diff --git a/ChangeLog.md b/ChangeLog.md
index 8fe57c25b32..82995d7bd40 100644
--- a/ChangeLog.md
+++ b/ChangeLog.md
@@ -141,6 +141,7 @@ These artifacts include extensions for the types available in the latter JDKs, s
 - [`KT-13901`](https://youtrack.jetbrains.com/issue/KT-13901) Move: Do not ignore target directory selected in the dialog (DnD mode)
 - [`KT-13904`](https://youtrack.jetbrains.com/issue/KT-13904) Move Nested Class to Upper Level: Preserve state of "Search in comments"/"Search for text occurrences" checkboxes
 - [`KT-13909`](https://youtrack.jetbrains.com/issue/KT-13909) Move Files/Directories: Fix behavior of "Open moved files in editor" checkbox
+- [`KT-14004`](https://youtrack.jetbrains.com/issue/KT-14004) Introduce Variable: Fix exception on trying to extract variable of functional type
 
 ##### New features
 
diff --git a/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/introduceVariable/KotlinVariableInplaceIntroducer.kt b/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/introduceVariable/KotlinVariableInplaceIntroducer.kt
index 37a9eaffca1..ff2ce9c9720 100644
--- a/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/introduceVariable/KotlinVariableInplaceIntroducer.kt
+++ b/idea/src/org/jetbrains/kotlin/idea/refactoring/introduce/introduceVariable/KotlinVariableInplaceIntroducer.kt
@@ -65,7 +65,7 @@ class KotlinVariableInplaceIntroducer(
         editor
 ) {
     private val suggestedNames = suggestedNames.toTypedArray()
-    private lateinit var expressionTypeCheckBox: JCheckBox
+    private var expressionTypeCheckBox: JCheckBox? = null
 
     init {
         initFormComponents {
@@ -86,22 +86,24 @@ class KotlinVariableInplaceIntroducer(
             }
 
             if (expressionType != null && !noTypeInference) {
-                expressionTypeCheckBox = NonFocusableCheckBox("Specify type explicitly")
-                expressionTypeCheckBox.isSelected = false
-                expressionTypeCheckBox.setMnemonic('t')
-                expressionTypeCheckBox.addActionListener {
-                    runWriteCommandAndRestart {
-                        updateVariableName()
-                        if (expressionTypeCheckBox.isSelected) {
-                            val renderedType = IdeDescriptorRenderers.SOURCE_CODE_SHORT_NAMES_IN_TYPES.renderType(expressionType)
-                            addedVariable.setTypeReference(KtPsiFactory(myProject).createType(renderedType))
-                        }
-                        else {
-                            addedVariable.setTypeReference(null)
+                expressionTypeCheckBox = NonFocusableCheckBox("Specify type explicitly").apply {
+                    isSelected = false
+                    setMnemonic('t')
+                    addActionListener {
+                        runWriteCommandAndRestart {
+                            updateVariableName()
+                            if (isSelected) {
+                                val renderedType = IdeDescriptorRenderers.SOURCE_CODE_SHORT_NAMES_IN_TYPES.renderType(expressionType)
+                                addedVariable.setTypeReference(KtPsiFactory(myProject).createType(renderedType))
+                            }
+                            else {
+                                addedVariable.setTypeReference(null)
+                            }
                         }
                     }
+
+                    addComponent(this)
                 }
-                addComponent(expressionTypeCheckBox)
             }
         }
     }
@@ -140,7 +142,7 @@ class KotlinVariableInplaceIntroducer(
     override fun getInitialName() = super.getInitialName().quoteIfNeeded()
 
     override fun updateTitle(variable: KtProperty?, value: String?) {
-        expressionTypeCheckBox.isEnabled = value == null || KotlinNameSuggester.isIdentifier(value)
+        expressionTypeCheckBox?.isEnabled = value == null || KotlinNameSuggester.isIdentifier(value)
         // No preview to update
     }