diff --git a/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt b/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt
index 09b6b6e2881..caac66cd984 100644
--- a/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt
+++ b/compiler/fir/checkers/checkers-component-generator/src/org/jetbrains/kotlin/fir/checkers/generator/diagnostics/FirDiagnosticsList.kt
@@ -1179,6 +1179,11 @@ object DIAGNOSTICS_LIST : DiagnosticList("FirErrors") {
         val OVERRIDE_BY_INLINE by warning<KtDeclaration>(PositioningStrategy.DECLARATION_SIGNATURE)
         
         val NON_INTERNAL_PUBLISHED_API by error<KtElement>()
+        
+        val INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE by error<KtElement>() {
+            parameter<FirExpression>("defaultValue")
+            parameter<FirValueParameterSymbol>("parameter")
+        }
 
         val REIFIED_TYPE_PARAMETER_IN_OVERRIDE by error<KtElement>(PositioningStrategy.REIFIED_MODIFIER)
 
diff --git a/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt b/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt
index bfafed29757..4652144351e 100644
--- a/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt
+++ b/compiler/fir/checkers/gen/org/jetbrains/kotlin/fir/analysis/diagnostics/FirErrors.kt
@@ -611,6 +611,7 @@ object FirErrors {
     val DECLARATION_CANT_BE_INLINED by error0<KtDeclaration>(SourceElementPositioningStrategies.DECLARATION_SIGNATURE)
     val OVERRIDE_BY_INLINE by warning0<KtDeclaration>(SourceElementPositioningStrategies.DECLARATION_SIGNATURE)
     val NON_INTERNAL_PUBLISHED_API by error0<KtElement>()
+    val INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE by error2<KtElement, FirExpression, FirValueParameterSymbol>()
     val REIFIED_TYPE_PARAMETER_IN_OVERRIDE by error0<KtElement>(SourceElementPositioningStrategies.REIFIED_MODIFIER)
     val INLINE_PROPERTY_WITH_BACKING_FIELD by error0<KtDeclaration>(SourceElementPositioningStrategies.DECLARATION_SIGNATURE)
 
diff --git a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/declaration/FirInlineDeclarationChecker.kt b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/declaration/FirInlineDeclarationChecker.kt
index 8be4f741d7f..b3e184ee703 100644
--- a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/declaration/FirInlineDeclarationChecker.kt
+++ b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/checkers/declaration/FirInlineDeclarationChecker.kt
@@ -344,7 +344,9 @@ object FirInlineDeclarationChecker : FirFunctionChecker() {
             if (param.isNoinline) continue
 
             val coneType = param.returnTypeRef.coneType
-            if (function.isSuspend && param.defaultValue != null && coneType.isSuspendFunctionType(context.session)) {
+            val isFunctionalType = coneType.isFunctionalType(context.session)
+            val defaultValue = param.defaultValue
+            if (function.isSuspend && defaultValue != null && coneType.isSuspendFunctionType(context.session)) {
                 reporter.reportOn(
                     param.source,
                     FirErrors.NOT_YET_SUPPORTED_IN_INLINE,
@@ -353,7 +355,7 @@ object FirInlineDeclarationChecker : FirFunctionChecker() {
                 )
             }
 
-            if (coneType.isNullable && coneType.isFunctionalType(context.session)) {
+            if (coneType.isNullable && isFunctionalType) {
                 reporter.reportOn(
                     param.source,
                     FirErrors.NULLABLE_INLINE_PARAMETER,
@@ -362,6 +364,16 @@ object FirInlineDeclarationChecker : FirFunctionChecker() {
                     context
                 )
             }
+
+            if (isFunctionalType && defaultValue != null && !isInlinableDefaultValue(defaultValue)) {
+                reporter.reportOn(
+                    defaultValue.source,
+                    FirErrors.INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE,
+                    defaultValue,
+                    param.symbol,
+                    context
+                )
+            }
         }
 
         if (overriddenSymbols.isNotEmpty()) {
@@ -432,6 +444,13 @@ object FirInlineDeclarationChecker : FirFunctionChecker() {
         return true
     }
 
+    private fun isInlinableDefaultValue(expression: FirExpression): Boolean =
+        expression is FirCallableReferenceAccess ||
+                expression is FirFunctionCall ||
+                expression is FirLambdaArgumentExpression ||
+                expression is FirAnonymousFunctionExpression ||
+                (expression is FirConstExpression<*> && expression.value == null) //this will be reported separately
+
     internal fun checkCallableDeclaration(declaration: FirCallableDeclaration, context: CheckerContext, reporter: DiagnosticReporter) {
         if (declaration is FirPropertyAccessor) return
         val overriddenSymbols = declaration.getOverriddenSymbols(context)
diff --git a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirDefaultErrorMessages.kt b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirDefaultErrorMessages.kt
index 504e232980f..221972f7de8 100644
--- a/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirDefaultErrorMessages.kt
+++ b/compiler/fir/checkers/src/org/jetbrains/kotlin/fir/analysis/diagnostics/FirDefaultErrorMessages.kt
@@ -230,6 +230,7 @@ import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INNER_CLASS_INSID
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INNER_CLASS_OF_GENERIC_THROWABLE_SUBCLASS
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INSTANCE_ACCESS_BEFORE_SUPER_CALL
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INTERFACE_WITH_SUPERCLASS
+import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INVALID_CHARACTERS
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INVALID_IF_AS_EXPRESSION
 import org.jetbrains.kotlin.fir.analysis.diagnostics.FirErrors.INVALID_TYPE_OF_ANNOTATION_MEMBER
@@ -938,6 +939,12 @@ class FirDefaultErrorMessages {
             map.put(REIFIED_TYPE_PARAMETER_IN_OVERRIDE, "Override by a function with reified type parameter")
             map.put(INLINE_PROPERTY_WITH_BACKING_FIELD, "Inline property cannot have backing field")
             map.put(NON_INTERNAL_PUBLISHED_API, "@PublishedApi annotation is only applicable for internal declaration")
+            map.put(
+                INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE,
+                "Invalid default value for inline parameter: ''{0}''. Only lambdas, anonymous functions, and callable references are supported",
+                FIR,
+                DECLARATION_NAME
+            )
             map.put(RESERVED_MEMBER_INSIDE_INLINE_CLASS, "Member with the name ''{0}'' is reserved for future releases", TO_STRING)
             map.put(
                 SECONDARY_CONSTRUCTOR_WITH_BODY_INSIDE_INLINE_CLASS,
diff --git a/compiler/testData/diagnostics/tests/inline/defaultLambdaInlineDisable.fir.kt b/compiler/testData/diagnostics/tests/inline/defaultLambdaInlineDisable.fir.kt
index 31910368a43..dca811d2967 100644
--- a/compiler/testData/diagnostics/tests/inline/defaultLambdaInlineDisable.fir.kt
+++ b/compiler/testData/diagnostics/tests/inline/defaultLambdaInlineDisable.fir.kt
@@ -28,7 +28,7 @@ val a = Foo()
 inline fun default8(s : () -> String = a::test) {}
 inline fun default9(s : () -> String = a::prop) {}
 
