diff --git a/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeToInlineBuilder.kt b/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeToInlineBuilder.kt
index 8289c600a88..65774e8c721 100644
--- a/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeToInlineBuilder.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/codeInliner/CodeToInlineBuilder.kt
@@ -19,21 +19,29 @@ package org.jetbrains.kotlin.idea.codeInliner
 import org.jetbrains.kotlin.descriptors.CallableDescriptor
 import org.jetbrains.kotlin.descriptors.TypeParameterDescriptor
 import org.jetbrains.kotlin.descriptors.ValueParameterDescriptor
+import org.jetbrains.kotlin.diagnostics.Errors
+import org.jetbrains.kotlin.idea.caches.resolve.getResolutionFacade
 import org.jetbrains.kotlin.idea.core.asExpression
 import org.jetbrains.kotlin.idea.imports.importableFqName
 import org.jetbrains.kotlin.idea.intentions.InsertExplicitTypeArgumentsIntention
+import org.jetbrains.kotlin.idea.intentions.SpecifyExplicitLambdaSignatureIntention
 import org.jetbrains.kotlin.idea.references.canBeResolvedViaImport
 import org.jetbrains.kotlin.idea.references.mainReference
 import org.jetbrains.kotlin.idea.resolve.ResolutionFacade
+import org.jetbrains.kotlin.idea.util.IdeDescriptorRenderers
 import org.jetbrains.kotlin.idea.util.getResolutionScope
 import org.jetbrains.kotlin.name.FqName
 import org.jetbrains.kotlin.psi.*
 import org.jetbrains.kotlin.psi.psiUtil.getReceiverExpression
+import org.jetbrains.kotlin.psi.psiUtil.getStrictParentOfType
 import org.jetbrains.kotlin.resolve.BindingContext
 import org.jetbrains.kotlin.resolve.calls.callUtil.getResolvedCall
 import org.jetbrains.kotlin.resolve.calls.model.isReallySuccess
 import org.jetbrains.kotlin.resolve.descriptorUtil.isExtension
+import org.jetbrains.kotlin.resolve.lazy.BodyResolveMode
 import org.jetbrains.kotlin.resolve.scopes.receivers.ImplicitReceiver
+import org.jetbrains.kotlin.types.ErrorUtils
+import org.jetbrains.kotlin.utils.sure
 import java.util.*
 
 class CodeToInlineBuilder(
@@ -57,9 +65,58 @@ class CodeToInlineBuilder(
 
         insertExplicitReceivers(codeToInline, bindingContext)
 
+        if (mainExpression != null) {
+            val functionLiteralExpression = mainExpression.unpackFunctionLiteral(true)
+            if (functionLiteralExpression != null) {
+                val functionLiteralParameterTypes = getParametersForFunctionLiteral(functionLiteralExpression, bindingContext)
+                if (functionLiteralParameterTypes != null) {
+                    codeToInline.addPostInsertionAction(mainExpression) { inlinedExpression ->
+                        addFunctionLiteralParameterTypes(functionLiteralParameterTypes, inlinedExpression)
+                    }
+                }
+            }
+        }
+
         return codeToInline.toNonMutable()
     }
 
