diff --git a/platform/util/src/com/intellij/openapi/util/text/StringUtil.java b/platform/util/src/com/intellij/openapi/util/text/StringUtil.java
index c26cb10030c4..c2b7de8ba7ed 100644
--- a/platform/util/src/com/intellij/openapi/util/text/StringUtil.java
+++ b/platform/util/src/com/intellij/openapi/util/text/StringUtil.java
@@ -153,17 +153,26 @@ public class StringUtil extends StringUtilRt {
     int i = 0;
 
     while (i < text.length()) {
-      final int i1 = ignoreCase? indexOfIgnoreCase(text, oldS, i) : text.indexOf(oldS, i);
-      if (i1 < 0) {
-        if (i == 0) return text;
+      final int index = ignoreCase? indexOfIgnoreCase(text, oldS, i) : text.indexOf(oldS, i);
+      if (index < 0) {
+        if (i == 0) {
+          return text;
+        }
+
         newText.append(text, i, text.length());
         break;
       }
       else {
-        if (newText == null) newText = new StringBuilder(text.length() - i);
-        newText.append(text, i, i1);
+        if (newText == null) {
+          if (text.length() == oldS.length()) {
+            return newS;
+          }
+          newText = new StringBuilder(text.length() - i);
+        }
+
+        newText.append(text, i, index);
         newText.append(newS);
-        i = i1 + oldS.length();
+        i = index + oldS.length();
       }
     }
     return newText != null ? newText.toString() : "";
@@ -1786,7 +1795,7 @@ public class StringUtil extends StringUtilRt {
   public static boolean contains(@NotNull CharSequence sequence, @NotNull CharSequence infix) {
     return indexOf(sequence, infix) >= 0;
   }
-  
+
   @Contract(pure = true)
   public static int indexOf(@NotNull CharSequence sequence, @NotNull CharSequence infix) {
     for (int i = 0; i < sequence.length() - infix.length(); i++) {
@@ -2448,7 +2457,7 @@ public class StringUtil extends StringUtilRt {
    *   \r<br>
    * </blockquote>
    * will return the following array: foo\r\n, \n, bar\n, \r\n, baz\r, \r
-   *   
+   *
    */
   @NotNull
   @Contract(pure = true)
diff --git a/platform/util/testSrc/com/intellij/util/text/StringUtilTest.java b/platform/util/testSrc/com/intellij/util/text/StringUtilTest.java
index d2f593d13ff1..93ebb038cae1 100644
--- a/platform/util/testSrc/com/intellij/util/text/StringUtilTest.java
+++ b/platform/util/testSrc/com/intellij/util/text/StringUtilTest.java
@@ -111,7 +111,7 @@ public class StringUtilTest extends TestCase {
   public void testFormatLinks() {
     assertEquals("<a href=\"http://a-b+c\">http://a-b+c</a>", StringUtil.formatLinks("http://a-b+c"));
   }
-  
+
   public void testCopyHeapCharBuffer() {
     String s = "abcde";
     CharBuffer buffer = CharBuffer.allocate(s.length());
@@ -124,7 +124,7 @@ public class StringUtilTest extends TestCase {
     assertNull(CharArrayUtil.fromSequenceWithoutCopying(buffer.subSequence(1, 5)));
     assertNull(CharArrayUtil.fromSequenceWithoutCopying(buffer.subSequence(1, 2)));
   }
-  
+
   public void testTitleCase() {
     assertEquals("Couldn't Connect to Debugger", StringUtil.wordsToBeginFromUpperCase("Couldn't connect to debugger"));
   }
@@ -198,7 +198,7 @@ public class StringUtilTest extends TestCase {
     assertEquals(Arrays.asList("aa"), Arrays.asList(StringUtil.splitByLinesKeepSeparators("aa")));
     assertEquals(Arrays.asList("\n", "\n", "aa\n", "\n", "bb\n", "cc\n", "\n"),
                  Arrays.asList(StringUtil.splitByLinesKeepSeparators("\n\naa\n\nbb\ncc\n\n")));
-    
+
     assertEquals(Arrays.asList("\r", "\r\n", "\r"), Arrays.asList(StringUtil.splitByLinesKeepSeparators("\r\r\n\r")));
     assertEquals(Arrays.asList("\r\n", "\r", "\r\n"), Arrays.asList(StringUtil.splitByLinesKeepSeparators("\r\n\r\r\n")));
 
@@ -224,4 +224,13 @@ public class StringUtilTest extends TestCase {
       }
     }
   }
+
+  public void testReplaceReturnReplacementIfTextEqualsToReplacedText() {
+    String newS = "/tmp";
+    assertSame(StringUtil.replace("$PROJECT_FILE$", "$PROJECT_FILE$".toLowerCase().toUpperCase() /* ensure new String instance */, newS), newS);
+  }
+
+  public void testReplace() {
+    assertEquals(StringUtil.replace("$PROJECT_FILE$/filename", "$PROJECT_FILE$", "/tmp"), "/tmp/filename");
+  }
 }