diff --git a/python/src/com/jetbrains/python/PythonParserDefinition.java b/python/src/com/jetbrains/python/PythonParserDefinition.java
index 9defc1bae6f0..6644cd7121dd 100644
--- a/python/src/com/jetbrains/python/PythonParserDefinition.java
+++ b/python/src/com/jetbrains/python/PythonParserDefinition.java
@@ -28,12 +28,14 @@ public class PythonParserDefinition implements ParserDefinition {
 
   private final TokenSet myWhitespaceTokens;
   private final TokenSet myCommentTokens;
+  private final TokenSet myStringLiteralTokens;
 
   public PythonParserDefinition() {
     language = (PythonLanguage)PythonFileType.INSTANCE.getLanguage();
 
     myWhitespaceTokens = TokenSet.create(PyTokenTypes.LINE_BREAK, PyTokenTypes.SPACE, PyTokenTypes.TAB, PyTokenTypes.FORMFEED);
     myCommentTokens = TokenSet.create(PyTokenTypes.END_OF_LINE_COMMENT);
+    myStringLiteralTokens = TokenSet.create(PyTokenTypes.STRING_LITERAL);
   }
 
   @NotNull
@@ -57,7 +59,7 @@ public class PythonParserDefinition implements ParserDefinition {
 
   @NotNull
   public TokenSet getStringLiteralElements() {
-    return TokenSet.EMPTY;
+    return myStringLiteralTokens;
   }
 
   @NotNull
diff --git a/python/testData/refactoring/rename/searchInStrings.py b/python/testData/refactoring/rename/searchInStrings.py
new file mode 100644
index 000000000000..bf80d5beb9d0
--- /dev/null
+++ b/python/testData/refactoring/rename/searchInStrings.py
@@ -0,0 +1,3 @@
+def f<caret>oo():
+    'this is method foo'
+    pass
diff --git a/python/testData/refactoring/rename/searchInStrings_after.py b/python/testData/refactoring/rename/searchInStrings_after.py
new file mode 100644
index 000000000000..073049cdcfda
--- /dev/null
+++ b/python/testData/refactoring/rename/searchInStrings_after.py
@@ -0,0 +1,3 @@
+def bar():
+    'this is method bar'
+    pass
diff --git a/python/testSrc/com/jetbrains/python/refactoring/PyRenameTest.java b/python/testSrc/com/jetbrains/python/refactoring/PyRenameTest.java
index 0e2b1d513e4b..afce37218a78 100644
--- a/python/testSrc/com/jetbrains/python/refactoring/PyRenameTest.java
+++ b/python/testSrc/com/jetbrains/python/refactoring/PyRenameTest.java
@@ -1,5 +1,7 @@
 package com.jetbrains.python.refactoring;
 
+import com.intellij.codeInsight.TargetElementUtilBase;
+import com.intellij.psi.PsiElement;
 import com.jetbrains.python.fixtures.PyLightFixtureTestCase;
 
 /**
@@ -11,4 +13,13 @@ public class PyRenameTest extends PyLightFixtureTestCase {
     myFixture.renameElementAtCaret("qu");
     myFixture.checkResultByFile("refactoring/rename/" + getTestName(true) + "_after.py");
   }
+
+  public void testSearchInStrings() throws Exception {  // PY-670
+    myFixture.configureByFile("refactoring/rename/" + getTestName(true) + ".py");
+    final PsiElement element = TargetElementUtilBase.findTargetElement(myFixture.getEditor(), TargetElementUtilBase.REFERENCED_ELEMENT_ACCEPTED |
+                                                                                        TargetElementUtilBase.ELEMENT_NAME_ACCEPTED);
+    assertNotNull(element);
+    myFixture.renameElement(element, "bar", true, false);
+    myFixture.checkResultByFile("refactoring/rename/" + getTestName(true) + "_after.py");
+  }
 }