diff --git a/plugins/generate-tostring/src/org/jetbrains/generate/tostring/GenerateToStringWorker.java b/plugins/generate-tostring/src/org/jetbrains/generate/tostring/GenerateToStringWorker.java
index 5a85d72f8dcd..a9c848702279 100644
--- a/plugins/generate-tostring/src/org/jetbrains/generate/tostring/GenerateToStringWorker.java
+++ b/plugins/generate-tostring/src/org/jetbrains/generate/tostring/GenerateToStringWorker.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2000-2013 JetBrains s.r.o.
+ * Copyright 2000-2014 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.
@@ -103,7 +103,7 @@ public class GenerateToStringWorker {
    * @param template the chosen template to use
    * @return the policy the user selected (never null)
    */
-  private ConflictResolutionPolicy exitsMethodDialog(TemplateResource template) {
+  protected ConflictResolutionPolicy exitsMethodDialog(TemplateResource template) {
     final DuplicationPolicy dupPolicy = config.getReplaceDialogInitialOption();
     if (dupPolicy == DuplicationPolicy.ASK) {
       PsiMethod existingMethod = PsiAdapter.findMethodByName(clazz, template.getTargetMethodName());
diff --git a/plugins/generate-tostring/src/org/jetbrains/generate/tostring/config/ReplacePolicy.java b/plugins/generate-tostring/src/org/jetbrains/generate/tostring/config/ReplacePolicy.java
index 72f86b3b637d..e070573d1dad 100644
--- a/plugins/generate-tostring/src/org/jetbrains/generate/tostring/config/ReplacePolicy.java
+++ b/plugins/generate-tostring/src/org/jetbrains/generate/tostring/config/ReplacePolicy.java
@@ -40,11 +40,11 @@ public class ReplacePolicy implements ConflictResolutionPolicy {
     }
 
     public PsiMethod applyMethod(PsiClass clazz, PsiMethod existingMethod, @NotNull PsiMethod newMethod, Editor editor) throws IncorrectOperationException {
+      PsiMethod generatedMethod = DuplicatePolicy.getInstance().applyMethod(clazz, null, newMethod, editor);
       if (existingMethod != null) {
         existingMethod.delete();
-        existingMethod = null;
       }
-      return DuplicatePolicy.getInstance().applyMethod(clazz, existingMethod, newMethod, editor);
+      return generatedMethod;
     }
 
     public String toString() {
diff --git a/plugins/generate-tostring/testSrc/org/jetbrains/generate/tostring/inspection/ToStringGeneratingTest.groovy b/plugins/generate-tostring/testSrc/org/jetbrains/generate/tostring/inspection/ToStringGeneratingTest.groovy
new file mode 100644
index 000000000000..b4685b9403e6
--- /dev/null
+++ b/plugins/generate-tostring/testSrc/org/jetbrains/generate/tostring/inspection/ToStringGeneratingTest.groovy
@@ -0,0 +1,124 @@
+/*
+ * Copyright 2000-2014 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.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+package org.jetbrains.generate.tostring.inspection
+
+import com.intellij.openapi.application.Result
+import com.intellij.openapi.command.WriteCommandAction
+import com.intellij.psi.PsiClass
+import com.intellij.psi.PsiFile
+import com.intellij.psi.PsiJavaFile
+import com.intellij.psi.PsiMember
+import com.intellij.testFramework.fixtures.LightCodeInsightFixtureTestCase
+import org.jetbrains.annotations.NotNull
+import org.jetbrains.generate.tostring.GenerateToStringWorker
+import org.jetbrains.generate.tostring.config.ConflictResolutionPolicy
+import org.jetbrains.generate.tostring.config.ReplacePolicy
+import org.jetbrains.generate.tostring.template.TemplateResource
+import org.jetbrains.generate.tostring.template.TemplatesManager
+
+/**
+ * Created by Max Medvedev on 07/03/14
+ */
+class ToStringGeneratingTest extends LightCodeInsightFixtureTestCase {
+  public void testDuplicateToStringAnInnerClass() throws Exception {
+    doTest('''\
+public class Foobar  {
+    private int foo;
+    private int bar;
+
+    @Override <caret>
+    public String toString() {
+        return "Foobar{" +
+                "foo=" + foo +
+                ", bar=" + bar +
+                '}';
+    }
+
+    public static class Nested {
+    }
+}
+''', '''\
+public class Foobar  {
+    private int foo;
+    private int bar;
+
+    @Override
+    public String <caret>toString() {
+        return "Foobar{" +
+                "foo=" + foo +
+                ", bar=" + bar +
+                '}';
+    }
+
+    public static class Nested {
+    }
+}
+''', ReplacePolicy.instance)
+  }
+
+  private void doTest(@NotNull String before,
+                      @NotNull String after,
+                      @NotNull ConflictResolutionPolicy policy,
+                      @NotNull TemplateResource template = findDefaultTemplate()) {
+    myFixture.configureByText('a.java', before)
+
+    PsiClass clazz = findClass()
+    Collection<PsiMember> members = collectMembers(clazz)
+    GenerateToStringWorker worker = buildWorker(clazz, policy)
+
+    new WriteCommandAction(myFixture.project, myFixture.file) {
+      @Override
+      protected void run(@NotNull Result result) throws Throwable {
+        worker.execute(members, template)
+      }
+    }.execute()
+
+    myFixture.checkResult(after)
+  }
+
+  @NotNull
+  private GenerateToStringWorker buildWorker(@NotNull PsiClass clazz, @NotNull ConflictResolutionPolicy policy) {
+    new GenerateToStringWorker(clazz, myFixture.editor, true) {
+      @Override
+      protected ConflictResolutionPolicy exitsMethodDialog(TemplateResource template) {
+        policy
+      }
+    }
+  }
+
+  @NotNull
+  private static TemplateResource findDefaultTemplate() {
+    Collection<TemplateResource> templates = TemplatesManager.getInstance().getAllTemplates();
+    def template = templates.find { it.fileName == "String concat (+)" }
+    assert template != null
+    template
+  }
+
+  @NotNull
+  private static Collection<PsiMember> collectMembers(@NotNull PsiClass clazz) {
+    clazz.fields as List
+  }
+
+  @NotNull
+  private PsiClass findClass() {
+    PsiFile file = myFixture.file
+    assert file instanceof PsiJavaFile
+    PsiClass[] classes = file.classes
+
+    assert classes.length == 1
+    classes[0]
+  }
+}