diff --git a/plugins/kotlin/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/extractableAnalysisUtil.kt b/plugins/kotlin/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/extractableAnalysisUtil.kt
index 063d22ed3e5b..a94f1dcad575 100644
--- a/plugins/kotlin/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/extractableAnalysisUtil.kt
+++ b/plugins/kotlin/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/extractableAnalysisUtil.kt
@@ -253,6 +253,8 @@ internal class MutableParameter(
     private val originalType: KotlinType,
     private val possibleTypes: Set<KotlinType>
 ) : Parameter, IMutableParameter<KotlinType> {
+    override val contextParameter: Boolean = false
+
     // All modifications happen in the same thread
     private var writable: Boolean = true
     private val defaultTypes = LinkedHashSet<KotlinType>()
diff --git a/plugins/kotlin/idea/tests/test/org/jetbrains/kotlin/idea/refactoring/introduce/ExtractionTestGenerated.java b/plugins/kotlin/idea/tests/test/org/jetbrains/kotlin/idea/refactoring/introduce/ExtractionTestGenerated.java
index 096501c8efd4..8f6291e14f8e 100644
--- a/plugins/kotlin/idea/tests/test/org/jetbrains/kotlin/idea/refactoring/introduce/ExtractionTestGenerated.java
+++ b/plugins/kotlin/idea/tests/test/org/jetbrains/kotlin/idea/refactoring/introduce/ExtractionTestGenerated.java
@@ -1610,6 +1610,35 @@ public abstract class ExtractionTestGenerated extends AbstractExtractionTest {
             }
         }
 