+    private fun getParametersForFunctionLiteral(functionLiteralExpression: KtLambdaExpression, context: BindingContext): String? {
+        val lambdaDescriptor = context.get(BindingContext.FUNCTION, functionLiteralExpression.functionLiteral)
+        if (lambdaDescriptor == null || ErrorUtils.containsErrorType(lambdaDescriptor)) return null
+        return lambdaDescriptor.valueParameters.joinToString {
+            it.name.asString() + ": " + IdeDescriptorRenderers.SOURCE_CODE.renderType(it.type)
+        }
+    }
+
+    private fun addFunctionLiteralParameterTypes(parameters: String, inlinedExpression: KtExpression) {
+        val containingFile = inlinedExpression.containingKtFile
+        val resolutionFacade = containingFile.getResolutionFacade()
+
+        val lambdaExpr = inlinedExpression.unpackFunctionLiteral(true).sure {
+            "can't find function literal expression for " + inlinedExpression.text
+        }
+        if (!needToAddParameterTypes(lambdaExpr, resolutionFacade)) return
+        SpecifyExplicitLambdaSignatureIntention.applyWithParameters(lambdaExpr, parameters)
+    }
+
+    private fun needToAddParameterTypes(
+            lambdaExpression: KtLambdaExpression,
+            resolutionFacade: ResolutionFacade
+    ): Boolean {
+        val functionLiteral = lambdaExpression.functionLiteral
+        val context = resolutionFacade.analyze(lambdaExpression, BodyResolveMode.PARTIAL_WITH_DIAGNOSTICS)
+        return context.diagnostics.any { diagnostic ->
+            val factory = diagnostic.factory
+            val element = diagnostic.psiElement
+            val hasCantInferParameter = factory == Errors.CANNOT_INFER_PARAMETER_TYPE &&
+                                        element.parent.parent == functionLiteral
+            val hasUnresolvedItOrThis = factory == Errors.UNRESOLVED_REFERENCE &&
+                                        element.text == "it" &&
+                                        element.getStrictParentOfType<KtFunctionLiteral>() == functionLiteral
+            hasCantInferParameter || hasUnresolvedItOrThis
+        }
+    }
+
     private fun insertExplicitTypeArguments(codeToInline: MutableCodeToInline, bindingContext: BindingContext, analyze: () -> BindingContext): BindingContext {
         val typeArgsToAdd = ArrayList<Pair<KtCallExpression, KtTypeArgumentList>>()
         codeToInline.forEachDescendantOfType<KtCallExpression> {
diff --git a/idea/src/org/jetbrains/kotlin/idea/intentions/SpecifyExplicitLambdaSignatureIntention.kt b/idea/src/org/jetbrains/kotlin/idea/intentions/SpecifyExplicitLambdaSignatureIntention.kt
index 801d2c50cbf..a1381579cdb 100644
--- a/idea/src/org/jetbrains/kotlin/idea/intentions/SpecifyExplicitLambdaSignatureIntention.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/intentions/SpecifyExplicitLambdaSignatureIntention.kt
@@ -19,7 +19,6 @@ package org.jetbrains.kotlin.idea.intentions
 import com.intellij.codeInsight.intention.LowPriorityAction
 import com.intellij.openapi.editor.Editor
 import com.intellij.psi.PsiWhiteSpace
-import org.jetbrains.kotlin.builtins.KotlinBuiltIns
 import org.jetbrains.kotlin.idea.caches.resolve.analyze
 import org.jetbrains.kotlin.idea.core.ShortenReferences
 import org.jetbrains.kotlin.idea.util.IdeDescriptorRenderers
@@ -46,30 +45,36 @@ class SpecifyExplicitLambdaSignatureIntention : SelfTargetingIntention<KtLambdaE
     }
 
     override fun applyTo(element: KtLambdaExpression, editor: Editor?) {
-        val psiFactory = KtPsiFactory(element)
         val functionLiteral = element.functionLiteral
         val functionDescriptor = element.analyze(BodyResolveMode.PARTIAL)[BindingContext.FUNCTION, functionLiteral]!!
 
         val parameterString = functionDescriptor.valueParameters
                 .map { "${it.name}: ${IdeDescriptorRenderers.SOURCE_CODE.renderType(it.type)}" }
                 .joinToString(", ")
+        applyWithParameters(element, parameterString)
+    }
 
