diff --git a/src/gt4py/next/ffront/past_to_itir.py b/src/gt4py/next/ffront/past_to_itir.py
index 628efb001c..8c320e01cd 100644
--- a/src/gt4py/next/ffront/past_to_itir.py
+++ b/src/gt4py/next/ffront/past_to_itir.py
@@ -110,7 +110,10 @@ def past_to_gtir(inp: AOT_PRG) -> stages.CompilableProgram:
             for name, descr in static_arg_descriptors.items()
             if not any(el is None for el in gtx_utils.flatten_nested_tuple(descr))  # type: ignore[arg-type]
         }
-        body = remap_symbols.RemapSymbolRefs().visit(itir_program.body, symbol_map=static_args)
+        body = [
+            remap_symbols.RemapSymbolRefs.apply(stmt, symbol_map=static_args)
+            for stmt in itir_program.body
+        ]  # type: ignore[arg-type]
         itir_program = itir.Program(
             id=itir_program.id,
             function_definitions=itir_program.function_definitions,
diff --git a/src/gt4py/next/iterator/transforms/inline_lambdas.py b/src/gt4py/next/iterator/transforms/inline_lambdas.py
index a41f74ebc1..7ac0b964a3 100644
--- a/src/gt4py/next/iterator/transforms/inline_lambdas.py
+++ b/src/gt4py/next/iterator/transforms/inline_lambdas.py
@@ -7,14 +7,14 @@
 # SPDX-License-Identifier: BSD-3-Clause
 
 import dataclasses
-from typing import Mapping, Optional, TypeVar
+from typing import Optional, TypeVar, Mapping
 
 from gt4py.eve import NodeTranslator, PreserveLocationVisitor
 from gt4py.next.iterator import ir
-from gt4py.next.iterator.ir_utils import ir_makers as im, misc as ir_misc
+from gt4py.next.iterator.ir_utils import ir_makers as im
 from gt4py.next.iterator.ir_utils.common_pattern_matcher import is_applied_lift
-from gt4py.next.iterator.transforms.remap_symbols import RemapSymbolRefs, RenameSymbols
-from gt4py.next.iterator.transforms.symbol_ref_utils import CountSymbolRefs
+from gt4py.next.iterator.transforms import symbol_ref_utils
+from gt4py.next.iterator.transforms.remap_symbols import RemapSymbolRefs
 from gt4py.next.iterator.type_system import inference as itir_inference
 
 
@@ -34,7 +34,9 @@ def inline_lambda(  # see todo above
     assert len(eligible_params) == len(node.fun.params) == len(node.args)
 
     if opcount_preserving:
-        ref_counts = CountSymbolRefs.apply(node.fun.expr, [p.id for p in node.fun.params])
+        ref_counts = symbol_ref_utils.CountSymbolRefs.apply(
+            node.fun.expr, [p.id for p in node.fun.params]
+        )
 
         for i, param in enumerate(node.fun.params):
             # TODO(tehrengruber): allow inlining more complicated zero-op expressions like ignore_shift(...)(it_sym)
@@ -64,49 +66,24 @@ def inline_lambda(  # see todo above
     if node.fun.params and not any(eligible_params):
         return node
 
-    refs: set[str] = set().union(
-        *(
-            arg.pre_walk_values().if_isinstance(ir.SymRef).getattr("id").to_set()
-            for arg, eligible in zip(node.args, eligible_params)
-            if eligible
-        )
-    )
-    syms: set[str] = node.fun.pre_walk_values().if_isinstance(ir.Sym).getattr("id").to_set()
-    clashes = refs & syms
-    fun = node.fun
-    if clashes:
-        # TODO(tehrengruber): find a better way of generating new symbols in `name_map` that don't collide with each other. E.g. this must still work:
-        # (lambda arg, arg_: (lambda arg_: ...)(arg))(a, b)  # noqa: ERA001 [commented-out-code]
-        name_map: dict[str, str] = {}
-
-        for sym in clashes:
-            name_map[sym] = ir_misc.unique_symbol(sym, refs | syms | {*name_map.values()})
-
-        # Let's rename the symbols (including params) of the function.
-        # If we would like to preserve the original param names, we could alternatively
-        # rename the eligible symrefs in `args`.
-        fun = RenameSymbols().visit(fun, name_map=name_map)
-
     symbol_map = {
-        param.id: arg
-        for param, arg, eligible in zip(fun.params, node.args, eligible_params)
+        str(param.id): arg
+        for param, arg, eligible in zip(node.fun.params, node.args, eligible_params)
         if eligible
     }
-    new_expr = RemapSymbolRefs().visit(fun.expr, symbol_map=symbol_map)
+
+    new_fun_proto = im.lambda_(
+        *(param for param, eligible in zip(node.fun.params, eligible_params) if not eligible)
+    )(node.fun.expr)
+    new_fun_proto = RemapSymbolRefs.apply(new_fun_proto, symbol_map=symbol_map)
+    new_expr = im.call(new_fun_proto)(
+        *(arg for arg, eligible in zip(node.args, eligible_params) if not eligible)
+    )
 