+        @RunWith(JUnit3RunnerWithInners.class)
+        @TestMetadata("testData/refactoring/extractFunction/contextParameters")
+        public static class ContextParameters extends AbstractExtractionTest {
+            @java.lang.Override
+            @org.jetbrains.annotations.NotNull
+            public final KotlinPluginMode getPluginMode() {
+                return KotlinPluginMode.K1;
+            }
+
+            private void runTest(String testDataFilePath) throws Exception {
+                KotlinTestUtils.runTest(this::doExtractFunctionTest, this, testDataFilePath);
+            }
+
+            @TestMetadata("base.kt")
+            public void testBase() throws Exception {
+                runTest("testData/refactoring/extractFunction/contextParameters/base.kt");
+            }
+
+            @TestMetadata("unnamed.kt")
+            public void testUnnamed() throws Exception {
+                runTest("testData/refactoring/extractFunction/contextParameters/unnamed.kt");
+            }
+
+            @TestMetadata("withProvidedContext.kt")
+            public void testWithProvidedContext() throws Exception {
+                runTest("testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt");
+            }
+        }
+
         @RunWith(JUnit3RunnerWithInners.class)
         @TestMetadata("testData/refactoring/extractFunction/controlFlow")
         public abstract static class ControlFlow extends AbstractExtractionTest {
diff --git a/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/base.kt b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/base.kt
new file mode 100644
index 000000000000..cb85c3bb6994
--- /dev/null
+++ b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/base.kt
@@ -0,0 +1,15 @@
+// COMPILER_ARGUMENTS: -Xcontext-parameters
+context(a: String)
+fun bar(p: Int) {}
+
+context(i: Int)
+val prop: Int
+    get() = 42
+
+context(a: String, b: Int)
+fun m() {
+    val i = prop
+    <selection>bar(i)</selection>
+}
+
+// IGNORE_K1
\ No newline at end of file
diff --git a/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/base.kt.after b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/base.kt.after
new file mode 100644
index 000000000000..c7f7c681cb7a
--- /dev/null
+++ b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/base.kt.after
@@ -0,0 +1,19 @@
+// COMPILER_ARGUMENTS: -Xcontext-parameters
+context(a: String)
+fun bar(p: Int) {}
+
+context(i: Int)
+val prop: Int
+    get() = 42
+
+context(a: String, b: Int)
+fun m() {
+    val i = prop
+    __dummyTestFun__(i)
+}
+
+context(a: String) private fun __dummyTestFun__(i: Int) {
+    bar(i)
+}
+
+// IGNORE_K1
diff --git a/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/unnamed.kt b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/unnamed.kt
new file mode 100644
index 000000000000..78fbd025b3d1
--- /dev/null
+++ b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/unnamed.kt
@@ -0,0 +1,15 @@
+// COMPILER_ARGUMENTS: -Xcontext-parameters
+context(_: String)
+fun bar(p: Int) {}
+
+context(_: Int)
+val prop: Int
+    get() = 42
+
+context(a: String, b: Int)
+fun m() {
+    val i = prop
+    <selection>bar(i)</selection>
+}
+
+// IGNORE_K1
\ No newline at end of file
diff --git a/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/unnamed.kt.after b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/unnamed.kt.after
new file mode 100644
index 000000000000..da40efa013ce
--- /dev/null
+++ b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/unnamed.kt.after
@@ -0,0 +1,19 @@
+// COMPILER_ARGUMENTS: -Xcontext-parameters
+context(_: String)
+fun bar(p: Int) {}
+
+context(_: Int)
+val prop: Int
+    get() = 42
+
+context(a: String, b: Int)
+fun m() {
+    val i = prop
+    __dummyTestFun__(i)
+}
+
+context(_: String) private fun __dummyTestFun__(i: Int) {
+    bar(i)
+}
+
+// IGNORE_K1
diff --git a/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt
new file mode 100644
index 000000000000..009297444b41
--- /dev/null
+++ b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt
@@ -0,0 +1,19 @@
+// COMPILER_ARGUMENTS: -Xcontext-parameters
+context(a: String)
+fun bar(p: Int) {}
+
+context(i: Int)
+val prop: Int
+    get() = 42
+
+context(a: String, b: Int)
+fun m() {
+    val i = prop
+
+    object: Function0<Int> {
+        override fun invoke(): Int {
+            <selection>bar(i)</selection>
+            return 1
+        }
+    }
+}
\ No newline at end of file
diff --git a/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt.after b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt.after
new file mode 100644
index 000000000000..c46e3be89c01
--- /dev/null
+++ b/plugins/kotlin/idea/tests/testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt.after
@@ -0,0 +1,23 @@
+// COMPILER_ARGUMENTS: -Xcontext-parameters
+context(a: String)
+fun bar(p: Int) {}
+
+context(i: Int)
+val prop: Int
+    get() = 42
+
+context(a: String, b: Int)
+fun m() {
+    val i = prop
+
+    object: Function0<Int> {
+        override fun invoke(): Int {
+            __dummyTestFun__()
+            return 1
+        }
+
+        private fun __dummyTestFun__() {
+            bar(i)
+        }
+    }
+}
diff --git a/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/ExtractFunctionGenerator.kt b/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/ExtractFunctionGenerator.kt
index af1a8356ca83..564f45113b02 100644
--- a/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/ExtractFunctionGenerator.kt
+++ b/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/ExtractFunctionGenerator.kt
@@ -457,7 +457,7 @@ abstract class ExtractFunctionGenerator<KotlinType, ExtractionResult : IExtracti
         if (generatorOptions.inTempFile) return config.createExtractionResult(declaration, Collections.emptyMap())
 
         val replaceInitialOccurrence = {
-            val arguments = descriptor.parameters.map { it.argumentText }
+            val arguments = descriptor.parameters.filter { !it.contextParameter }.map { it.argumentText }
             makeCall(descriptor, declaration, descriptor.controlFlow, descriptor.extractionData.originalRange, arguments)
         }
 
@@ -558,6 +558,17 @@ abstract class ExtractFunctionGenerator<KotlinType, ExtractionResult : IExtracti
             else -> CallableBuilder.Target.READ_ONLY_PROPERTY
         }
         return CallableBuilder(builderTarget).apply {
+
+            val typeDescriptor = createTypeDescriptor(descriptor.extractionData)
+
+            val contextParameters = descriptor.parameters.filter { it.contextParameter }
+            if (contextParameters.isNotEmpty()) {
+                val contextString = contextParameters.joinToString(prefix = "context(", postfix = ")") {
+                    it.name + ": " + typeDescriptor.renderType(it.parameterType, isReceiver = false, Variance.IN_VARIANCE)
+                }
+                modifier(contextString)
+            }
+
             val visibility = descriptor.visibility?.value ?: ""
 
             fun TypeParameter.isReified() = originalDeclaration.hasModifier(KtTokens.REIFIED_KEYWORD)
@@ -600,7 +611,6 @@ abstract class ExtractFunctionGenerator<KotlinType, ExtractionResult : IExtracti
                 }
             )
 