-        val newParameterList = psiFactory.createLambdaParameterListIfAny(parameterString)
-        val oldParameterList = functionLiteral.valueParameterList
-        if (oldParameterList != null && newParameterList != null) {
-            oldParameterList.replace(newParameterList)
-        }
-        else {
-            val openBraceElement = functionLiteral.lBrace
-            val nextSibling = openBraceElement.nextSibling
-            val addNewline = nextSibling is PsiWhiteSpace && nextSibling.text?.contains("\n") ?: false
-            val (whitespace, arrow) = psiFactory.createWhitespaceAndArrow()
-            functionLiteral.addRangeAfter(whitespace, arrow, openBraceElement)
-            newParameterList?.let { functionLiteral.addAfter(it, openBraceElement) }
-            if (addNewline) {
-                functionLiteral.addAfter(psiFactory.createNewLine(), openBraceElement)
+    companion object {
+        fun applyWithParameters(element: KtLambdaExpression, parameterString: String) {
+            val psiFactory = KtPsiFactory(element)
+            val functionLiteral = element.functionLiteral
+            val newParameterList = psiFactory.createLambdaParameterListIfAny(parameterString)
+            val oldParameterList = functionLiteral.valueParameterList
+            if (oldParameterList != null && newParameterList != null) {
+                oldParameterList.replace(newParameterList)
             }
+            else {
+                val openBraceElement = functionLiteral.lBrace
+                val nextSibling = openBraceElement.nextSibling
+                val addNewline = nextSibling is PsiWhiteSpace && nextSibling.text?.contains("\n") ?: false
+                val (whitespace, arrow) = psiFactory.createWhitespaceAndArrow()
+                functionLiteral.addRangeAfter(whitespace, arrow, openBraceElement)
+                newParameterList?.let { functionLiteral.addAfter(it, openBraceElement) }
+                if (addNewline) {
+                    functionLiteral.addAfter(psiFactory.createNewLine(), openBraceElement)
+                }
+            }
+            ShortenReferences.DEFAULT.process(element.valueParameters)
         }
-        ShortenReferences.DEFAULT.process(element.valueParameters)
     }
 }
diff --git a/idea/testData/refactoring/inline/function/expressionBody/FunctionalType.kt b/idea/testData/refactoring/inline/function/expressionBody/FunctionalType.kt
new file mode 100644
index 00000000000..2bb0a570a23
--- /dev/null
+++ b/idea/testData/refactoring/inline/function/expressionBody/FunctionalType.kt
@@ -0,0 +1,4 @@
+fun foo() {
+    fun bar(): (Int) -> Int = { it }
+    val b = <caret>bar()
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/function/expressionBody/FunctionalType.kt.after b/idea/testData/refactoring/inline/function/expressionBody/FunctionalType.kt.after
new file mode 100644
index 00000000000..3665ebd6596
--- /dev/null
+++ b/idea/testData/refactoring/inline/function/expressionBody/FunctionalType.kt.after
@@ -0,0 +1,3 @@
+fun foo() {
+    val b = { it: Int -> it }
+}
\ No newline at end of file
diff --git a/idea/tests/org/jetbrains/kotlin/idea/refactoring/inline/InlineTestGenerated.java b/idea/tests/org/jetbrains/kotlin/idea/refactoring/inline/InlineTestGenerated.java
index f319d2bf5e9..eb1c174a5ef 100644
--- a/idea/tests/org/jetbrains/kotlin/idea/refactoring/inline/InlineTestGenerated.java
+++ b/idea/tests/org/jetbrains/kotlin/idea/refactoring/inline/InlineTestGenerated.java
@@ -136,6 +136,12 @@ public class InlineTestGenerated extends AbstractInlineTest {
                 doTest(fileName);
             }
 
+            @TestMetadata("FunctionalType.kt")
+            public void testFunctionalType() throws Exception {
+                String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/function/expressionBody/FunctionalType.kt");
+                doTest(fileName);
+            }
+
             @TestMetadata("MultipleInComposition.kt")
             public void testMultipleInComposition() throws Exception {
                 String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/function/expressionBody/MultipleInComposition.kt");