diff --git a/java/java-psi-impl/src/com/intellij/codeInsight/folding/impl/JavaFoldingBuilderBase.java b/java/java-psi-impl/src/com/intellij/codeInsight/folding/impl/JavaFoldingBuilderBase.java
index b957e79c670f..5bd62c2e9faa 100644
--- a/java/java-psi-impl/src/com/intellij/codeInsight/folding/impl/JavaFoldingBuilderBase.java
+++ b/java/java-psi-impl/src/com/intellij/codeInsight/folding/impl/JavaFoldingBuilderBase.java
@@ -60,7 +60,8 @@ public abstract class JavaFoldingBuilderBase extends CustomFoldingBuilder implem
     if (element instanceof PsiImportList) {
       return "...";
     }
-    if (element instanceof PsiMethod || element instanceof PsiClassInitializer || element instanceof PsiClass) {
+    if (element instanceof PsiMethod || element instanceof PsiClassInitializer || element instanceof PsiClass ||
+        element instanceof PsiLambdaExpression) {
       return "{...}";
     }
     if (element instanceof PsiDocComment) {
@@ -168,6 +169,13 @@ public abstract class JavaFoldingBuilderBase extends CustomFoldingBuilder implem
 
       return new TextRange(startOffset, last.getTextRange().getEndOffset());
     }
+
+    if (element instanceof PsiLambdaExpression) {
+      PsiElement body = ((PsiLambdaExpression)element).getBody();
+      if (body instanceof PsiCodeBlock) {
+        return body.getTextRange();
+      }
+    }
     return null;
   }
 
@@ -675,6 +683,9 @@ public abstract class JavaFoldingBuilderBase extends CustomFoldingBuilder implem
     else if (element instanceof PsiComment) {
       return settings.isCollapseEndOfLineComments();
     }
+    else if (element instanceof PsiLambdaExpression) {
+      return settings.isCollapseLambdas();
+    }
     else {
       LOG.error("Unknown element:" + element);
       return false;
@@ -714,6 +725,15 @@ public abstract class JavaFoldingBuilderBase extends CustomFoldingBuilder implem
         super.visitNewExpression(expression);
       }
 
+      @Override
+      public void visitLambdaExpression(PsiLambdaExpression expression) {
+        PsiElement body = expression.getBody();
+        if (body instanceof PsiCodeBlock) {
+          addToFold(foldElements, expression, document, true);
+        }
+        super.visitLambdaExpression(expression);
+      }
+
       @Override
       public void visitComment(PsiComment comment) {
         addCommentFolds(comment, processedComments, foldElements);
diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/folding/JavaFolding8Test.groovy b/java/java-tests/testSrc/com/intellij/codeInsight/folding/JavaFolding8Test.groovy
index 132e836a7bb3..ba9494b5d55d 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/folding/JavaFolding8Test.groovy
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/folding/JavaFolding8Test.groovy
@@ -97,6 +97,22 @@ class Test {
     assert foldingModel.getCollapsedRegionAtOffset(text.indexOf("MyAction("))?.placeholderText == '() ' + JavaFoldingBuilder.rightArrow + ' { '
   }
 
+  void "test folding lambda with block body"() {
+    def text = """\
+class Test {
+  void test() {
+    Runnable action = () -> {
+        System.out.println();
+        };
+    }
+}
+"""
+    configure text
+    def foldingModel = myFixture.editor.foldingModel as FoldingModelImpl
+
+    assert foldingModel.getCollapsedRegionAtOffset(text.indexOf("System.out.println"))?.placeholderText == '{...}'
+  }
+
   private def configure(String text) {
     myFixture.configureByText("a.java", text)
     CodeFoldingManagerImpl.getInstance(getProject()).buildInitialFoldings(myFixture.editor)