diff --git a/idea/idea-completion/testData/basic/common/primitiveCompletion/completionInLocalFunction.kt b/idea/idea-completion/testData/basic/common/primitiveCompletion/completionInLocalFunction.kt
new file mode 100644
index 00000000000..44b26f2db56
--- /dev/null
+++ b/idea/idea-completion/testData/basic/common/primitiveCompletion/completionInLocalFunction.kt
@@ -0,0 +1,17 @@
+// FIR_COMPARISON
+val topLevelVal = ""
+
+fun topLevel(topLevelArg: String) {
+    val inTopLevelVal = 10
+
+    fun local(localArg: String) {
+        val inLocalVal = 20
+        <caret>
+    }
+}
+
+// EXIST: topLevelVal
+// EXIST: topLevelArg
+// EXIST: inTopLevelVal
+// EXIST: localArg
+// EXIST: inLocalVal
\ No newline at end of file
diff --git a/idea/idea-completion/testData/basic/common/primitiveCompletion/completionInPropertyLambdaInitializer.kt b/idea/idea-completion/testData/basic/common/primitiveCompletion/completionInPropertyLambdaInitializer.kt
new file mode 100644
index 00000000000..be3d9e7bb80
--- /dev/null
+++ b/idea/idea-completion/testData/basic/common/primitiveCompletion/completionInPropertyLambdaInitializer.kt
@@ -0,0 +1,8 @@
+// FIR_COMPARISON
+val topLevelVal = ""
+
+val otherVal: () -> Unit = {
+    val foo = <caret>
+}
+
+// EXIST: topLevelVal
diff --git a/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JSBasicCompletionTestGenerated.java b/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JSBasicCompletionTestGenerated.java
index c207cdfd050..6683b7df16e 100644
--- a/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JSBasicCompletionTestGenerated.java
+++ b/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JSBasicCompletionTestGenerated.java
@@ -2273,6 +2273,16 @@ public class JSBasicCompletionTestGenerated extends AbstractJSBasicCompletionTes
                 runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/classFieldsAndFunctionsFromInnerClassExplicitReceiver.kt");
             }
 
+            @TestMetadata("completionInLocalFunction.kt")
+            public void testCompletionInLocalFunction() throws Exception {
+                runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/completionInLocalFunction.kt");
+            }
+
+            @TestMetadata("completionInPropertyLambdaInitializer.kt")
+            public void testCompletionInPropertyLambdaInitializer() throws Exception {
+                runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/completionInPropertyLambdaInitializer.kt");
+            }
+
             @TestMetadata("defaultKotlinImports.kt")
             public void testDefaultKotlinImports() throws Exception {
                 runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/defaultKotlinImports.kt");
diff --git a/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JvmBasicCompletionTestGenerated.java b/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JvmBasicCompletionTestGenerated.java
index 02139c86e48..5461a889399 100644
--- a/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JvmBasicCompletionTestGenerated.java
+++ b/idea/idea-completion/tests/org/jetbrains/kotlin/idea/completion/test/JvmBasicCompletionTestGenerated.java
@@ -2273,6 +2273,16 @@ public class JvmBasicCompletionTestGenerated extends AbstractJvmBasicCompletionT
                 runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/classFieldsAndFunctionsFromInnerClassExplicitReceiver.kt");
             }
 
+            @TestMetadata("completionInLocalFunction.kt")
+            public void testCompletionInLocalFunction() throws Exception {
+                runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/completionInLocalFunction.kt");
+            }
+
+            @TestMetadata("completionInPropertyLambdaInitializer.kt")
+            public void testCompletionInPropertyLambdaInitializer() throws Exception {
+                runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/completionInPropertyLambdaInitializer.kt");
+            }
+
             @TestMetadata("defaultKotlinImports.kt")
             public void testDefaultKotlinImports() throws Exception {
                 runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/defaultKotlinImports.kt");
diff --git a/idea/idea-fir/tests/org/jetbrains/kotlin/idea/completion/HighLevelJvmBasicCompletionTestGenerated.java b/idea/idea-fir/tests/org/jetbrains/kotlin/idea/completion/HighLevelJvmBasicCompletionTestGenerated.java
index b19cfc5d471..80fd8056e63 100644
--- a/idea/idea-fir/tests/org/jetbrains/kotlin/idea/completion/HighLevelJvmBasicCompletionTestGenerated.java
+++ b/idea/idea-fir/tests/org/jetbrains/kotlin/idea/completion/HighLevelJvmBasicCompletionTestGenerated.java
@@ -2273,6 +2273,16 @@ public class HighLevelJvmBasicCompletionTestGenerated extends AbstractHighLevelJ
                 runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/classFieldsAndFunctionsFromInnerClassExplicitReceiver.kt");
             }
 
+            @TestMetadata("completionInLocalFunction.kt")
+            public void testCompletionInLocalFunction() throws Exception {
+                runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/completionInLocalFunction.kt");
+            }
+
+            @TestMetadata("completionInPropertyLambdaInitializer.kt")
+            public void testCompletionInPropertyLambdaInitializer() throws Exception {
+                runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/completionInPropertyLambdaInitializer.kt");
+            }
+
             @TestMetadata("defaultKotlinImports.kt")
             public void testDefaultKotlinImports() throws Exception {
                 runTest("idea/idea-completion/testData/basic/common/primitiveCompletion/defaultKotlinImports.kt");
diff --git a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/utils/EnclosingDeclarationContext.kt b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/utils/EnclosingDeclarationContext.kt
index 1a2e99e53ce..91c26357110 100644
--- a/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/utils/EnclosingDeclarationContext.kt
+++ b/idea/idea-frontend-fir/src/org/jetbrains/kotlin/idea/frontend/api/fir/utils/EnclosingDeclarationContext.kt
@@ -17,7 +17,7 @@ import org.jetbrains.kotlin.psi.psiUtil.getNonStrictParentOfType
 internal sealed class EnclosingDeclarationContext {
     companion object {
         fun detect(originalFile: KtFile, positionInFakeFile: KtElement): EnclosingDeclarationContext {
-            val fakeFunction = positionInFakeFile.getNonStrictParentOfType<KtNamedFunction>()
+            val fakeFunction = positionInFakeFile.parentsOfType<KtNamedFunction>().firstOrNull { !it.isLocal }
             if (fakeFunction != null) {
                 val originalFunction = originalFile.findDeclarationOfTypeAt<KtNamedFunction>(fakeFunction.textOffset)
                     ?: error("Cannot find original function matching to ${fakeFunction.getElementTextInContext()} in $originalFile")