-            val typeDescriptor = createTypeDescriptor(descriptor.extractionData)
             descriptor.receiverParameter?.let {
                 val receiverType = it.parameterType
                 val receiverTypeAsString = typeDescriptor.renderType(receiverType, isReceiver = true, Variance.IN_VARIANCE)
@@ -609,7 +619,7 @@ abstract class ExtractFunctionGenerator<KotlinType, ExtractionResult : IExtracti
 
             name(descriptor.name)
 
-            descriptor.parameters.forEach { parameter ->
+            descriptor.parameters.filter { !it.contextParameter }.forEach { parameter ->
                 param(parameter.name, typeDescriptor.renderType(parameter.parameterType, isReceiver = false, Variance.IN_VARIANCE))
             }
 
diff --git a/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/IParameter.kt b/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/IParameter.kt
index 5315197319f4..c6c30906e23c 100644
--- a/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/IParameter.kt
+++ b/plugins/kotlin/refactorings/kotlin.refactorings.common/src/org/jetbrains/kotlin/idea/refactoring/introduce/extractionEngine/IParameter.kt
@@ -6,6 +6,7 @@ interface IParameter<KotlinType> {
     val name: String
     val mirrorVarName: String?
     val receiverCandidate: Boolean
+    val contextParameter: Boolean
 
     val parameterType: KotlinType
 
diff --git a/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/Parameter.kt b/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/Parameter.kt
index e35b79c74c03..c895177893e8 100644
--- a/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/Parameter.kt
+++ b/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/Parameter.kt
@@ -49,7 +49,8 @@ internal class MutableParameter(
     override val originalDescriptor: PsiNamedElement,
     override val receiverCandidate: Boolean,
     private val originalType: KaType,
-    private val scope: KtElement
+    private val scope: KtElement,
+    override val contextParameter: Boolean
 ) : Parameter, IMutableParameter<KaType> {
 
     private val typePredicates = mutableSetOf<TypePredicate>()
diff --git a/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/parametersUtil.kt b/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/parametersUtil.kt
index 9fae18a0848c..84d7ea717eec 100644
--- a/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/parametersUtil.kt
+++ b/plugins/kotlin/refactorings/kotlin.refactorings.k2/src/org/jetbrains/kotlin/idea/k2/refactoring/extractFunction/parametersUtil.kt
@@ -21,6 +21,7 @@ import org.jetbrains.kotlin.analysis.api.resolution.symbol
 import org.jetbrains.kotlin.analysis.api.components.KaDiagnosticCheckerFilter
 import org.jetbrains.kotlin.analysis.api.fir.diagnostics.KaFirDiagnostic
 import org.jetbrains.kotlin.analysis.api.impl.base.components.KaBaseIllegalPsiException
+import org.jetbrains.kotlin.analysis.api.resolution.KaErrorCallInfo
 import org.jetbrains.kotlin.analysis.api.signatures.KaCallableSignature
 import org.jetbrains.kotlin.analysis.api.symbols.*
 import org.jetbrains.kotlin.analysis.api.types.KaClassType
@@ -81,6 +82,7 @@ import org.jetbrains.kotlin.types.expressions.OperatorConventions
 import org.jetbrains.kotlin.idea.k2.refactoring.introduce.K2SemanticMatcher.isSemanticMatch
 import org.jetbrains.kotlin.psi.KtReferenceExpression
 import org.jetbrains.kotlin.psi.psiUtil.findLabelAndCall
+import org.jetbrains.kotlin.utils.addIfNotNull
 
 /**
  * Represents a parameter candidate as it's original declaration and a reference in code.
@@ -102,6 +104,7 @@ private class ParameterWithReference(val parameterOrigin: PsiNamedElement, val r
     }
 }
 
+@OptIn(KaExperimentalApi::class)
 context(KaSession)
 internal fun ExtractionData.inferParametersInfo(
     virtualBlock: KtBlockExpression,
@@ -131,6 +134,34 @@ internal fun ExtractionData.inferParametersInfo(
 
