diff --git a/python/helpers/pycharm/_jb_runner_tools.py b/python/helpers/pycharm/_jb_runner_tools.py
index b17c44ba6277..ceec9f695c7a 100644
--- a/python/helpers/pycharm/_jb_runner_tools.py
+++ b/python/helpers/pycharm/_jb_runner_tools.py
@@ -309,19 +309,42 @@ class _SymbolNameSplitter(object):
 
 class _SymbolName2KSplitter(_SymbolNameSplitter):
     """
-    Based on imp which works in 2, but not 3
+    Based on imp which works in 2, but not 3.
+    It also emulates packages for folders with out of __init__.py.
+    Say, you have Python path "spam.eggs" where "spam" is plain folder.
+    It works for Py3, but not Py2.
+    find_module for "spam" raises exception which is processed then (see "_symbol_processed") 
     """
     def __init__(self):
         super(_SymbolNameSplitter, self).__init__()
         self._path = None
+        # Set to True when at least one find_module success, so we have at least one symbol
+        self._symbol_processed = False
 
     def check_is_importable(self, parts, current_step, separator):
         import imp
         module_to_import = parts[current_step]
-        (fil, self._path, desc) = imp.find_module(module_to_import, [self._path] if self._path else None)
-        if desc[2] == imp.PKG_DIRECTORY:
-            # Package
-            self._path = imp.load_module(module_to_import, fil, self._path, desc).__path__[0]
+        try:
+            (fil, self._path, desc) = imp.find_module(module_to_import, [self._path] if self._path else None)
+            self._symbol_processed = True
+            if desc[2] == imp.PKG_DIRECTORY:
+                # Package
+                self._path = imp.load_module(module_to_import, fil, self._path, desc).__path__[0]
+        except ImportError as error:
+            if not self._symbol_processed:
+                # First ImportError means there could be folder with out for __init__.py
+                # See class doc for more info
+                subdir = os.path.sep.join(parts[:current_step + 1])
+                dirs = [path for path in map( lambda p: os.path.join(p, subdir), sys.path) if os.path.isdir(path)]
+                if not dirs:
+                    raise error
+                elif len(dirs) == 1:
+                    # can be folder with out of __init__.py
+                    self._path = dirs[0]
+                    return
+                else:
+                    raise Exception("Several folders on sys.path with same name, rename folder: {0}", ",".join(dirs))
+            raise error
 
 
 class _SymbolName3KSplitter(_SymbolNameSplitter):
diff --git a/python/testData/testRunner/env/pytest/folder_no_init_py/test_test.py b/python/testData/testRunner/env/pytest/folder_no_init_py/test_test.py
new file mode 100644
index 000000000000..fb92113cf97b
--- /dev/null
+++ b/python/testData/testRunner/env/pytest/folder_no_init_py/test_test.py
@@ -0,0 +1,8 @@
+
+
+def test_test():
+    assert False
+
+
+def test_2_test():
+    pass
diff --git a/python/testSrc/com/jetbrains/env/python/testing/PythonPyTestingTest.java b/python/testSrc/com/jetbrains/env/python/testing/PythonPyTestingTest.java
index 676f3fc96119..3bce18627584 100644
--- a/python/testSrc/com/jetbrains/env/python/testing/PythonPyTestingTest.java
+++ b/python/testSrc/com/jetbrains/env/python/testing/PythonPyTestingTest.java
@@ -29,7 +29,7 @@ import static org.junit.Assert.assertEquals;
  * User : catherine
  */
 @EnvTestTagsRequired(tags = "pytest")
-public class PythonPyTestingTest extends PyEnvTestCase {
+public final class PythonPyTestingTest extends PyEnvTestCase {
 
   @Test
   public void testConfigurationProducer() throws Exception {
@@ -91,13 +91,14 @@ public class PythonPyTestingTest extends PyEnvTestCase {
 
   @Test
   public void testProduceConfigurationOnFile() throws Exception {
-    runPythonTest(new CreateConfigurationTestTask(PythonTestConfigurationsModel.PY_TEST_NAME, PyUniversalPyTestConfiguration.class, "spam.py"){
-      @NotNull
-      @Override
-      protected PsiElement getElementToRightClickOnByFile(@NotNull final String fileName) {
-        return myFixture.configureByFile(fileName);
-      }
-    });
+    runPythonTest(
+      new CreateConfigurationTestTask(PythonTestConfigurationsModel.PY_TEST_NAME, PyUniversalPyTestConfiguration.class, "spam.py") {
+        @NotNull
+        @Override
+        protected PsiElement getElementToRightClickOnByFile(@NotNull final String fileName) {
+          return myFixture.configureByFile(fileName);
+        }
+      });
   }
 
   @Test
@@ -215,6 +216,36 @@ public class PythonPyTestingTest extends PyEnvTestCase {
     });
   }
 
+  /**
+   * Ensure we can run path like "spam.bar" where "spam" is folder with out of init.py
+   */
+  @Test
+  public void testPyTestFolderNoInitPy() {
+    runPythonTest(new PyProcessWithConsoleTestTask<PyTestTestProcessRunner>("/testRunner/env/pytest", SdkCreationType.EMPTY_SDK) {
+      @NotNull
+      @Override
+      protected PyTestTestProcessRunner createProcessRunner() throws Exception {
+        return new PyTestTestProcessRunner("folder_no_init_py/test_test.py", 2);
+      }
+
+      @Override
+      protected void checkTestResults(@NotNull final PyTestTestProcessRunner runner,
+                                      @NotNull final String stdout,
+                                      @NotNull final String stderr,
+                                      @NotNull final String all) {
+        assertEquals(runner.getFormattedTestTree(), 1, runner.getFailedTestsCount());
+        if (runner.getCurrentRerunStep() == 0) {
+          assertEquals(runner.getFormattedTestTree(), 2, runner.getAllTestsCount());
+          assertEquals(runner.getFormattedTestTree(), 1, runner.getPassedTestsCount());
+        }
+        else {
+          assertEquals(runner.getFormattedTestTree(), 1, runner.getAllTestsCount());
+          assertEquals(runner.getFormattedTestTree(), 0, runner.getPassedTestsCount());
+        }
+      }
+    });
+  }
+
   @Test
   public void testPytestRunner2() {
     runPythonTest(new PyProcessWithConsoleTestTask<PyTestTestProcessRunner>("/testRunner/env/pytest", SdkCreationType.EMPTY_SDK) {