diff --git a/java/idea-ui/src/com/intellij/platform/templates/SaveProjectAsTemplateDialog.java b/java/idea-ui/src/com/intellij/platform/templates/SaveProjectAsTemplateDialog.java
index d3d832befab6..dd539427062c 100644
--- a/java/idea-ui/src/com/intellij/platform/templates/SaveProjectAsTemplateDialog.java
+++ b/java/idea-ui/src/com/intellij/platform/templates/SaveProjectAsTemplateDialog.java
@@ -21,7 +21,9 @@ import com.intellij.openapi.module.Module;
 import com.intellij.openapi.module.ModuleManager;
 import com.intellij.openapi.project.Project;
 import com.intellij.openapi.ui.DialogWrapper;
+import com.intellij.openapi.ui.Messages;
 import com.intellij.openapi.ui.ValidationInfo;
+import com.intellij.openapi.util.io.FileUtil;
 import com.intellij.openapi.util.text.StringUtil;
 import com.intellij.openapi.vfs.VfsUtilCore;
 import com.intellij.openapi.vfs.VirtualFile;
@@ -113,8 +115,22 @@ public class SaveProjectAsTemplateDialog extends DialogWrapper {
     if (StringUtil.isEmpty(myName.getText())) {
       return new ValidationInfo("Template name should not be empty");
     }
+    return null;
+  }
+
+  @Override
+  protected void doOKAction() {
     File file = getTemplateFile();
-    return file.exists() ? new ValidationInfo("Template already exists") : null;
+    if (file.exists()) {
+      if (Messages.showYesNoDialog(myPanel,
+                                   FileUtil.getNameWithoutExtension(file) + " exists already.\n" +
+                                   "Do you want to replace it with the new one?", "Template Already Exists",
+                                   Messages.getWarningIcon()) == Messages.NO) {
+        return;
+      }
+      file.delete();
+    }
+    super.doOKAction();
   }
 
   File getTemplateFile() {