diff --git a/java/java-psi-impl/src/com/intellij/core/JavaCoreApplicationEnvironment.java b/java/java-psi-impl/src/com/intellij/core/JavaCoreApplicationEnvironment.java
index 8e7fcdbd090c..902322272ea8 100644
--- a/java/java-psi-impl/src/com/intellij/core/JavaCoreApplicationEnvironment.java
+++ b/java/java-psi-impl/src/com/intellij/core/JavaCoreApplicationEnvironment.java
@@ -15,12 +15,16 @@
  */
 package com.intellij.core;
 
+import com.intellij.codeInsight.folding.JavaCodeFoldingSettings;
+import com.intellij.codeInsight.folding.impl.JavaCodeFoldingSettingsBase;
+import com.intellij.codeInsight.folding.impl.JavaFoldingBuilderBase;
 import com.intellij.codeInsight.runner.JavaMainMethodProvider;
 import com.intellij.ide.highlighter.ArchiveFileType;
 import com.intellij.ide.highlighter.JavaClassFileType;
 import com.intellij.ide.highlighter.JavaFileType;
 import com.intellij.lang.LanguageASTFactory;
 import com.intellij.lang.LanguageParserDefinitions;
+import com.intellij.lang.folding.LanguageFolding;
 import com.intellij.lang.java.JavaLanguage;
 import com.intellij.lang.java.JavaParserDefinition;
 import com.intellij.navigation.ItemPresentationProviders;
@@ -29,9 +33,8 @@ import com.intellij.openapi.extensions.Extensions;
 import com.intellij.openapi.fileTypes.PlainTextFileType;
 import com.intellij.openapi.fileTypes.PlainTextLanguage;
 import com.intellij.openapi.fileTypes.PlainTextParserDefinition;
+import com.intellij.openapi.project.Project;
 import com.intellij.openapi.projectRoots.JavaVersionService;
-import com.intellij.openapi.util.ClassExtension;
-import com.intellij.openapi.util.Disposer;
 import com.intellij.psi.*;
 import com.intellij.psi.augment.PsiAugmentProvider;
 import com.intellij.psi.impl.EmptySubstitutorImpl;
@@ -84,19 +87,22 @@ public class JavaCoreApplicationEnvironment extends CoreApplicationEnvironment {
     addExplicitExtension(ItemPresentationProviders.INSTANCE, PsiField.class, new FieldPresentationProvider());
     addExplicitExtension(ItemPresentationProviders.INSTANCE, PsiLocalVariable.class, new VariablePresentationProvider());
     addExplicitExtension(ItemPresentationProviders.INSTANCE, PsiParameter.class, new VariablePresentationProvider());
+
+    registerApplicationService(JavaCodeFoldingSettings.class, new JavaCodeFoldingSettingsBase());
+    addExplicitExtension(LanguageFolding.INSTANCE, JavaLanguage.INSTANCE, new JavaFoldingBuilderBase() {
+      @Override
+      protected boolean shouldShowExplicitLambdaType(PsiAnonymousClass anonymousClass, PsiNewExpression expression) {
+        return false;
+      }
+
+      @Override
+      protected boolean isBelowRightMargin(Project project, int lineLength) {
+        return false;
+      }
+    });
   }
 
   protected CoreJavaDirectoryService createJavaDirectoryService() {
     return new CoreJavaDirectoryService();
   }
-
-  public <T> void addExplicitExtension(final ClassExtension<T> instance, final Class clazz, final T object) {
-    instance.addExplicitExtension(clazz, object);
-    Disposer.register(getParentDisposable(), new Disposable() {
-      @Override
-      public void dispose() {
-        instance.removeExplicitExtension(clazz, object);
-      }
-    });
-  }
 }
diff --git a/platform/core-impl/src/com/intellij/core/CoreApplicationEnvironment.java b/platform/core-impl/src/com/intellij/core/CoreApplicationEnvironment.java
index e7ce3d36f774..2d204dc21458 100644
--- a/platform/core-impl/src/com/intellij/core/CoreApplicationEnvironment.java
+++ b/platform/core-impl/src/com/intellij/core/CoreApplicationEnvironment.java
@@ -35,7 +35,9 @@ import com.intellij.openapi.extensions.ExtensionsArea;
 import com.intellij.openapi.fileEditor.FileDocumentManager;
 import com.intellij.openapi.fileTypes.*;
 import com.intellij.openapi.progress.*;
+import com.intellij.openapi.util.ClassExtension;
 import com.intellij.openapi.util.Disposer;
+import com.intellij.openapi.util.KeyedExtensionCollector;
 import com.intellij.openapi.util.StaticGetter;
 import com.intellij.openapi.vfs.VirtualFileManager;
 import com.intellij.openapi.vfs.VirtualFileSystem;
@@ -276,13 +278,7 @@ public class CoreApplicationEnvironment {
   }
 
