diff --git a/crates/assists/src/handlers/infer_function_return_type.rs b/crates/assists/src/handlers/infer_function_return_type.rs
index b4944a6b0bc..80864c53072 100644
--- a/crates/assists/src/handlers/infer_function_return_type.rs
+++ b/crates/assists/src/handlers/infer_function_return_type.rs
@@ -1,5 +1,5 @@
 use hir::HirDisplay;
-use syntax::{ast, AstNode, SyntaxToken, TextSize};
+use syntax::{ast, AstNode, TextRange, TextSize};
 use test_utils::mark;
 
 use crate::{AssistContext, AssistId, AssistKind, Assists};
@@ -7,7 +7,7 @@ use crate::{AssistContext, AssistId, AssistKind, Assists};
 // Assist: infer_function_return_type
 //
 // Adds the return type to a function or closure inferred from its tail expression if it doesn't have a return
-// type specified.
+// type specified. This assists is useable in a functions or closures tail expression or return type position.
 //
 // ```
 // fn foo() { 4<|>2i32 }
@@ -17,10 +17,12 @@ use crate::{AssistContext, AssistId, AssistKind, Assists};
 // fn foo() -> i32 { 42i32 }
 // ```
 pub(crate) fn infer_function_return_type(acc: &mut Assists, ctx: &AssistContext) -> Option<()> {
-    let expr = ctx.find_node_at_offset::<ast::Expr>()?;
-    let (tail_expr, insert_pos, wrap_expr) = extract_tail(expr)?;
+    let (tail_expr, builder_edit_pos, wrap_expr) = extract_tail(ctx)?;
     let module = ctx.sema.scope(tail_expr.syntax()).module()?;
-    let ty = ctx.sema.type_of_expr(&tail_expr).filter(|ty| !ty.is_unit())?;
+    let ty = ctx.sema.type_of_expr(&tail_expr)?;
+    if ty.is_unit() {
+        return None;
+    }
     let ty = ty.display_source_code(ctx.db(), module.into()).ok()?;
 
     acc.add(
@@ -28,8 +30,14 @@ pub(crate) fn infer_function_return_type(acc: &mut Assists, ctx: &AssistContext)
         "Add this function's return type",
         tail_expr.syntax().text_range(),
         |builder| {
-            let insert_pos = insert_pos.text_range().end() + TextSize::from(1);
-            builder.insert(insert_pos, &format!("-> {} ", ty));
+            match builder_edit_pos {
+                InsertOrReplace::Insert(insert_pos) => {
+                    builder.insert(insert_pos, &format!("-> {} ", ty))
+                }
+                InsertOrReplace::Replace(text_range) => {
+                    builder.replace(text_range, &format!("-> {}", ty))
+                }
+            }
             if wrap_expr {
                 mark::hit!(wrap_closure_non_block_expr);
                 // `|x| x` becomes `|x| -> T x` which is invalid, so wrap it in a block
@@ -39,34 +47,69 @@ pub(crate) fn infer_function_return_type(acc: &mut Assists, ctx: &AssistContext)
     )
 }
 
