diff --git a/python/src/com/jetbrains/python/refactoring/NameSuggestorUtil.java b/python/src/com/jetbrains/python/refactoring/NameSuggestorUtil.java
index 04b5128e7de5..e863549ee02a 100644
--- a/python/src/com/jetbrains/python/refactoring/NameSuggestorUtil.java
+++ b/python/src/com/jetbrains/python/refactoring/NameSuggestorUtil.java
@@ -23,7 +23,7 @@ public class NameSuggestorUtil {
 
   @NotNull
   public static Collection<String> generateNames(@NotNull String name) {
-    name = StringUtil.decapitalize(deleteNonLetterFromString(name.replace('.', '_')));
+    name = StringUtil.decapitalize(deleteNonLetterFromString(StringUtil.unquoteString(name.replace('.', '_'))));
     if (name.startsWith("get")) {
       name = name.substring(3);
     }
diff --git a/python/testData/refactoring/introduceVariable/suggestStringConstantValue.py b/python/testData/refactoring/introduceVariable/suggestStringConstantValue.py
new file mode 100644
index 000000000000..80a56485dd79
--- /dev/null
+++ b/python/testData/refactoring/introduceVariable/suggestStringConstantValue.py
@@ -0,0 +1 @@
+"foo <caret>bar"
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/refactoring/PyIntroduceVariableTest.java b/python/testSrc/com/jetbrains/python/refactoring/PyIntroduceVariableTest.java
index 9b9b23d6cfa4..4dd4668a2be0 100644
--- a/python/testSrc/com/jetbrains/python/refactoring/PyIntroduceVariableTest.java
+++ b/python/testSrc/com/jetbrains/python/refactoring/PyIntroduceVariableTest.java
@@ -36,6 +36,10 @@ public class PyIntroduceVariableTest extends PyLightFixtureTestCase {
     doTestSuggestions(PyCallExpression.class, "my_class");
   }
 
+  public void testSuggestStringConstantValue() { // PY-1276
+    doTestSuggestions(PyExpression.class, "foo_bar");
+  }
+
   private void doTestSuggestions(Class<? extends PyExpression> parentClass, String... expectedNames) {
     myFixture.configureByFile("/refactoring/introduceVariable/" + getTestName(true) + ".py");
     VariableIntroduceHandler handler = new VariableIntroduceHandler();