diff --git a/compiler/frontend/src/org/jetbrains/kotlin/psi/KtExpressionImpl.kt b/compiler/frontend/src/org/jetbrains/kotlin/psi/KtExpressionImpl.kt
index adba23417cb..8399c7ee0dd 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/psi/KtExpressionImpl.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/psi/KtExpressionImpl.kt
@@ -19,6 +19,7 @@ package org.jetbrains.kotlin.psi
 import com.intellij.lang.ASTNode
 import com.intellij.psi.PsiElement
 import org.jetbrains.kotlin.KtNodeType
+import org.jetbrains.kotlin.psi.psiUtil.canPlaceAfterSimpleNameEntry
 
 public abstract class KtExpressionImpl(node: ASTNode) : KtElementImpl(node), KtExpression {
 
@@ -38,14 +39,33 @@ public abstract class KtExpressionImpl(node: ASTNode) : KtElementImpl(node), KtE
             val parent = expression.getParent()
 
             if (newElement is KtExpression) {
-                when (parent) {
-                    is KtExpression -> {
+                when {
+                    parent is KtStringTemplateEntryWithExpression &&
+                    newElement is KtStringTemplateExpression &&
+                    // Do not mix raw and non-raw templates
+                    parent.parent.firstChild.text == newElement.firstChild.text -> {
+                        val entriesToAdd = newElement.entries
+                        val templateExpression = parent.parent as KtStringTemplateExpression
+                        if (entriesToAdd.size > 0) {
+                            templateExpression.addRangeBefore(entriesToAdd.first(), entriesToAdd.last(), parent)
+                            val lastNewEntry = parent.prevSibling
+                            val nextElement = parent.nextSibling
+                            if (lastNewEntry is KtSimpleNameStringTemplateEntry &&
+                                lastNewEntry.expression != null &&
+                                !canPlaceAfterSimpleNameEntry(nextElement)) {
+                                lastNewEntry.replace(KtPsiFactory(expression).createBlockStringTemplateEntry(lastNewEntry.expression!!))
+                            }
+                        }
+                        parent.delete()
+                    }
+
+                    parent is KtExpression -> {
                         if (KtPsiUtil.areParenthesesNecessary(newElement, expression, parent)) {
                             return rawReplaceHandler(KtPsiFactory(expression).createExpressionByPattern("($0)", newElement))
                         }
                     }
 
-                    is KtSimpleNameStringTemplateEntry -> {
+                    parent is KtSimpleNameStringTemplateEntry -> {
                         if (newElement !is KtSimpleNameExpression) {
                             val newEntry = parent.replace(KtPsiFactory(expression).createBlockStringTemplateEntry(newElement)) as KtBlockStringTemplateEntry
                             return newEntry.getExpression()!!
diff --git a/compiler/frontend/src/org/jetbrains/kotlin/psi/psiUtil/ktPsiUtil.kt b/compiler/frontend/src/org/jetbrains/kotlin/psi/psiUtil/ktPsiUtil.kt
index ee25c02e715..e6b1fc9e8fe 100644
--- a/compiler/frontend/src/org/jetbrains/kotlin/psi/psiUtil/ktPsiUtil.kt
+++ b/compiler/frontend/src/org/jetbrains/kotlin/psi/psiUtil/ktPsiUtil.kt
@@ -36,6 +36,7 @@ import org.jetbrains.kotlin.resolve.calls.model.ArgumentMatch
 import org.jetbrains.kotlin.types.expressions.OperatorConventions
 import java.util.*
 import kotlin.test.assertTrue
+import kotlin.text.Regex
 
 // NOTE: in this file we collect only Kotlin-specific methods working with PSI and not modifying it
 
@@ -423,4 +424,11 @@ public fun KtExpression.getOutermostParenthesizerOrThis(): KtExpression {
     }?.first as KtExpression? ?: this
 }
 
