diff --git a/python/src/com/jetbrains/python/PythonFoldingBuilder.java b/python/src/com/jetbrains/python/PythonFoldingBuilder.java
index e89182cd1bcc..934df7061dc6 100644
--- a/python/src/com/jetbrains/python/PythonFoldingBuilder.java
+++ b/python/src/com/jetbrains/python/PythonFoldingBuilder.java
@@ -207,15 +207,16 @@ public class PythonFoldingBuilder extends CustomFoldingBuilder implements DumbAw
     }
     if (node.getElementType() == PyElementTypes.STRING_LITERAL_EXPRESSION) {
       PyStringLiteralExpression stringLiteralExpression = (PyStringLiteralExpression)node.getPsi();
+      String prefix = stringLiteralExpression.getStringElements().get(0).getPrefix();
       if (stringLiteralExpression.isDocString()) {
         final String stringValue = stringLiteralExpression.getStringValue().trim();
         final String[] lines = LineTokenizer.tokenize(stringValue, true);
         if (lines.length > 2 && lines[1].trim().length() == 0) {
-          return "\"\"\"" + lines[0].trim() + "...\"\"\"";
+          return prefix + "\"\"\"" + lines[0].trim() + "...\"\"\"";
         }
-        return "\"\"\"...\"\"\"";
+        return prefix + "\"\"\"...\"\"\"";
       } else {
-        return getLanguagePlaceholderForString(stringLiteralExpression);
+        return prefix + getLanguagePlaceholderForString(stringLiteralExpression);
       }
     }
     return "...";
diff --git a/python/testData/folding/stringPrefixFolding.py b/python/testData/folding/stringPrefixFolding.py
new file mode 100644
index 000000000000..fccaa92251ab
--- /dev/null
+++ b/python/testData/folding/stringPrefixFolding.py
@@ -0,0 +1,8 @@
+def foo():<fold text='...'>
+    <fold text='r"""..."""'>r"""
+    foo/bar
+    """</fold>
+    pass</fold>
+
+mline = <fold text='u"..."'>u"\n\n\n\n\n\n\n\n" \
+    "\n\n\n\n\n\n\n\"</fold>
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/PyFoldingTest.java b/python/testSrc/com/jetbrains/python/PyFoldingTest.java
index 149130b9aab1..698045ce4a70 100644
--- a/python/testSrc/com/jetbrains/python/PyFoldingTest.java
+++ b/python/testSrc/com/jetbrains/python/PyFoldingTest.java
@@ -112,4 +112,9 @@ public class PyFoldingTest extends PyTestCase {
       }
     }
   }
+
+  // PY-39406
+  public void testStringPrefixFolding() {
+    doTest();
+  }
 }