diff --git a/plugins/devkit/intellij.devkit.workspaceModel/src/WorkspaceModelGenerator.kt b/plugins/devkit/intellij.devkit.workspaceModel/src/WorkspaceModelGenerator.kt
index e203f64cdee8..3a1cf502cb68 100644
--- a/plugins/devkit/intellij.devkit.workspaceModel/src/WorkspaceModelGenerator.kt
+++ b/plugins/devkit/intellij.devkit.workspaceModel/src/WorkspaceModelGenerator.kt
@@ -62,10 +62,10 @@ class WorkspaceModelGenerator(private val project: Project, private val coroutin
           project, module, sourceRoot.file!!,
           processAbstractTypes = module.withAbstractTypes,
           explicitApiEnabled = module.explicitApiEnabled,
-          isTestModule = module.isTestModule // TODO(It doesn't work for all modules)
-        ) {
-          createGeneratedSourceFolder(module, sourceRoot)
-        }
+          isTestModule = module.isTestModule, // TODO(It doesn't work for all modules)
+          targetFolderGenerator = { createGeneratedSourceFolder(module, sourceRoot) },
+          existingTargetFolder = { sourceRoot.file?.parent?.children?.find { it.name == GENERATED_FOLDER_NAME } }
+        )
       }
     }
   }
diff --git a/plugins/devkit/intellij.devkit.workspaceModel/src/codegen/writer/CodeWriter.kt b/plugins/devkit/intellij.devkit.workspaceModel/src/codegen/writer/CodeWriter.kt
index 0c6f25b70613..85aa5122c647 100644
--- a/plugins/devkit/intellij.devkit.workspaceModel/src/codegen/writer/CodeWriter.kt
+++ b/plugins/devkit/intellij.devkit.workspaceModel/src/codegen/writer/CodeWriter.kt
@@ -46,7 +46,8 @@ object CodeWriter {
   suspend fun generate(
     project: Project, module: Module, sourceFolder: VirtualFile,
     processAbstractTypes: Boolean, explicitApiEnabled: Boolean, isTestModule: Boolean,
-    targetFolderGenerator: () -> VirtualFile?
+    targetFolderGenerator: () -> VirtualFile?,
+    existingTargetFolder: () -> VirtualFile?
   ) {
     val sourceFilePerObjModule = HashMap<String, VirtualFile>()
     val ktClasses = HashMap<String, KtClass>()
@@ -91,6 +92,11 @@ object CodeWriter {
 
         if (generatedCode.isEmpty() || problems.any { it.level == GenerationProblem.Level.ERROR }) {
           LOG.info("Not found types for generation")
+          val genFolder = existingTargetFolder.invoke()
+          if (genFolder != null) {
+            indicator.text = DevKitWorkspaceModelBundle.message("progress.text.removing.old.code")
+            removeGeneratedCode(ktClasses, genFolder)
+          }
           return@runWriteActionWithCancellableProgressInDispatchThread
         }
 
@@ -101,8 +107,6 @@ object CodeWriter {
         }
 
         indicator.text = DevKitWorkspaceModelBundle.message("progress.text.removing.old.code")
-        val psiFactory = KtPsiFactory(project)
-
         removeGeneratedCode(ktClasses, genFolder)
 
         val topLevelDeclarations = MultiMap.create<KtFile, Pair<KtClass, List<KtDeclaration>>>()
@@ -113,6 +117,7 @@ object CodeWriter {
         indicator.isIndeterminate = false
 
         generatedCode.forEachIndexed { i, code ->
+          val psiFactory = KtPsiFactory(project)
           indicator.fraction = 0.15 + 0.1 * i / generatedCode.size
           when (code) {
             is ObjModuleFileGeneratedCode ->
diff --git a/plugins/devkit/intellij.devkit.workspaceModel/tests/testSrc/com/intellij/devkit/workspaceModel/CodeGenerationTestBase.kt b/plugins/devkit/intellij.devkit.workspaceModel/tests/testSrc/com/intellij/devkit/workspaceModel/CodeGenerationTestBase.kt
index 33d130c2349b..521a0e7e76ac 100644
--- a/plugins/devkit/intellij.devkit.workspaceModel/tests/testSrc/com/intellij/devkit/workspaceModel/CodeGenerationTestBase.kt
+++ b/plugins/devkit/intellij.devkit.workspaceModel/tests/testSrc/com/intellij/devkit/workspaceModel/CodeGenerationTestBase.kt
@@ -147,8 +147,10 @@ abstract class CodeGenerationTestBase : KotlinLightCodeInsightFixtureTestCase()
         project, module, srcRoot,
         processAbstractTypes = processAbstractTypes,
         explicitApiEnabled = explicitApiEnabled,
-        isTestModule = isTestModule
-      ) { genRoot }
+        isTestModule = isTestModule,
+        targetFolderGenerator = { genRoot },
+        existingTargetFolder = { genRoot }
+      )
       FileDocumentManager.getInstance().saveAllDocuments()
     }
     return srcRoot to genRoot