     if all(eligible_params):
+        new_expr = new_expr.fun.expr
         new_expr.location = node.location
-    else:
-        new_expr = ir.FunCall(
-            fun=ir.Lambda(
-                params=[
-                    param for param, eligible in zip(fun.params, eligible_params) if not eligible
-                ],
-                expr=new_expr,
-            ),
-            args=[arg for arg, eligible in zip(node.args, eligible_params) if not eligible],
-            location=node.location,
-        )
+
     for attr in ("type", "recorded_shifts", "domain"):
         if hasattr(node.annex, attr):
             setattr(new_expr.annex, attr, getattr(node.annex, attr))
diff --git a/src/gt4py/next/iterator/transforms/remap_symbols.py b/src/gt4py/next/iterator/transforms/remap_symbols.py
index 5495f63ae1..a082543089 100644
--- a/src/gt4py/next/iterator/transforms/remap_symbols.py
+++ b/src/gt4py/next/iterator/transforms/remap_symbols.py
@@ -10,6 +10,8 @@
 
 from gt4py.eve import NodeTranslator, PreserveLocationVisitor, SymbolTableTrait
 from gt4py.next.iterator import ir
+from gt4py.next.iterator.ir_utils import ir_makers as im, misc as ir_misc
+from gt4py.next.iterator.transforms import symbol_ref_utils
 from gt4py.next.iterator.type_system import inference as type_inference
 
 
@@ -17,13 +19,50 @@ class RemapSymbolRefs(PreserveLocationVisitor, NodeTranslator):
     # This pass preserves, but doesn't use the `type`, `recorded_shifts`, `domain` annex.
     PRESERVED_ANNEX_ATTRS = ("type", "recorded_shifts", "domain")
 
-    def visit_SymRef(self, node: ir.SymRef, *, symbol_map: Dict[str, ir.Node]):
+    @classmethod
+    def apply(cls, node: ir.Node, symbol_map: Dict[str, ir.Node]):
+        external_symbols = set().union(
+            *(symbol_ref_utils.collect_symbol_refs(expr) for expr in [node, *symbol_map.values()])
+        )
+        return cls().visit(node, symbol_map=symbol_map, reserved_params=external_symbols)
+
+    def visit_SymRef(
+        self, node: ir.SymRef, *, symbol_map: Dict[str, ir.Node], reserved_params: set[str]
+    ):
         return symbol_map.get(str(node.id), node)
 
-    def visit_Lambda(self, node: ir.Lambda, *, symbol_map: Dict[str, ir.Node]):
+    def visit_Lambda(
+        self, node: ir.Lambda, *, symbol_map: Dict[str, ir.Node], reserved_params: set[str]
+    ):
         params = {str(p.id) for p in node.params}
-        new_symbol_map = {k: v for k, v in symbol_map.items() if k not in params}
-        return ir.Lambda(params=node.params, expr=self.visit(node.expr, symbol_map=new_symbol_map))
+
+        clashes = params & reserved_params
+        if clashes:
+            reserved_params = {*reserved_params}
+            new_symbol_map: Dict[str, ir.Node] = {}
+            new_params: list[ir.Sym] = []
+            for param in node.params:
+                if param.id in clashes:
+                    new_param = im.sym(ir_misc.unique_symbol(param.id, reserved_params), param.type)
+                    assert new_param.id not in symbol_map
+                    new_symbol_map[param.id] = im.ref(new_param.id, param.type)
+                    reserved_params.add(new_param.id)
+                else:
+                    new_param = param
+                new_params.append(new_param)
+
+            new_symbol_map = symbol_map | new_symbol_map
+        else:
+            new_params = node.params  # keep params as is
+            new_symbol_map = symbol_map
+
+        filtered_symbol_map = {k: v for k, v in new_symbol_map.items() if k not in new_params}
+        return ir.Lambda(
+            params=new_params,
+            expr=self.visit(
+                node.expr, symbol_map=filtered_symbol_map, reserved_params=reserved_params
+            ),
+        )
 
     def generic_visit(self, node: ir.Node, **kwargs: Any):  # type: ignore[override]
         assert isinstance(node, SymbolTableTrait) == isinstance(node, ir.Lambda), (
diff --git a/tests/next_tests/unit_tests/iterator_tests/transforms_tests/test_inline_lambdas.py b/tests/next_tests/unit_tests/iterator_tests/transforms_tests/test_inline_lambdas.py
index 005e9b047c..12e140f0c7 100644
--- a/tests/next_tests/unit_tests/iterator_tests/transforms_tests/test_inline_lambdas.py
+++ b/tests/next_tests/unit_tests/iterator_tests/transforms_tests/test_inline_lambdas.py
@@ -40,6 +40,19 @@
         ),
         im.multiplies_(im.plus(2, 1), im.plus("x", "x")),
     ),
+    (
+        "name_shadowing_external",
+        im.call(im.lambda_("x")(im.lambda_("y")(im.plus("x", "y"))))(im.plus("x", "y")),
+        im.lambda_("y_")(im.plus(im.plus("x", "y"), "y_")),
+    ),
+    (
+        "renaming_collision",
+        # the `y` param of the lambda may not be renamed to `y_` as this name is already referenced
+        im.call(im.lambda_("x")(im.lambda_("y")(im.plus(im.plus("x", "y"), "y_"))))(
+            im.plus("x", "y")
+        ),
+        im.lambda_("y__")(im.plus(im.plus(im.plus("x", "y"), "y__"), "y_")),
+    ),
     (
         # ensure opcount preserving option works whether `itir.SymRef` has a type or not
         "typed_ref",