diff --git a/idea/src/org/jetbrains/kotlin/idea/intentions/ConvertLambdaToReferenceIntention.kt b/idea/src/org/jetbrains/kotlin/idea/intentions/ConvertLambdaToReferenceIntention.kt
index c58ed53652f..6d2086a34f0 100644
--- a/idea/src/org/jetbrains/kotlin/idea/intentions/ConvertLambdaToReferenceIntention.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/intentions/ConvertLambdaToReferenceIntention.kt
@@ -33,7 +33,12 @@ import org.jetbrains.kotlin.types.isDynamic
 import org.jetbrains.kotlin.types.typeUtil.isTypeParameter
 import org.jetbrains.kotlin.types.typeUtil.isUnit
 
-class ConvertLambdaToReferenceInspection : IntentionBasedInspection<KtLambdaExpression>(ConvertLambdaToReferenceIntention())
+class ConvertLambdaToReferenceInspection(
+        val intention: ConvertLambdaToReferenceIntention = ConvertLambdaToReferenceIntention()
+) : IntentionBasedInspection<KtLambdaExpression>(
+        intention,
+        { intention.shouldSuggestToConvert(it) }
+)
 
 class ConvertLambdaToReferenceIntention : SelfTargetingOffsetIndependentIntention<KtLambdaExpression>(
         KtLambdaExpression::class.java, "Convert lambda to reference"
@@ -141,6 +146,12 @@ class ConvertLambdaToReferenceIntention : SelfTargetingOffsetIndependentIntentio
         }
     }
 
+    internal fun shouldSuggestToConvert(element: KtLambdaExpression): Boolean {
+        val body = element.bodyExpression ?: return false
+        val referenceName = buildReferenceText(body.statements.singleOrNull() ?: return false) ?: return false
+        return referenceName.length < element.text.length
+    }
+
     private fun KtCallExpression.getCallReferencedName() = (calleeExpression as? KtNameReferenceExpression)?.getReferencedName()
 
     private fun buildReferenceText(expression: KtExpression): String? {
@@ -166,7 +177,7 @@ class ConvertLambdaToReferenceIntention : SelfTargetingOffsetIndependentIntentio
     override fun applyTo(element: KtLambdaExpression, editor: Editor?) {
         val body = element.bodyExpression ?: return
         val referenceName = buildReferenceText(body.statements.singleOrNull() ?: return) ?: return
-        val factory = KtPsiFactory(editor?.project)
+        val factory = KtPsiFactory(element)
         val lambdaArgument = element.parent as? KtLambdaArgument
         if (lambdaArgument == null) {
             // Without lambda argument syntax, just replace lambda with reference
diff --git a/idea/testData/inspections/convertLambdaToReference/inspectionData/expected.xml b/idea/testData/inspections/convertLambdaToReference/inspectionData/expected.xml
new file mode 100644
index 00000000000..0990a51a52f
--- /dev/null
+++ b/idea/testData/inspections/convertLambdaToReference/inspectionData/expected.xml
@@ -0,0 +1,10 @@
+<problems>
+    <problem>
+        <file>test.kt</file>
+        <line>5</line>
+        <module>light_idea_test_case</module>
+        <entry_point TYPE="file" FQNAME="temp:///src/test.kt" />
+        <problem_class severity="WARNING" attribute_key="WARNING_ATTRIBUTES">Can be replaced with function reference</problem_class>
+        <description>Convert lambda to reference</description>
+    </problem>
+</problems>
\ No newline at end of file
diff --git a/idea/testData/inspections/convertLambdaToReference/inspectionData/inspections.test b/idea/testData/inspections/convertLambdaToReference/inspectionData/inspections.test
new file mode 100644
index 00000000000..2b2f8dee5a0
--- /dev/null
+++ b/idea/testData/inspections/convertLambdaToReference/inspectionData/inspections.test
@@ -0,0 +1 @@
+// INSPECTION_CLASS: org.jetbrains.kotlin.idea.intentions.ConvertLambdaToReferenceInspection
\ No newline at end of file
diff --git a/idea/testData/inspections/convertLambdaToReference/test.kt b/idea/testData/inspections/convertLambdaToReference/test.kt
new file mode 100644
index 00000000000..7edab1a170d
--- /dev/null
+++ b/idea/testData/inspections/convertLambdaToReference/test.kt
@@ -0,0 +1,9 @@
+// Mostly tested as intention. Here we just test shouldSuggestToConvert()
+
+// Should suggest to convert
+class TheirWrapper(val x: Int)
+val x = { y: Int -> TheirWrapper(y) }
+
+// Should not suggest to convert (too long reference)
+fun foo(arg: TheirWrapper, convert: (TheirWrapper) -> String) = convert(arg)
+val y = foo(TheirWrapper(42)) { it.toString() }
\ No newline at end of file
diff --git a/idea/tests/org/jetbrains/kotlin/idea/codeInsight/InspectionTestGenerated.java b/idea/tests/org/jetbrains/kotlin/idea/codeInsight/InspectionTestGenerated.java
index bc557eb8249..d96bf9f02bc 100644
--- a/idea/tests/org/jetbrains/kotlin/idea/codeInsight/InspectionTestGenerated.java
+++ b/idea/tests/org/jetbrains/kotlin/idea/codeInsight/InspectionTestGenerated.java
@@ -148,6 +148,12 @@ public class InspectionTestGenerated extends AbstractInspectionTest {
             doTest(fileName);
         }
 
+        @TestMetadata("convertLambdaToReference/inspectionData/inspections.test")
+        public void testConvertLambdaToReference_inspectionData_Inspections_test() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/inspections/convertLambdaToReference/inspectionData/inspections.test");
+            doTest(fileName);
+        }
+
         @TestMetadata("equalsAndHashCode/inspectionData/inspections.test")
         public void testEqualsAndHashCode_inspectionData_Inspections_test() throws Exception {
             String fileName = KotlinTestUtils.navigationMetadata("idea/testData/inspections/equalsAndHashCode/inspectionData/inspections.test");