     }
 
+    val unknownContextParameters = mutableSetOf<KtParameter>()
+    analyze(virtualBlock) {
+        for (referenceExpression in virtualBlock.collectDescendantsOfType<KtReferenceExpression> { it.resolveResult != null }) {
+            val call = referenceExpression.resolveToCall()
+            if (call is KaErrorCallInfo) {
+                val diagnostic = call.diagnostic
+                if (diagnostic is KaFirDiagnostic.NoContextArgument) {
+                    unknownContextParameters.addIfNotNull((diagnostic.symbol as? KaContextParameterSymbol)?.psi as? KtParameter)
+                }
+            }
+        }
+    }
+
+    unknownContextParameters.forEach {
+        val name = it.name ?: "_"
+        val parameter = MutableParameter(
+            name,
+            it.ownerDeclaration as KtNamedDeclaration,
+            false,
+            it.returnType,
+            targetSibling as KtElement,
+            contextParameter = true
+        )
+        parameter.refCount++
+        parameter.currentName = name
+        info.parameters.add(parameter)
+    }
+
     val varNameValidator = KotlinDeclarationNameValidator(
         commonParent,
         true,
@@ -252,7 +283,7 @@ private fun ExtractionData.registerParameter(
         if (extractThis || extractOrdinaryParameter || extractFunctionRef) {
             val parameterExpression = getParameterArgumentExpression(originalRef, receiverToExtract, refInfo.smartCast)
             val parameter = extractedDescriptorToParameter.getOrPut(ParameterWithReference(elementToExtract, originalRef.takeUnless { extractThis })) {
-                var argumentText =
+                val argumentText =
                     calculateArgumentText(
                         hasThisReceiver,
                         extractThis,
@@ -269,7 +300,7 @@ private fun ExtractionData.registerParameter(
                     receiverToExtract
                 )
 
-                MutableParameter(argumentText, elementToExtract, extractThis, originalType, targetSibling as KtElement)
+                MutableParameter(argumentText, elementToExtract, extractThis, originalType, targetSibling as KtElement, contextParameter = false)
             }
 
             // TODO add type predicate based on called functions https://youtrack.jetbrains.com/issue/KTIJ-29166
diff --git a/plugins/kotlin/refactorings/kotlin.refactorings.tests.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/introduce/K2IntroduceFunctionTestGenerated.java b/plugins/kotlin/refactorings/kotlin.refactorings.tests.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/introduce/K2IntroduceFunctionTestGenerated.java
index 36bbf014e0f5..8572795c33a6 100644
--- a/plugins/kotlin/refactorings/kotlin.refactorings.tests.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/introduce/K2IntroduceFunctionTestGenerated.java
+++ b/plugins/kotlin/refactorings/kotlin.refactorings.tests.k2/test/org/jetbrains/kotlin/idea/k2/refactoring/introduce/K2IntroduceFunctionTestGenerated.java
@@ -379,6 +379,35 @@ public abstract class K2IntroduceFunctionTestGenerated extends AbstractK2Introdu
         }
     }
 
+    @RunWith(JUnit3RunnerWithInners.class)
+    @TestMetadata("../../idea/tests/testData/refactoring/extractFunction/contextParameters")
+    public static class ContextParameters extends AbstractK2IntroduceFunctionTest {
+        @java.lang.Override
+        @org.jetbrains.annotations.NotNull
+        public final KotlinPluginMode getPluginMode() {
+            return KotlinPluginMode.K2;
+        }
+
+        private void runTest(String testDataFilePath) throws Exception {
+            KotlinTestUtils.runTest(this::doExtractFunctionTest, this, testDataFilePath);
+        }
+
+        @TestMetadata("base.kt")
+        public void testBase() throws Exception {
+            runTest("../../idea/tests/testData/refactoring/extractFunction/contextParameters/base.kt");
+        }
+
+        @TestMetadata("unnamed.kt")
+        public void testUnnamed() throws Exception {
+            runTest("../../idea/tests/testData/refactoring/extractFunction/contextParameters/unnamed.kt");
+        }
+
+        @TestMetadata("withProvidedContext.kt")
+        public void testWithProvidedContext() throws Exception {
+            runTest("../../idea/tests/testData/refactoring/extractFunction/contextParameters/withProvidedContext.kt");
+        }
+    }
+
     @RunWith(JUnit3RunnerWithInners.class)
     @TestMetadata("../../idea/tests/testData/refactoring/extractFunction/controlFlow")
     public abstract static class ControlFlow extends AbstractK2IntroduceFunctionTest {