diff --git a/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/FunctionsTypingVisitor.kt b/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/FunctionsTypingVisitor.kt
index e802defef3c..1dd91411ec6 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/FunctionsTypingVisitor.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/types/expressions/FunctionsTypingVisitor.kt
@@ -92,12 +92,17 @@ internal class FunctionsTypingVisitor(facade: ExpressionTypingInternals) : Expre
             )
         }
         // Necessary for local functions
-        ForceResolveUtil.forceResolveAllContents(functionDescriptor.annotations);
+        ForceResolveUtil.forceResolveAllContents(functionDescriptor.annotations)
 
-        val functionInnerScope = FunctionDescriptorUtil.getFunctionInnerScope(context.scope, functionDescriptor, context.trace)
-        components.expressionTypingServices.checkFunctionReturnType(
-                functionInnerScope, function, functionDescriptor, context.dataFlowInfo, null, context.trace
-        )
+        if (!function.hasDeclaredReturnType() && !function.hasBlockBody()) {
+            ForceResolveUtil.forceResolveAllContents(functionDescriptor.returnType)
+        }
+        else {
+            val functionInnerScope = FunctionDescriptorUtil.getFunctionInnerScope(context.scope, functionDescriptor, context.trace)
+            components.expressionTypingServices.checkFunctionReturnType(
+                    functionInnerScope, function, functionDescriptor, context.dataFlowInfo, null, context.trace
+            )
+        }
 
         components.valueParameterResolver.resolveValueParameters(
                 function.getValueParameters(), functionDescriptor.valueParameters, context.scope, context.dataFlowInfo, context.trace
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt
new file mode 100644
index 00000000000..6213b43563d
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt
@@ -0,0 +1,11 @@
+// See KT-6271
+fun foo() {
+    fun fact(n: Int) = {
+        if (n > 0) {
+            <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM!>fact(n - 1)<!> <!DEBUG_INFO_ELEMENT_WITH_ERROR_TYPE!>*<!> n
+        }
+        else {
+            1
+        }
+    }
+}
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.txt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.txt
new file mode 100644
index 00000000000..65a6ac47e1f
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.txt
@@ -0,0 +1,3 @@
+package
+
+public fun foo(): kotlin.Unit
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt
new file mode 100644
index 00000000000..bd777a778b3
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt
@@ -0,0 +1,3 @@
+fun foo() {
+    fun bar() = (fun() = <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM!>bar()<!>)
+}
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.txt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.txt
new file mode 100644
index 00000000000..65a6ac47e1f
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.txt
@@ -0,0 +1,3 @@
+package
+
+public fun foo(): kotlin.Unit
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt
new file mode 100644
index 00000000000..016f29e7f66
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt
@@ -0,0 +1,5 @@
+fun foo() {
+    fun bar() = {
+        <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM!>bar()<!>
+    }
+}
\ No newline at end of file
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.txt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.txt
new file mode 100644
index 00000000000..65a6ac47e1f
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.txt
@@ -0,0 +1,3 @@
+package
+
+public fun foo(): kotlin.Unit
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt
new file mode 100644
index 00000000000..a37cd9f43a7
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt
@@ -0,0 +1,8 @@
+fun foo() {
+    fun bar1() = <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM!>bar1()<!>
+
+    fun bar2() = 1 + <!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM!>bar2()<!>
+    fun bar3() = id(<!TYPECHECKER_HAS_RUN_INTO_RECURSIVE_PROBLEM!>bar3()<!>)
+}
+
+fun <T> id(x: T) = x
diff --git a/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.txt b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.txt
new file mode 100644
index 00000000000..8e92243886c
--- /dev/null
+++ b/compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.txt
@@ -0,0 +1,4 @@
+package
+
+public fun foo(): kotlin.Unit
+public fun </*0*/ T> id(/*0*/ x: T): T
diff --git a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
index 6a21439115b..3ab54a0f3b6 100644
--- a/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/checkers/DiagnosticsTestGenerated.java
@@ -8580,6 +8580,39 @@ public class DiagnosticsTestGenerated extends AbstractDiagnosticsTest {
                 }
             }
 
+            @TestMetadata("compiler/testData/diagnostics/tests/inference/recursiveLocalFuns")
+            @TestDataPath("$PROJECT_ROOT")
+            @RunWith(JUnit3RunnerWithInners.class)
+            public static class RecursiveLocalFuns extends AbstractDiagnosticsTest {
+                public void testAllFilesPresentInRecursiveLocalFuns() throws Exception {
+                    KotlinTestUtils.assertAllTestsPresentByMetadata(this.getClass(), new File("compiler/testData/diagnostics/tests/inference/recursiveLocalFuns"), Pattern.compile("^(.+)\\.kt$"), true);
+                }
+
+                @TestMetadata("localFactorial.kt")
+                public void testLocalFactorial() throws Exception {
+                    String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/localFactorial.kt");
+                    doTest(fileName);
+                }
+
+                @TestMetadata("recursiveFun.kt")
+                public void testRecursiveFun() throws Exception {
+                    String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveFun.kt");
+                    doTest(fileName);
+                }
+
+                @TestMetadata("recursiveLambda.kt")
+                public void testRecursiveLambda() throws Exception {
+                    String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/recursiveLambda.kt");
+                    doTest(fileName);
+                }
+
+                @TestMetadata("selfCall.kt")
+                public void testSelfCall() throws Exception {
+                    String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/diagnostics/tests/inference/recursiveLocalFuns/selfCall.kt");
+                    doTest(fileName);
+                }
+            }
+
             @TestMetadata("compiler/testData/diagnostics/tests/inference/regressions")
             @TestDataPath("$PROJECT_ROOT")
             @RunWith(JUnit3RunnerWithInners.class)