diff --git a/src/services/formatting/formatting.ts b/src/services/formatting/formatting.ts
index 24ddabc2b2b..23a392d7718 100644
--- a/src/services/formatting/formatting.ts
+++ b/src/services/formatting/formatting.ts
@@ -1008,10 +1008,20 @@ module ts.formatting {
         return SyntaxKind.Unknown;
     }
 
-    let internedTabsIndentation: string[];
-    let internedSpacesIndentation: string[];
+    var internedSizes: { tabSize: number; indentSize: number };
+    var internedTabsIndentation: string[];
+    var internedSpacesIndentation: string[];
 
     export function getIndentationString(indentation: number, options: FormatCodeOptions): string {
+        // reset interned strings if FormatCodeOptions were changed
+        let resetInternedStrings =
+            !internedSizes || (internedSizes.tabSize !== options.TabSize || internedSizes.indentSize !== options.IndentSize);
+
+        if (resetInternedStrings) {
+            internedSizes = { tabSize: options.TabSize, indentSize: options.IndentSize };
+            internedTabsIndentation = internedSpacesIndentation = undefined;
+        }
+
         if (!options.ConvertTabsToSpaces) {
             let tabs = Math.floor(indentation / options.TabSize);
             let spaces = indentation - tabs * options.TabSize;
diff --git a/src/services/formatting/indentation.ts b/src/services/formatting/indentation.ts
deleted file mode 100644
index f6f8fc0319f..00000000000
--- a/src/services/formatting/indentation.ts
+++ /dev/null
@@ -1,54 +0,0 @@
-module ts.formatting {
-
-    var internedTabsIndentation: string[];
-    var internedSpacesIndentation: string[];
-
-    export function getIndentationString(indentation: number, options: FormatCodeOptions): string {
-        if (!options.ConvertTabsToSpaces) {
-            var tabs = Math.floor(indentation / options.TabSize);
-            var spaces = indentation - tabs * options.TabSize;
-
-            var tabString: string;
-            if (!internedTabsIndentation) {
-                internedTabsIndentation = [];
-            }
-
-            if (internedTabsIndentation[tabs] === undefined) {
-                internedTabsIndentation[tabs] = tabString = repeat('\t', tabs);
-            }
-            else {
-                tabString = internedTabsIndentation[tabs];
-            }
-
-            return spaces ? tabString + repeat(" ", spaces) : tabString;
-        }
-        else {
-            var spacesString: string;
-            var quotient = Math.floor(indentation / options.IndentSize);
-            var remainder = indentation % options.IndentSize;
-            if (!internedSpacesIndentation) {
-                internedSpacesIndentation = [];
-            }
-
-            if (internedSpacesIndentation[quotient] === undefined) {
-                spacesString = repeat(" ", options.IndentSize * quotient);
-                internedSpacesIndentation[quotient] = spacesString;
-            }
-            else {
-                spacesString = internedSpacesIndentation[quotient];
-            }
-
-            
-            return remainder ? spacesString + repeat(" ", remainder) : spacesString;
-        }
-
-        function repeat(value: string, count: number): string {
-            var s = "";
-            for (var i = 0; i < count; ++i) {
-                s += value;
-            }
-
-            return s;
-        }
-    }
-}
\ No newline at end of file
diff --git a/tests/cases/fourslash/formattingChangeSettings.ts b/tests/cases/fourslash/formattingChangeSettings.ts
new file mode 100644
index 00000000000..190de4c3e92
--- /dev/null
+++ b/tests/cases/fourslash/formattingChangeSettings.ts
@@ -0,0 +1,24 @@
+/// <reference path='fourslash.ts'/>
+
+////module M {
+/////*1*/var x=1;
+////}
+
+var originalOptions = format.copyFormatOptions();
+
+format.document();
+
+goTo.marker("1");
+verify.currentLineContentIs("    var x = 1;");
+
+var copy = format.copyFormatOptions();
+copy.TabSize = 2;
+copy.IndentSize = 2;
+
+format.setFormatOptions(copy);
+format.document();
+
+goTo.marker("1");
+verify.currentLineContentIs("  var x = 1;");
+
+format.setFormatOptions(originalOptions);
\ No newline at end of file