diff --git a/python/src/com/jetbrains/python/codeInsight/codeFragment/PyCodeFragmentUtil.java b/python/src/com/jetbrains/python/codeInsight/codeFragment/PyCodeFragmentUtil.java
index 883a62326091..241703071895 100644
--- a/python/src/com/jetbrains/python/codeInsight/codeFragment/PyCodeFragmentUtil.java
+++ b/python/src/com/jetbrains/python/codeInsight/codeFragment/PyCodeFragmentUtil.java
@@ -100,9 +100,12 @@ public class PyCodeFragmentUtil {
       for (Instruction outerInstruction : outerInstructions) {
         // Here we check control flow when for statement content is beeing extracted
         if (outerInstruction instanceof ReadWriteInstruction &&
-            PyForStatementNavigator.getPyForStatementByIterable(outerInstruction.getElement())!=null){
-          errorFound = false;
-          break;
+            PyForStatementNavigator.getPyForStatementByIterable(outerInstruction.getElement())!=null) {
+          // In case when return instruction is inside
+          if (!returnInstructionInside){
+            errorFound = false;
+            break;
+          }
         }
       }
       if (errorFound){
diff --git a/python/testData/refactoring/extractmethod/conditionalreturn.before.py b/python/testData/refactoring/extractmethod/conditionalreturn.before.py
new file mode 100644
index 000000000000..ea7119b33e3a
--- /dev/null
+++ b/python/testData/refactoring/extractmethod/conditionalreturn.before.py
@@ -0,0 +1,7 @@
+class Conference(object):
+    def __init__(self):
+        self.talks = []
+
+    def getTalkAt(self, hour):
+        for start, end, name in self.talks:
+            <selection>if hour >= start and hour < end: return name</selection>
\ No newline at end of file
diff --git a/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java b/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java
index c04760dd7c97..6a0334228c5a 100644
--- a/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java
+++ b/python/testSrc/com/jetbrains/python/refactoring/PyExtractMethodTest.java
@@ -126,4 +126,9 @@ public class PyExtractMethodTest extends LightMarkedTestCase {
   public void testClass() throws Throwable {
     doTest("context/class.before.py", "bar", "context/class.after.py");
   }
+
+  public void testConditionalReturn() throws Throwable {
+    doTest("conditionalreturn.before.py", "bar", "Cannot perform refactoring when execution flow is interrupted");
+  }
+
 }