diff --git a/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/LocalClassGenerator.kt b/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/LocalClassGenerator.kt
index b2713ab6655..f3b0703bb29 100644
--- a/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/LocalClassGenerator.kt
+++ b/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/LocalClassGenerator.kt
@@ -20,16 +20,17 @@ import org.jetbrains.kotlin.ir.IrStatement
 import org.jetbrains.kotlin.ir.expressions.IrBlockImpl
 import org.jetbrains.kotlin.ir.expressions.IrCallImpl
 import org.jetbrains.kotlin.ir.expressions.IrOperator
+import org.jetbrains.kotlin.psi.KtClassOrObject
 import org.jetbrains.kotlin.psi.KtObjectLiteralExpression
 import org.jetbrains.kotlin.psi.psiUtil.endOffset
 import org.jetbrains.kotlin.psi.psiUtil.startOffset
 
 class LocalClassGenerator(statementGenerator: StatementGenerator): StatementGeneratorExtension(statementGenerator) {
-    fun generateObjectLiteral(expression: KtObjectLiteralExpression): IrStatement {
-        val objectLiteralType = getInferredTypeWithImplicitCastsOrFail(expression)
-        val irBlock = IrBlockImpl(expression.startOffset, expression.endOffset, objectLiteralType, IrOperator.OBJECT_LITERAL)
+    fun generateObjectLiteral(ktObjectLiteral: KtObjectLiteralExpression): IrStatement {
+        val objectLiteralType = getInferredTypeWithImplicitCastsOrFail(ktObjectLiteral)
+        val irBlock = IrBlockImpl(ktObjectLiteral.startOffset, ktObjectLiteral.endOffset, objectLiteralType, IrOperator.OBJECT_LITERAL)
 
-        val irClass = DeclarationGenerator(statementGenerator.context).generateClassOrObjectDeclaration(expression.objectDeclaration)
+        val irClass = DeclarationGenerator(statementGenerator.context).generateClassOrObjectDeclaration(ktObjectLiteral.objectDeclaration)
         irBlock.addStatement(irClass)
 
         val objectConstructor = irClass.descriptor.unsubstitutedPrimaryConstructor ?:
@@ -44,10 +45,13 @@ class LocalClassGenerator(statementGenerator: StatementGenerator): StatementGene
             "Object literal constructor should have no value parameters: $objectConstructor"
         }
 
-        irBlock.addStatement(IrCallImpl(expression.startOffset, expression.endOffset, objectLiteralType,
+        irBlock.addStatement(IrCallImpl(ktObjectLiteral.startOffset, ktObjectLiteral.endOffset, objectLiteralType,
                                         objectConstructor, IrOperator.OBJECT_LITERAL))
 
         return irBlock
     }
 
+    fun generateLocalClass(ktClassOrObject: KtClassOrObject): IrStatement =
+            DeclarationGenerator(statementGenerator.context).generateClassOrObjectDeclaration(ktClassOrObject)
+
 }
diff --git a/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/StatementGenerator.kt b/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/StatementGenerator.kt
index e2d019f6267..4a961cf00bb 100644
--- a/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/StatementGenerator.kt
+++ b/compiler/ir/ir.psi2ir/src/org/jetbrains/kotlin/psi2ir/generators/StatementGenerator.kt
@@ -339,6 +339,9 @@ class StatementGenerator(
 
     override fun visitObjectLiteralExpression(expression: KtObjectLiteralExpression, data: Nothing?): IrStatement =
             LocalClassGenerator(this).generateObjectLiteral(expression)
+
+    override fun visitClassOrObject(classOrObject: KtClassOrObject, data: Nothing?): IrStatement =
+            LocalClassGenerator(this).generateLocalClass(classOrObject)
 }
 
 abstract class StatementGeneratorExtension(val statementGenerator: StatementGenerator) : GeneratorWithScope {
diff --git a/compiler/testData/ir/irText/classes/localClasses.kt b/compiler/testData/ir/irText/classes/localClasses.kt
new file mode 100644
index 00000000000..88a307cb76a
--- /dev/null
+++ b/compiler/testData/ir/irText/classes/localClasses.kt
@@ -0,0 +1,6 @@
+fun outer() {
+    class LocalClass {
+        fun foo() {}
+    }
+    LocalClass().foo()
+}
\ No newline at end of file
diff --git a/compiler/testData/ir/irText/classes/localClasses.txt b/compiler/testData/ir/irText/classes/localClasses.txt
new file mode 100644
index 00000000000..f5aefc751e9
--- /dev/null
+++ b/compiler/testData/ir/irText/classes/localClasses.txt
@@ -0,0 +1,10 @@
+FILE /localClasses.kt
+  FUN public fun outer(): kotlin.Unit
+    BLOCK_BODY
+      CLASS CLASS LocalClass
+        FUN public constructor LocalClass()
+          BLOCK_BODY
+        FUN public final fun foo(): kotlin.Unit
+          BLOCK_BODY
+      CALL .foo type=kotlin.Unit operator=null
+        $this: CALL .<init> type=outer.LocalClass operator=null
diff --git a/compiler/tests/org/jetbrains/kotlin/ir/IrTextTestCaseGenerated.java b/compiler/tests/org/jetbrains/kotlin/ir/IrTextTestCaseGenerated.java
index a45e0aa3754..75545fc8021 100644
--- a/compiler/tests/org/jetbrains/kotlin/ir/IrTextTestCaseGenerated.java
+++ b/compiler/tests/org/jetbrains/kotlin/ir/IrTextTestCaseGenerated.java
@@ -85,6 +85,12 @@ public class IrTextTestCaseGenerated extends AbstractIrTextTestCase {
             doTest(fileName);
         }
 
+        @TestMetadata("localClasses.kt")
+        public void testLocalClasses() throws Exception {
+            String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/ir/irText/classes/localClasses.kt");
+            doTest(fileName);
+        }
+
         @TestMetadata("objectLiteralExpressions.kt")
         public void testObjectLiteralExpressions() throws Exception {
             String fileName = KotlinTestUtils.navigationMetadata("compiler/testData/ir/irText/classes/objectLiteralExpressions.kt");