diff --git a/compiler/backend/src/org/jetbrains/kotlin/codegen/ExpressionCodegen.java b/compiler/backend/src/org/jetbrains/kotlin/codegen/ExpressionCodegen.java
index 6b007454e2d..af45214f35d 100644
--- a/compiler/backend/src/org/jetbrains/kotlin/codegen/ExpressionCodegen.java
+++ b/compiler/backend/src/org/jetbrains/kotlin/codegen/ExpressionCodegen.java
@@ -1447,9 +1447,6 @@ public class ExpressionCodegen extends KtVisitor<StackValue, StackValue> impleme
         leaveTasks.add(answer -> {
             int index = myFrameMap.leave(functionDescriptor);
 
-            assert !functionDescriptor.getName().isSpecial()
-                    : "Local variable should be generated only for function with name: " + localFunction.getText();
-
             String functionIndex = StringsKt.substringAfterLast(type.getInternalName(), '$', "");
             assert !functionIndex.isEmpty();
 
diff --git a/compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt b/compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt
new file mode 100644
index 00000000000..b1cc8d2e895
--- /dev/null
+++ b/compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt
@@ -0,0 +1,9 @@
+fun <T> block(block: () -> T): T = block()
+fun foo() {}
+
+fun test(): () -> Unit = block { fun() = foo() }
+
+fun box(): String {
+    test()
+    return "OK"
+}
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
index 69fad507969..a47c9e1b344 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/BlackBoxCodegenTestGenerated.java
@@ -11591,6 +11591,11 @@ public class BlackBoxCodegenTestGenerated extends AbstractBlackBoxCodegenTest {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/functionLiteralExpression.kt");
             }
 
+            @TestMetadata("insideGenericLambda.kt")
+            public void testInsideGenericLambda() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt");
+            }
+
             @TestMetadata("underscoreParameters.kt")
             public void testUnderscoreParameters() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/underscoreParameters.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
index 489662cac5c..8ca4585acbf 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/LightAnalysisModeTestGenerated.java
@@ -11591,6 +11591,11 @@ public class LightAnalysisModeTestGenerated extends AbstractLightAnalysisModeTes
                 runTest("compiler/testData/codegen/box/functions/functionExpression/functionLiteralExpression.kt");
             }
 
+            @TestMetadata("insideGenericLambda.kt")
+            public void testInsideGenericLambda() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt");
+            }
+
             @TestMetadata("underscoreParameters.kt")
             public void testUnderscoreParameters() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/underscoreParameters.kt");
diff --git a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
index 74dd1d562b3..d531e60cabb 100644
--- a/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/codegen/ir/IrBlackBoxCodegenTestGenerated.java
@@ -10471,6 +10471,11 @@ public class IrBlackBoxCodegenTestGenerated extends AbstractIrBlackBoxCodegenTes
                 runTest("compiler/testData/codegen/box/functions/functionExpression/functionLiteralExpression.kt");
             }
 
+            @TestMetadata("insideGenericLambda.kt")
+            public void testInsideGenericLambda() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt");
+            }
+
             @TestMetadata("underscoreParameters.kt")
             public void testUnderscoreParameters() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/underscoreParameters.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
index 5d6bc3f7d77..ca2ca89f035 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/ir/semantics/IrJsCodegenBoxTestGenerated.java
@@ -9016,6 +9016,11 @@ public class IrJsCodegenBoxTestGenerated extends AbstractIrJsCodegenBoxTest {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/functionLiteralExpression.kt");
             }
 
+            @TestMetadata("insideGenericLambda.kt")
+            public void testInsideGenericLambda() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt");
+            }
+
             @TestMetadata("underscoreParameters.kt")
             public void testUnderscoreParameters() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/underscoreParameters.kt");
diff --git a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
index 2ae0abe1a2e..e91a61cae49 100644
--- a/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
+++ b/js/js.tests/test/org/jetbrains/kotlin/js/test/semantics/JsCodegenBoxTestGenerated.java
@@ -10101,6 +10101,11 @@ public class JsCodegenBoxTestGenerated extends AbstractJsCodegenBoxTest {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/functionLiteralExpression.kt");
             }
 
+            @TestMetadata("insideGenericLambda.kt")
+            public void testInsideGenericLambda() throws Exception {
+                runTest("compiler/testData/codegen/box/functions/functionExpression/insideGenericLambda.kt");
+            }
+
             @TestMetadata("underscoreParameters.kt")
             public void testUnderscoreParameters() throws Exception {
                 runTest("compiler/testData/codegen/box/functions/functionExpression/underscoreParameters.kt");