-inline fun default10(s : () -> String = object : Function0<String> {
+inline fun default10(s : () -> String = <!INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE!>object<!> : Function0<String> {
     override fun invoke(): String {
         return "FAIL"
     }
diff --git a/compiler/testData/diagnostics/tests/inline/defaultLambdaInlining.fir.kt b/compiler/testData/diagnostics/tests/inline/defaultLambdaInlining.fir.kt
index f8b7bc24d99..94a771094b0 100644
--- a/compiler/testData/diagnostics/tests/inline/defaultLambdaInlining.fir.kt
+++ b/compiler/testData/diagnostics/tests/inline/defaultLambdaInlining.fir.kt
@@ -28,7 +28,7 @@ val a = Foo()
 inline fun default8(s : () -> String = a::test) {}
 inline fun default9(s : () -> String = a::prop) {}
 
-inline fun default10(s : () -> String = object : Function0<String> {
+inline fun default10(s : () -> String = <!INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE!>object<!> : Function0<String> {
     override fun invoke(): String {
         return "FAIL"
     }
diff --git a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDataClassConverters.kt b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDataClassConverters.kt
index c913fb1c068..aea8b5ecb6e 100644
--- a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDataClassConverters.kt
+++ b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDataClassConverters.kt
@@ -3185,6 +3185,14 @@ internal val KT_DIAGNOSTIC_CONVERTER = KtDiagnosticConverterBuilder.buildConvert
             token,
         )
     }
+    add(FirErrors.INVALID_DEFAULT_FUNCTIONAL_PARAMETER_FOR_INLINE) { firDiagnostic ->
+        InvalidDefaultFunctionalParameterForInlineImpl(
+            firDiagnostic.a.source!!.psi as KtExpression,
+            firSymbolBuilder.buildSymbol(firDiagnostic.b.fir),
+            firDiagnostic as FirPsiDiagnostic,
+            token,
+        )
+    }
     add(FirErrors.REIFIED_TYPE_PARAMETER_IN_OVERRIDE) { firDiagnostic ->
         ReifiedTypeParameterInOverrideImpl(
             firDiagnostic as FirPsiDiagnostic,
diff --git a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnostics.kt b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnostics.kt
index 3da7c7a190d..03b25ca6b1a 100644
--- a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnostics.kt
+++ b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnostics.kt
@@ -2222,6 +2222,12 @@ sealed class KtFirDiagnostic<PSI : PsiElement> : KtDiagnosticWithPsi<PSI> {
         override val diagnosticClass get() = NonInternalPublishedApi::class
     }
 
+    abstract class InvalidDefaultFunctionalParameterForInline : KtFirDiagnostic<KtElement>() {
+        override val diagnosticClass get() = InvalidDefaultFunctionalParameterForInline::class
+        abstract val defaultValue: KtExpression
+        abstract val parameter: KtSymbol
+    }
+
     abstract class ReifiedTypeParameterInOverride : KtFirDiagnostic<KtElement>() {
         override val diagnosticClass get() = ReifiedTypeParameterInOverride::class
     }
diff --git a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnosticsImpl.kt b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnosticsImpl.kt
index 315b021d3ef..ee1ad62e58e 100644
--- a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnosticsImpl.kt
+++ b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/diagnostics/KtFirDiagnosticsImpl.kt
@@ -3588,6 +3588,15 @@ internal class NonInternalPublishedApiImpl(
     override val firDiagnostic: FirPsiDiagnostic by weakRef(firDiagnostic)
 }
 
+internal class InvalidDefaultFunctionalParameterForInlineImpl(
+    override val defaultValue: KtExpression,
+    override val parameter: KtSymbol,
+    firDiagnostic: FirPsiDiagnostic,
+    override val token: ValidityToken,
+) : KtFirDiagnostic.InvalidDefaultFunctionalParameterForInline(), KtAbstractFirDiagnostic<KtElement> {
+    override val firDiagnostic: FirPsiDiagnostic by weakRef(firDiagnostic)
+}
+
 internal class ReifiedTypeParameterInOverrideImpl(
     firDiagnostic: FirPsiDiagnostic,
     override val token: ValidityToken,