData/refactoring/extractmethod/InnerFunctionWithSameNameAsOuterMethod.before.py b/python/testData/refactoring/extractmethod/InnerFunctionWithSameNameAsOuterMethod.before.py
new file mode 100644
index 000000000000..d739adad2ca2
--- /dev/null
+++ b/python/testData/refactoring/extractmethod/InnerFunctionWithSameNameAsOuterMethod.before.py
@@ -0,0 +1,6 @@
+class A:
+    def foo(self): ...
+
+    def bar(self):
+        def baz():
+            <selection>print('baz')</selection>
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java b/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java
index 835fe4013957..6f42f6f9a6da 100644
--- a/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java
+++ b/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java
@@ -391,4 +391,9 @@ public class PyExtractMethodTest extends LightMarkedTestCase {
   public void testMethodNameCanShadowModuleFunction() {
     doTest("_require_instance");
   }
+
+  // PY-61591
+  public void testInnerFunctionWithSameNameAsOuterMethod() {
+    doTest("foo");
+  }
 }