diff --git a/idea/src/org/jetbrains/kotlin/idea/debugger/evaluate/FrameVisitor.kt b/idea/src/org/jetbrains/kotlin/idea/debugger/evaluate/FrameVisitor.kt
index d84bf39581a..dfc0a04de94 100644
--- a/idea/src/org/jetbrains/kotlin/idea/debugger/evaluate/FrameVisitor.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/debugger/evaluate/FrameVisitor.kt
@@ -56,9 +56,11 @@ class FrameVisitor(context: EvaluationContextImpl) {
                 else -> {
                     if (isInsideInlineFunctionBody(frame.visibleVariables())) {
                         val number = numberOfInlinedFunctions(frame.visibleVariables())
-                        val inlineFunVar = findLocalVariableForInlineArgument(name, number, asmType, true)
-                        if (inlineFunVar != null) {
-                            return inlineFunVar
+                        for (inlineFunctionIndex in number downTo 1) {
+                            val inlineFunVar = findLocalVariableForInlineArgument(name, inlineFunctionIndex, asmType, true)
+                            if (inlineFunVar != null) {
+                                return inlineFunVar
+                            }
                         }
                     }
 
diff --git a/idea/testData/debugger/tinyApp/outs/frameInlineArgumentInsideInlineFun.out b/idea/testData/debugger/tinyApp/outs/frameInlineArgumentInsideInlineFun.out
new file mode 100644
index 00000000000..c87f8fa8cb8
--- /dev/null
+++ b/idea/testData/debugger/tinyApp/outs/frameInlineArgumentInsideInlineFun.out
@@ -0,0 +1,57 @@
+LineBreakpoint created at frameInlineArgumentInsideInlineFun.kt:16
+!JDK_HOME!\bin\java -agentlib:jdwp=transport=dt_socket,address=!HOST_NAME!:!HOST_PORT!,suspend=y,server=n -Dfile.encoding=!FILE_ENCODING! -classpath !OUTPUT_PATH!;!KOTLIN_RUNTIME!;!CUSTOM_LIBRARY!;!RT_JAR! frameInlineArgumentInsideInlineFun.FrameInlineArgumentInsideInlineFunKt
+Connected to the target VM, address: '!HOST_NAME!:PORT_NAME!', transport: 'socket'
+frameInlineArgumentInsideInlineFun.kt:16
+Compile bytecode for element
+// KT-10674: Debugger: Evaluate Expression / Watches fail for variable/parameter captured from one inline function to another
+package frameInlineArgumentInsideInlineFun
+
+class A {
+    inline fun inlineFun(s: (Int) -> Unit) {
+        val element = 1.0
+        s(1)
+    }
+}
+
+class B {
+    inline fun foo(s: (Int) -> Unit) {
+        val element = 1
+        A().inlineFun {
+            //Breakpoint!
+            val e = element
+        }
+        s(1)
+    }
+}
+
+class C {
+    fun bar() {
+        val element = 1f
+        B().foo {
+            val e = element
+        }
+    }
+}
+
+fun main(args: Array<String>) {
+    C().bar()
+}
+
+// PRINT_FRAME
+
+// EXPRESSION: element
+// RESULT: 1: I
+ frame    = bar():16, C {frameInlineArgumentInsideInlineFun}
+   this     = this = {frameInlineArgumentInsideInlineFun.C@uniqueID}
+              - Class has no fields
+   local    = element: float = 1.0 (sp = frameInlineArgumentInsideInlineFun.kt, 13)
+   local    = this_$iv: frameInlineArgumentInsideInlineFun.B = {frameInlineArgumentInsideInlineFun.B@uniqueID} (sp = null)
+              - Class has no fields
+   local    = element$iv: int = 1 (sp = frameInlineArgumentInsideInlineFun.kt, 13)
+   local    = this_$iv$iv: frameInlineArgumentInsideInlineFun.A = {frameInlineArgumentInsideInlineFun.A@uniqueID} (sp = null)
+              - Class has no fields
+   local    = element$iv$iv: double = 1.0 (sp = frameInlineArgumentInsideInlineFun.kt, 13)
+   local    = it$iv: int = 1 (sp = null)
+Disconnected from the target VM, address: '!HOST_NAME!:PORT_NAME!', transport: 'socket'
+
+Process finished with exit code 0
diff --git a/idea/testData/debugger/tinyApp/src/evaluate/singleBreakpoint/frame/frameInlineArgumentInsideInlineFun.kt b/idea/testData/debugger/tinyApp/src/evaluate/singleBreakpoint/frame/frameInlineArgumentInsideInlineFun.kt
new file mode 100644
index 00000000000..6564a8b82c7
--- /dev/null
+++ b/idea/testData/debugger/tinyApp/src/evaluate/singleBreakpoint/frame/frameInlineArgumentInsideInlineFun.kt
@@ -0,0 +1,38 @@
+// KT-10674: Debugger: Evaluate Expression / Watches fail for variable/parameter captured from one inline function to another
+package frameInlineArgumentInsideInlineFun
+
+class A {
+    inline fun inlineFun(s: (Int) -> Unit) {
+        val element = 1.0
+        s(1)
+    }
+}
+
+class B {
+    inline fun foo(s: (Int) -> Unit) {
+        val element = 1
+        A().inlineFun {
+            //Breakpoint!
+            val e = element
+        }
+        s(1)
+    }
+}
+
+class C {
+    fun bar() {
+        val element = 1f
+        B().foo {
+            val e = element
+        }
+    }
+}
+
+fun main(args: Array<String>) {
+    C().bar()
+}
+
+// PRINT_FRAME
+
+// EXPRESSION: element
+// RESULT: 1: I
\ No newline at end of file
diff --git a/idea/tests/org/jetbrains/kotlin/idea/debugger/evaluate/KotlinEvaluateExpressionTestGenerated.java b/idea/tests/org/jetbrains/kotlin/idea/debugger/evaluate/KotlinEvaluateExpressionTestGenerated.java
index bfe6e3979b5..ccb3c44a7b0 100644
--- a/idea/tests/org/jetbrains/kotlin/idea/debugger/evaluate/KotlinEvaluateExpressionTestGenerated.java
+++ b/idea/tests/org/jetbrains/kotlin/idea/debugger/evaluate/KotlinEvaluateExpressionTestGenerated.java
@@ -513,6 +513,12 @@ public class KotlinEvaluateExpressionTestGenerated extends AbstractKotlinEvaluat
                 doSingleBreakpointTest(fileName);
             }
 
+            @TestMetadata("frameInlineArgumentInsideInlineFun.kt")
+            public void testFrameInlineArgumentInsideInlineFun() throws Exception {
+                String fileName = KotlinTestUtils.navigationMetadata("idea/testData/debugger/tinyApp/src/evaluate/singleBreakpoint/frame/frameInlineArgumentInsideInlineFun.kt");
+                doSingleBreakpointTest(fileName);
+            }
+
             @TestMetadata("frameInlineFun.kt")
             public void testFrameInlineFun() throws Exception {
                 String fileName = KotlinTestUtils.navigationMetadata("idea/testData/debugger/tinyApp/src/evaluate/singleBreakpoint/frame/frameInlineFun.kt");