diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/BoxJsTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/BoxJsTestGenerated.java
index d135100abb8..835e20bb9bd 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/BoxJsTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/BoxJsTestGenerated.java
@@ -5678,6 +5678,12 @@ public class BoxJsTestGenerated extends AbstractBoxJsTest {
             doTest(fileName);
         }
 
+        @TestMetadata("localFunctions.kt")
+        public void testLocalFunctions() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("js/js.translator/testData/box/nameClashes/localFunctions.kt");
+            doTest(fileName);
+        }
+
         @TestMetadata("methodAndPrivateProperty.kt")
         public void testMethodAndPrivateProperty() throws Exception {
             String fileName = KotlinTestUtils.navigationMetadata("js/js.translator/testData/box/nameClashes/methodAndPrivateProperty.kt");
diff --git a/js/js.translator/src/org/jetbrains/kotlin/js/translate/expression/LiteralFunctionTranslator.kt b/js/js.translator/src/org/jetbrains/kotlin/js/translate/expression/LiteralFunctionTranslator.kt
index e6467d7640a..5e7609d16cd 100644
--- a/js/js.translator/src/org/jetbrains/kotlin/js/translate/expression/LiteralFunctionTranslator.kt
+++ b/js/js.translator/src/org/jetbrains/kotlin/js/translate/expression/LiteralFunctionTranslator.kt
@@ -16,7 +16,6 @@
 
 package org.jetbrains.kotlin.js.translate.expression
 
-import org.jetbrains.kotlin.backend.common.SUSPENDED_MARKER_NAME
 import org.jetbrains.kotlin.builtins.isBuiltinExtensionFunctionalType
 import org.jetbrains.kotlin.descriptors.*
 import org.jetbrains.kotlin.descriptors.impl.ValueParameterDescriptorImpl
@@ -24,10 +23,10 @@ import org.jetbrains.kotlin.js.backend.ast.*
 import org.jetbrains.kotlin.js.backend.ast.metadata.*
 import org.jetbrains.kotlin.js.descriptorUtils.isCoroutineLambda
 import org.jetbrains.kotlin.js.inline.util.getInnerFunction
+import org.jetbrains.kotlin.js.inline.util.rewriters.NameReplacingVisitor
 import org.jetbrains.kotlin.js.translate.context.TranslationContext
 import org.jetbrains.kotlin.js.translate.context.getNameForCapturedDescriptor
 import org.jetbrains.kotlin.js.translate.context.hasCapturedExceptContaining
-import org.jetbrains.kotlin.js.translate.context.isCaptured
 import org.jetbrains.kotlin.js.translate.general.AbstractTranslator
 import org.jetbrains.kotlin.js.translate.utils.BindingUtils.getFunctionDescriptor
 import org.jetbrains.kotlin.js.translate.utils.FunctionBodyTranslator.setDefaultValueForArguments
@@ -73,21 +72,12 @@ class LiteralFunctionTranslator(context: TranslationContext) : AbstractTranslato
 
         val tracker = functionContext.usageTracker()!!
 
-        val isRecursive = tracker.isCaptured(descriptor)
-
-        lambda.name = if (isRecursive) {
-            tracker.getNameForCapturedDescriptor(descriptor)
-        }
-        else {
-            invokingContext.getInnerNameForDescriptor(descriptor)
-        }
-
         if (tracker.hasCapturedExceptContaining()) {
             val lambdaCreator = simpleReturnFunction(invokingContext.scope(), lambda)
             lambdaCreator.name = invokingContext.getInnerNameForDescriptor(descriptor)
             lambdaCreator.isLocal = true
-            if (!isRecursive || descriptor.isCoroutineLambda) {
-                lambda.name = null
+            if (descriptor in tracker.capturedDescriptors && !descriptor.isCoroutineLambda) {
+                lambda.name = tracker.getNameForCapturedDescriptor(descriptor)
             }
             lambdaCreator.name.staticRef = lambdaCreator
             lambdaCreator.fillCoroutineMetadata(invokingContext, descriptor, continuationType)
@@ -95,6 +85,14 @@ class LiteralFunctionTranslator(context: TranslationContext) : AbstractTranslato
                                                         invokingContext)
         }
 
+        lambda.name = invokingContext.getInnerNameForDescriptor(descriptor)
+        if (descriptor in tracker.capturedDescriptors) {
+            val capturedName = tracker.getNameForCapturedDescriptor(descriptor)!!
+            val globalName = invokingContext.getInnerNameForDescriptor(descriptor)
+            val replacingVisitor = NameReplacingVisitor(mapOf(capturedName to JsAstUtils.pureFqn(globalName, null)))
+            replacingVisitor.accept(lambda)
+        }
+
         lambda.isLocal = true
 
         invokingContext.addDeclarationStatement(lambda.makeStmt())
diff --git a/js/js.translator/testData/box/nameClashes/localFunctions.kt b/js/js.translator/testData/box/nameClashes/localFunctions.kt
new file mode 100644
index 00000000000..c7ec5292819
--- /dev/null
+++ b/js/js.translator/testData/box/nameClashes/localFunctions.kt
@@ -0,0 +1,43 @@
+var log = ""
+
+fun foo() {
+    fun local(x: String) {
+        if (x.isEmpty()) return
+        log += "foo(${x[0]});"
+        local(x.substring(1))
+    }
+    local("OK")
+}
+
+fun bar() {
+    fun local(x: String) {
+        if (x.isEmpty()) return
+        log += "bar(${x[0]});"
+        local(x.substring(1))
+    }
+    local("OK")
+}
+
+fun baz(): Int {
+    fun local(x: String) {
+        if (x.isEmpty()) return
+        log += "baz(${x[0]});"
+        local(x.substring(1))
+    }
+    fun local(x: Int): Int = if (x == 0) 1 else x * local(x - 1)
+    local("OK")
+    return local(3)
+}
+
+
+fun box(): String {
+    foo()
+    bar()
+    val result = baz()
+
+    if (result != 6) return "fail1: $result"
+
+    if (log != "foo(O);foo(K);bar(O);bar(K);baz(O);baz(K);") return "fail2: $result"
+
+    return "OK"
+}
\ No newline at end of file