-public fun PsiElement.isFunctionalExpression(): Boolean = this is KtNamedFunction && nameIdentifier == null
\ No newline at end of file
+public fun PsiElement.isFunctionalExpression(): Boolean = this is KtNamedFunction && nameIdentifier == null
+
+private val BAD_NEIGHBOUR_FOR_SIMPLE_TEMPLATE_ENTRY_PATTERN = Regex("[a-zA-Z0-9_].*")
+
+fun canPlaceAfterSimpleNameEntry(element: PsiElement?): Boolean {
+    val entryText = element?.text ?: return true
+    return !BAD_NEIGHBOUR_FOR_SIMPLE_TEMPLATE_ENTRY_PATTERN.matches(entryText)
+}
\ No newline at end of file
diff --git a/idea/src/org/jetbrains/kotlin/idea/intentions/RemoveCurlyBracesFromTemplateIntention.kt b/idea/src/org/jetbrains/kotlin/idea/intentions/RemoveCurlyBracesFromTemplateIntention.kt
index 0e1178101d3..37aa3bc165d 100644
--- a/idea/src/org/jetbrains/kotlin/idea/intentions/RemoveCurlyBracesFromTemplateIntention.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/intentions/RemoveCurlyBracesFromTemplateIntention.kt
@@ -23,15 +23,14 @@ import org.jetbrains.kotlin.psi.KtBlockStringTemplateEntry
 import org.jetbrains.kotlin.psi.KtNameReferenceExpression
 import org.jetbrains.kotlin.psi.KtPsiFactory
 import org.jetbrains.kotlin.psi.KtStringTemplateEntryWithExpression
-import java.util.regex.Pattern
+import org.jetbrains.kotlin.psi.psiUtil.canPlaceAfterSimpleNameEntry
 
 public class RemoveCurlyBracesFromTemplateInspection : IntentionBasedInspection<KtBlockStringTemplateEntry>(RemoveCurlyBracesFromTemplateIntention())
 
 public class RemoveCurlyBracesFromTemplateIntention : SelfTargetingOffsetIndependentIntention<KtBlockStringTemplateEntry>(javaClass(), "Remove curly braces") {
     override fun isApplicableTo(element: KtBlockStringTemplateEntry): Boolean {
         if (element.getExpression() !is KtNameReferenceExpression) return false
-        val nextSiblingText = element.getNextSibling()?.getText()
-        return nextSiblingText == null || !pattern.matcher(nextSiblingText).matches()
+        return canPlaceAfterSimpleNameEntry(element.nextSibling)
     }
 
