diff --git a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/ir/IrInlineReferenceLocator.kt b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/ir/IrInlineReferenceLocator.kt
index fdcead3d5b5..a87e8f482a5 100644
--- a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/ir/IrInlineReferenceLocator.kt
+++ b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/ir/IrInlineReferenceLocator.kt
@@ -15,7 +15,7 @@ import org.jetbrains.kotlin.ir.declarations.IrFunction
 import org.jetbrains.kotlin.ir.expressions.*
 import org.jetbrains.kotlin.ir.visitors.acceptChildrenVoid
 
-internal class IrInlineReferenceLocator(private val context: JvmBackendContext) : IrElementVisitorVoidWithContext() {
+internal open class IrInlineReferenceLocator(private val context: JvmBackendContext) : IrElementVisitorVoidWithContext() {
     val inlineReferences = mutableSetOf<IrCallableReference>()
 
     // For crossinline lambdas, the call site is null as it's probably in a separate class somewhere.
@@ -36,7 +36,7 @@ internal class IrInlineReferenceLocator(private val context: JvmBackendContext)
                     continue
 
                 if (valueArgument is IrPropertyReference) {
-                    inlineReferences.add(valueArgument)
+                    handleInlineFunctionCallableReferenceParam(valueArgument)
                     continue
                 }
 
@@ -46,16 +46,24 @@ internal class IrInlineReferenceLocator(private val context: JvmBackendContext)
                     else -> null
                 } ?: continue
 
-                inlineReferences.add(reference)
+                handleInlineFunctionCallableReferenceParam(reference)
                 if (valueArgument is IrBlock && valueArgument.origin.isLambda) {
-                    lambdaToCallSite[reference.symbol.owner] =
-                        if (parameter.isCrossinline) null else currentScope!!.irElement as IrDeclaration
+                    val declaration = if (parameter.isCrossinline) null else currentScope!!.irElement as IrDeclaration
+                    handleInlineFunctionLambdaParam(reference.symbol.owner, function, declaration)
                 }
             }
         }
         return super.visitFunctionAccess(expression)
     }
 
+    open fun handleInlineFunctionCallableReferenceParam(valueArgument: IrCallableReference) {
+        inlineReferences.add(valueArgument)
+    }
+
+    open fun handleInlineFunctionLambdaParam(lambda: IrFunction, callee: IrFunction, callSite: IrDeclaration?) {
+        lambdaToCallSite[lambda] = callSite
+    }
+
     companion object {
         fun scan(context: JvmBackendContext, element: IrElement) =
             IrInlineReferenceLocator(context).apply { element.accept(this, null) }
diff --git a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/FakeInliningLocalVariablesLowering.kt b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/FakeInliningLocalVariablesLowering.kt
index d8b40eb18f3..300046e8c4a 100644
--- a/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/FakeInliningLocalVariablesLowering.kt
+++ b/compiler/ir/backend.jvm/src/org/jetbrains/kotlin/backend/jvm/lower/FakeInliningLocalVariablesLowering.kt
@@ -10,15 +10,20 @@ import org.jetbrains.kotlin.backend.common.lower.createIrBuilder
 import org.jetbrains.kotlin.backend.common.phaser.makeIrFilePhase
 import org.jetbrains.kotlin.backend.jvm.JvmBackendContext
 import org.jetbrains.kotlin.backend.jvm.codegen.mapClass
-import org.jetbrains.kotlin.ir.IrElement
-import org.jetbrains.kotlin.ir.builders.*
+import org.jetbrains.kotlin.backend.jvm.ir.IrInlineReferenceLocator
+import org.jetbrains.kotlin.ir.builders.createTmpVariable
+import org.jetbrains.kotlin.ir.builders.irBlockBody
+import org.jetbrains.kotlin.ir.builders.irInt
+import org.jetbrains.kotlin.ir.declarations.IrDeclaration
 import org.jetbrains.kotlin.ir.declarations.IrDeclarationOrigin
 import org.jetbrains.kotlin.ir.declarations.IrFile
 import org.jetbrains.kotlin.ir.declarations.IrFunction
-import org.jetbrains.kotlin.ir.expressions.*
+import org.jetbrains.kotlin.ir.expressions.IrBlockBody
+import org.jetbrains.kotlin.ir.expressions.IrCallableReference
+import org.jetbrains.kotlin.ir.expressions.IrExpressionBody
 import org.jetbrains.kotlin.ir.util.parentAsClass
-import org.jetbrains.kotlin.ir.visitors.IrElementVisitorVoid
 import org.jetbrains.kotlin.ir.visitors.acceptChildrenVoid
+import org.jetbrains.kotlin.ir.visitors.acceptVoid
 import org.jetbrains.kotlin.load.java.JvmAbi
 
 internal val fakeInliningLocalVariablesLowering = makeIrFilePhase(
@@ -27,41 +32,29 @@ internal val fakeInliningLocalVariablesLowering = makeIrFilePhase(
     description = "Add fake locals to identify the range of inlined functions and lambdas"
 )
 
-internal class FakeInliningLocalVariablesLowering(val context: JvmBackendContext) : IrElementVisitorVoid, FileLoweringPass {
+internal class FakeInliningLocalVariablesLowering(val context: JvmBackendContext) : IrInlineReferenceLocator(context), FileLoweringPass {
     override fun lower(irFile: IrFile) {
-        irFile.acceptChildrenVoid(this)
+        irFile.acceptVoid(this)
     }
 
-    override fun visitElement(element: IrElement) {
-        element.acceptChildrenVoid(this)
-    }
-
-    override fun visitCall(expression: IrCall) {
-        expression.acceptChildrenVoid(this)
-        val callee = expression.symbol.owner
-        if (callee.isInline) {
-            for (i in 0 until expression.valueArgumentsCount) {
-                val argument = expression.getValueArgument(i)
-                if ((argument is IrBlock) && argument.origin == IrStatementOrigin.LAMBDA) {
-                    val lastStatement = argument.statements.last()
-                    if (lastStatement is IrFunctionReference) {
-                        val localFunForLambda = lastStatement.symbol.owner
-                        if (localFunForLambda.origin == IrDeclarationOrigin.LOCAL_FUNCTION_FOR_LAMBDA) {
-                            localFunForLambda.addFakeInliningLocalVariablesForArguments(callee)
-                        }
-                    }
-                }
-            }
-        }
-    }
-
-    override fun visitFunction(declaration: IrFunction) {
+    override fun visitFunctionNew(declaration: IrFunction) {
         declaration.acceptChildrenVoid(this)
         if (declaration.isInline && !declaration.origin.isSynthetic && declaration.body != null) {
             declaration.addFakeInliningLocalVariables()
         }
     }
 
+    override fun handleInlineFunctionCallableReferenceParam(valueArgument: IrCallableReference) {
+        // Do not record inline function callable reference parameters. They will not be used.
+    }
+
+    override fun handleInlineFunctionLambdaParam(lambda: IrFunction, callee: IrFunction, callSite: IrDeclaration?) {
+        // Do not record lambda parameters. Instead deal with them now.
+        if (lambda.origin == IrDeclarationOrigin.LOCAL_FUNCTION_FOR_LAMBDA) {
+            lambda.addFakeInliningLocalVariablesForArguments(callee)
+        }
+    }
+
     private fun IrFunction.addFakeInliningLocalVariables() {
         val currentFunctionName = context.methodSignatureMapper.mapFunctionName(this)
         val localName = "${JvmAbi.LOCAL_VARIABLE_NAME_PREFIX_INLINE_FUNCTION}$currentFunctionName"