   public <T> void addExplicitExtension(final LanguageExtension<T> instance, final Language language, final T object) {
-    instance.addExplicitExtension(language, object);
-    Disposer.register(myParentDisposable, new Disposable() {
-      @Override
-      public void dispose() {
-        instance.removeExplicitExtension(language, object);
-      }
-    });
+    doAddExplicitExtension(instance, language, object);
   }
 
   public void registerParserDefinition(Language language, ParserDefinition parserDefinition) {
@@ -290,15 +286,23 @@ public class CoreApplicationEnvironment {
   }
 
   public <T> void addExplicitExtension(@NotNull final FileTypeExtension<T> instance, @NotNull final FileType fileType, @NotNull final T object) {
-    instance.addExplicitExtension(fileType, object);
+    doAddExplicitExtension(instance, fileType, object);
+  }
+
+  private <T,U> void doAddExplicitExtension(@NotNull final KeyedExtensionCollector<T,U> instance, @NotNull final U key, @NotNull final T object) {
+    instance.addExplicitExtension(key, object);
     Disposer.register(myParentDisposable, new Disposable() {
       @Override
       public void dispose() {
-        instance.removeExplicitExtension(fileType, object);
+        instance.removeExplicitExtension(key, object);
       }
     });
   }
 
+  public <T> void addExplicitExtension(@NotNull final ClassExtension<T> instance, @NotNull final Class aClass, @NotNull final T object) {
+    doAddExplicitExtension(instance, aClass, object);
+  }
+
   public <T> void addExtension(ExtensionPointName<T> name, final T extension) {
     final ExtensionPoint<T> extensionPoint = Extensions.getRootArea().getExtensionPoint(name);
     extensionPoint.registerExtension(extension);
diff --git a/xml/xml-psi-impl/src/com/intellij/xml/XmlCoreEnvironment.java b/xml/xml-psi-impl/src/com/intellij/xml/XmlCoreEnvironment.java
index 5ae81dd96174..5389f2114ea5 100644
--- a/xml/xml-psi-impl/src/com/intellij/xml/XmlCoreEnvironment.java
+++ b/xml/xml-psi-impl/src/com/intellij/xml/XmlCoreEnvironment.java
@@ -1,5 +1,21 @@
+/*
+ * Copyright 2000-2014 JetBrains s.r.o.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
 package com.intellij.xml;
 
+import com.intellij.application.options.editor.XmlFoldingSettings;
 import com.intellij.codeInspection.XmlSuppressionProvider;
 import com.intellij.core.CoreApplicationEnvironment;
 import com.intellij.core.CoreProjectEnvironment;
@@ -13,16 +29,14 @@ import com.intellij.lang.LanguageParserDefinitions;
 import com.intellij.lang.dtd.DTDLanguage;
 import com.intellij.lang.dtd.DTDParserDefinition;
 import com.intellij.lang.dtd.DtdSyntaxHighlighterFactory;
+import com.intellij.lang.folding.LanguageFolding;
 import com.intellij.lang.html.HTMLLanguage;
 import com.intellij.lang.html.HTMLParserDefinition;
 import com.intellij.lang.html.HtmlSyntaxHighlighterFactory;
 import com.intellij.lang.xhtml.XHTMLLanguage;
 import com.intellij.lang.xhtml.XHTMLParserDefinition;
 import com.intellij.lang.xhtml.XhtmlSyntaxHighlighterFactory;
-import com.intellij.lang.xml.XMLLanguage;
-import com.intellij.lang.xml.XMLParserDefinition;
-import com.intellij.lang.xml.XmlASTFactory;
-import com.intellij.lang.xml.XmlSyntaxHighlighterFactory;
+import com.intellij.lang.xml.*;
 import com.intellij.lexer.HtmlEmbeddedTokenTypesProvider;
 import com.intellij.openapi.extensions.Extensions;
 import com.intellij.openapi.fileTypes.SyntaxHighlighterFactory;
@@ -85,6 +99,11 @@ public class XmlCoreEnvironment {
       appEnvironment.addExtension(StandardResourceProvider.EP_NAME, new InternalResourceProvider());
 
       appEnvironment.registerApplicationService(ExternalResourceManager.class, createExternalResourceManager());
+      appEnvironment.registerApplicationService(XmlFoldingSettings.class, new XmlFoldingSettings());
+      appEnvironment.addExplicitExtension(LanguageFolding.INSTANCE, XMLLanguage.INSTANCE, new XmlFoldingBuilder());
+      appEnvironment.addExplicitExtension(LanguageFolding.INSTANCE, HTMLLanguage.INSTANCE, new XmlFoldingBuilder());
+      appEnvironment.addExplicitExtension(LanguageFolding.INSTANCE, XHTMLLanguage.INSTANCE, new XmlFoldingBuilder());
+      appEnvironment.addExplicitExtension(LanguageFolding.INSTANCE, DTDLanguage.INSTANCE, new XmlFoldingBuilder());
     }
 
     protected ExternalResourceManagerEx createExternalResourceManager() {