-fn extract_tail(expr: ast::Expr) -> Option<(ast::Expr, SyntaxToken, bool)> {
-    let (ret_ty, tail_expr, insert_pos, wrap_expr) =
-        if let Some(closure) = expr.syntax().ancestors().find_map(ast::ClosureExpr::cast) {
-            let (tail_expr, wrap_expr) = match closure.body()? {
+enum InsertOrReplace {
+    Insert(TextSize),
+    Replace(TextRange),
+}
+
+/// Check the potentially already specified return type and reject it or turn it into a builder command
+/// if allowed.
+fn ret_ty_to_action(ret_ty: Option<ast::RetType>, insert_pos: TextSize) -> Option<InsertOrReplace> {
+    match ret_ty {
+        Some(ret_ty) => match ret_ty.ty() {
+            Some(ast::Type::InferType(_)) | None => {
+                mark::hit!(existing_infer_ret_type);
+                mark::hit!(existing_infer_ret_type_closure);
+                Some(InsertOrReplace::Replace(ret_ty.syntax().text_range()))
+            }
+            _ => {
+                mark::hit!(existing_ret_type);
+                mark::hit!(existing_ret_type_closure);
+                None
+            }
+        },
+        None => Some(InsertOrReplace::Insert(insert_pos + TextSize::from(1))),
+    }
+}
+
+fn extract_tail(ctx: &AssistContext) -> Option<(ast::Expr, InsertOrReplace, bool)> {
+    let (tail_expr, return_type_range, action, wrap_expr) =
+        if let Some(closure) = ctx.find_node_at_offset::<ast::ClosureExpr>() {
+            let rpipe_pos = closure.param_list()?.syntax().last_token()?.text_range().end();
+            let action = ret_ty_to_action(closure.ret_type(), rpipe_pos)?;
+
+            let body = closure.body()?;
+            let body_start = body.syntax().first_token()?.text_range().start();
+            let (tail_expr, wrap_expr) = match body {
                 ast::Expr::BlockExpr(block) => (block.expr()?, false),
                 body => (body, true),
             };
-            let ret_ty = closure.ret_type();
-            let rpipe = closure.param_list()?.syntax().last_token()?;
-            (ret_ty, tail_expr, rpipe, wrap_expr)
+
+            let ret_range = TextRange::new(rpipe_pos, body_start);
+            (tail_expr, ret_range, action, wrap_expr)
         } else {
-            let func = expr.syntax().ancestors().find_map(ast::Fn::cast)?;
-            let tail_expr = func.body()?.expr()?;
-            let ret_ty = func.ret_type();
-            let rparen = func.param_list()?.r_paren_token()?;
-            (ret_ty, tail_expr, rparen, false)
+            let func = ctx.find_node_at_offset::<ast::Fn>()?;
+            let rparen_pos = func.param_list()?.r_paren_token()?.text_range().end();
+            let action = ret_ty_to_action(func.ret_type(), rparen_pos)?;
+
+            let body = func.body()?;
+            let tail_expr = body.expr()?;
+
+            let ret_range_end = body.l_curly_token()?.text_range().start();
+            let ret_range = TextRange::new(rparen_pos, ret_range_end);
+            (tail_expr, ret_range, action, false)
         };
-    if ret_ty.is_some() {
-        mark::hit!(existing_ret_type);
-        mark::hit!(existing_ret_type_closure);
+    let frange = ctx.frange.range;
+    if return_type_range.contains_range(frange) {
+        mark::hit!(cursor_in_ret_position);
+        mark::hit!(cursor_in_ret_position_closure);
+    } else if tail_expr.syntax().text_range().contains_range(frange) {
+        mark::hit!(cursor_on_tail);
+        mark::hit!(cursor_on_tail_closure);
+    } else {
         return None;
     }
-    // check whether the expr we were at is indeed the tail expression
-    if !tail_expr.syntax().text_range().contains_range(expr.syntax().text_range()) {
-        mark::hit!(not_tail_expr);
-        return None;
-    }
-    Some((tail_expr, insert_pos, wrap_expr))
+    Some((tail_expr, action, wrap_expr))
 }
 
 #[cfg(test)]
@@ -75,8 +118,65 @@ mod tests {
 
     use super::*;
 
+    #[test]
+    fn infer_return_type_specified_inferred() {
+        mark::check!(existing_infer_ret_type);
+        check_assist(
+            infer_function_return_type,
+            r#"fn foo() -> <|>_ {
+                45
+            }"#,
+            r#"fn foo() -> i32 {
+                45
+            }"#,
+        );
+    }
+
+    #[test]
+    fn infer_return_type_specified_inferred_closure() {
+        mark::check!(existing_infer_ret_type_closure);
+        check_assist(
+            infer_function_return_type,
+            r#"fn foo() {
+                || -> _ {<|>45};
+            }"#,
+            r#"fn foo() {
+                || -> i32 {45};
+            }"#,
+        );
+    }
+
+    #[test]
+    fn infer_return_type_cursor_at_return_type_pos() {
+        mark::check!(cursor_in_ret_position);
+        check_assist(
+            infer_function_return_type,
+            r#"fn foo() <|>{
+                45
+            }"#,
+            r#"fn foo() -> i32 {
+                45
+            }"#,
+        );
+    }
+
+    #[test]
+    fn infer_return_type_cursor_at_return_type_pos_closure() {
+        mark::check!(cursor_in_ret_position_closure);
+        check_assist(
+            infer_function_return_type,
+            r#"fn foo() {
+                || <|>45
+            }"#,
+            r#"fn foo() {
+                || -> i32 {45}
+            }"#,
+        );
+    }
+
     #[test]
     fn infer_return_type() {
+        mark::check!(cursor_on_tail);
         check_assist(
             infer_function_return_type,
             r#"fn foo() {
@@ -122,7 +222,6 @@ mod tests {
 
     #[test]
     fn not_applicable_non_tail_expr() {
-        mark::check!(not_tail_expr);
         check_assist_not_applicable(
             infer_function_return_type,
             r#"fn foo() {
@@ -144,6 +243,7 @@ mod tests {
 
     #[test]
     fn infer_return_type_closure_block() {
+        mark::check!(cursor_on_tail_closure);
         check_assist(
             infer_function_return_type,
             r#"fn foo() {