     override fun applyTo(element: KtBlockStringTemplateEntry, editor: Editor) {
@@ -43,8 +42,4 @@ public class RemoveCurlyBracesFromTemplateIntention : SelfTargetingOffsetIndepen
         val newEntry = KtPsiFactory(element).createSimpleNameStringTemplateEntry(name)
         return element.replaced(newEntry)
     }
-
-    companion object {
-        private val pattern = Pattern.compile("[a-zA-Z0-9_].*")
-    }
 }
diff --git a/idea/testData/refactoring/inline/stringTemplates/addBraces.kt b/idea/testData/refactoring/inline/stringTemplates/addBraces.kt
new file mode 100644
index 00000000000..03ab1052836
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/addBraces.kt
@@ -0,0 +1,5 @@
+fun foo() {
+    val a = 1
+    val <caret>x = " $a"
+    val y = "x=${x}_"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/addBraces.kt.after b/idea/testData/refactoring/inline/stringTemplates/addBraces.kt.after
new file mode 100644
index 00000000000..a375856d39b
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/addBraces.kt.after
@@ -0,0 +1,4 @@
+fun foo() {
+    val a = 1
+    val y = "x= ${a}_"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/blockEntry.kt b/idea/testData/refactoring/inline/stringTemplates/blockEntry.kt
new file mode 100644
index 00000000000..0b2d1b6a9cb
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/blockEntry.kt
@@ -0,0 +1,5 @@
+fun foo() {
+    val a = 1
+    val <caret>x = "_$a:${a + 1}_"
+    val y = "__x=${x}__"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/blockEntry.kt.after b/idea/testData/refactoring/inline/stringTemplates/blockEntry.kt.after
new file mode 100644
index 00000000000..7088676f3a3
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/blockEntry.kt.after
@@ -0,0 +1,4 @@
+fun foo() {
+    val a = 1
+    val y = "__x=_$a:${a + 1}___"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/empty.kt b/idea/testData/refactoring/inline/stringTemplates/empty.kt
new file mode 100644
index 00000000000..6e615eac5cb
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/empty.kt
@@ -0,0 +1,4 @@
+fun foo() {
+    val <caret>x = ""
+    val y = "!!x=$x!!"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/empty.kt.after b/idea/testData/refactoring/inline/stringTemplates/empty.kt.after
new file mode 100644
index 00000000000..4ac49b5bce4
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/empty.kt.after
@@ -0,0 +1,3 @@
+fun foo() {
+    val y = "!!x=!!"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/nonEmpty.kt b/idea/testData/refactoring/inline/stringTemplates/nonEmpty.kt
new file mode 100644
index 00000000000..859aed88f81
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/nonEmpty.kt
@@ -0,0 +1,5 @@
+fun foo() {
+    val a = 1
+    val <caret>x = "_$a:${a + 1}_"
+    val y = "!!x=$x!!"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/nonEmpty.kt.after b/idea/testData/refactoring/inline/stringTemplates/nonEmpty.kt.after
new file mode 100644
index 00000000000..32749a3eda2
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/nonEmpty.kt.after
@@ -0,0 +1,4 @@
+fun foo() {
+    val a = 1
+    val y = "!!x=_$a:${a + 1}_!!"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/nonRawToRaw.kt b/idea/testData/refactoring/inline/stringTemplates/nonRawToRaw.kt
new file mode 100644
index 00000000000..247e22985c8
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/nonRawToRaw.kt
@@ -0,0 +1,4 @@
+fun foo() {
+    val <caret>x = "ab\nc"
+    val y = """x=$x"""
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/nonRawToRaw.kt.after b/idea/testData/refactoring/inline/stringTemplates/nonRawToRaw.kt.after
new file mode 100644
index 00000000000..0bf7751753e
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/nonRawToRaw.kt.after
@@ -0,0 +1,3 @@
+fun foo() {
+    val y = """x=${"ab\nc"}"""
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/rawString.kt b/idea/testData/refactoring/inline/stringTemplates/rawString.kt
new file mode 100644
index 00000000000..09d0ca5121b
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/rawString.kt
@@ -0,0 +1,7 @@
+fun foo() {
+    val a = 1
+    val <caret>x = """_
+    $a:${a + 1}
+    _"""
+    val y = """!!x=$x!!"""
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/rawString.kt.after b/idea/testData/refactoring/inline/stringTemplates/rawString.kt.after
new file mode 100644
index 00000000000..c4e7abbb634
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/rawString.kt.after
@@ -0,0 +1,6 @@
+fun foo() {
+    val a = 1
+    val y = """!!x=_
+    $a:${a + 1}
+    _!!"""
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/rawToNonRaw.kt b/idea/testData/refactoring/inline/stringTemplates/rawToNonRaw.kt
new file mode 100644
index 00000000000..8ca2c283229
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/rawToNonRaw.kt
@@ -0,0 +1,5 @@
+fun foo() {
+    val <caret>x = """ab
+    c"""
+    val y = "x=$x"
+}
\ No newline at end of file
diff --git a/idea/testData/refactoring/inline/stringTemplates/rawToNonRaw.kt.after b/idea/testData/refactoring/inline/stringTemplates/rawToNonRaw.kt.after
new file mode 100644
index 00000000000..e20ba0da300
--- /dev/null
+++ b/idea/testData/refactoring/inline/stringTemplates/rawToNonRaw.kt.after
@@ -0,0 +1,4 @@
+fun foo() {
+    val y = "x=${"""ab
+    c"""}"
+}
\ 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 9cb193e3d05..91da7c40b8f 100644
--- a/idea/tests/org/jetbrains/kotlin/idea/refactoring/inline/InlineTestGenerated.java
+++ b/idea/tests/org/jetbrains/kotlin/idea/refactoring/inline/InlineTestGenerated.java
@@ -484,4 +484,55 @@ public class InlineTestGenerated extends AbstractInlineTest {
             doTest(fileName);
         }
     }
+
+    @TestMetadata("idea/testData/refactoring/inline/stringTemplates")
+    @TestDataPath("$PROJECT_ROOT")
+    @RunWith(JUnit3RunnerWithInners.class)
+    public static class StringTemplates extends AbstractInlineTest {
+        @TestMetadata("addBraces.kt")
+        public void testAddBraces() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/stringTemplates/addBraces.kt");
+            doTest(fileName);
+        }
+
+        public void testAllFilesPresentInStringTemplates() throws Exception {
+            KotlinTestUtils.assertAllTestsPresentByMetadata(this.getClass(), new File("idea/testData/refactoring/inline/stringTemplates"), Pattern.compile("^(.+)\\.kt$"), true);
+        }
+
+        @TestMetadata("blockEntry.kt")
+        public void testBlockEntry() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/stringTemplates/blockEntry.kt");
+            doTest(fileName);
+        }
+
+        @TestMetadata("empty.kt")
+        public void testEmpty() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/stringTemplates/empty.kt");
+            doTest(fileName);
+        }
+
+        @TestMetadata("nonEmpty.kt")
+        public void testNonEmpty() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/stringTemplates/nonEmpty.kt");
+            doTest(fileName);
+        }
+
+        @TestMetadata("nonRawToRaw.kt")
+        public void testNonRawToRaw() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/stringTemplates/nonRawToRaw.kt");
+            doTest(fileName);
+        }
+
+        @TestMetadata("rawString.kt")
+        public void testRawString() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/stringTemplates/rawString.kt");
+            doTest(fileName);
+        }
+
+        @TestMetadata("rawToNonRaw.kt")
+        public void testRawToNonRaw() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("idea/testData/refactoring/inline/stringTemplates/rawToNonRaw.kt");
+            doTest(fileName);
+        }
+    }
 }