diff --git a/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/MutableClassDescriptorLite.java b/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/MutableClassDescriptorLite.java
index da643a50d59..e05248eeef5 100644
--- a/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/MutableClassDescriptorLite.java
+++ b/compiler/frontend/src/org/jetbrains/jet/lang/descriptors/MutableClassDescriptorLite.java
@@ -91,13 +91,16 @@ public abstract class MutableClassDescriptorLite extends ClassDescriptorBase {
     }
 
     private static boolean isStatic(ClassDescriptor declarationClassDescriptor) {
+        if (declarationClassDescriptor.getKind() == ClassKind.ENUM_CLASS) {
+            return true;
+        }
         DeclarationDescriptor containingDescriptor = declarationClassDescriptor.getContainingDeclaration();
         if (containingDescriptor instanceof NamespaceDescriptor) {
             return true;
         }
         else if (containingDescriptor instanceof ClassDescriptor) {
             ClassDescriptor containingClassDescriptor = (ClassDescriptor) containingDescriptor;
-            return containingClassDescriptor.getKind().isObject() || declarationClassDescriptor.getKind() == ClassKind.ENUM_CLASS;
+            return containingClassDescriptor.getKind().isObject();
         }
         else {
             return false;
diff --git a/compiler/testData/codegen/enum/inFunction.kt b/compiler/testData/codegen/enum/inFunction.kt
new file mode 100644
index 00000000000..bcf9ae88113
--- /dev/null
+++ b/compiler/testData/codegen/enum/inFunction.kt
@@ -0,0 +1,11 @@
+// KT-2948 Assertion fails on a local enum
+
+fun foo(): String {
+   enum class E {
+       OK
+   }
+
+   return E.OK.toString()
+}
+
+fun box(): String = foo()
\ No newline at end of file
diff --git a/compiler/tests/org/jetbrains/jet/codegen/EnumGenTest.java b/compiler/tests/org/jetbrains/jet/codegen/EnumGenTest.java
index aef8740d74f..3c44528a5ee 100644
--- a/compiler/tests/org/jetbrains/jet/codegen/EnumGenTest.java
+++ b/compiler/tests/org/jetbrains/jet/codegen/EnumGenTest.java
@@ -164,6 +164,10 @@ public class EnumGenTest extends CodegenTestCase {
         blackBoxFile("enum/inner.kt");
     }
 
+    public void testInFunction() {
+        blackBoxFile("enum/inFunction.kt");
+    }
+
     public void testInnerWithExistingClassObject() {
         blackBoxFile("enum/innerWithExistingClassObject.kt");
     }