diff --git a/backend/src/main/java/com/griddynamics/genesis/template/dsl/groovy/transformations/exceptions/DSLSyntaxException.java b/backend/src/main/java/com/griddynamics/genesis/template/dsl/groovy/transformations/exceptions/DSLSyntaxException.java
new file mode 100644
index 000000000..6f319a23e
--- /dev/null
+++ b/backend/src/main/java/com/griddynamics/genesis/template/dsl/groovy/transformations/exceptions/DSLSyntaxException.java
@@ -0,0 +1,8 @@
+package com.griddynamics.genesis.template.dsl.groovy.transformations.exceptions;
+
+
+public class DSLSyntaxException extends Exception {
+    public DSLSyntaxException(String message) {
+        super(message);
+    }
+}
diff --git a/backend/src/main/java/com/griddynamics/genesis/template/dsl/groovy/transformations/exceptions/MacroParametersException.java b/backend/src/main/java/com/griddynamics/genesis/template/dsl/groovy/transformations/exceptions/MacroParametersException.java
new file mode 100644
index 000000000..7bd8f1562
--- /dev/null
+++ b/backend/src/main/java/com/griddynamics/genesis/template/dsl/groovy/transformations/exceptions/MacroParametersException.java
@@ -0,0 +1,8 @@
+package com.griddynamics.genesis.template.dsl.groovy.transformations.exceptions;
+
+
+public class MacroParametersException extends DSLSyntaxException {
+    public MacroParametersException(String message) {
+        super(message);
+    }
+}
diff --git a/backend/src/main/scala/com/griddynamics/genesis/service/impl/GroovyTemplateService.scala b/backend/src/main/scala/com/griddynamics/genesis/service/impl/GroovyTemplateService.scala
index ad6db89f7..fe9a5c4f8 100755
--- a/backend/src/main/scala/com/griddynamics/genesis/service/impl/GroovyTemplateService.scala
+++ b/backend/src/main/scala/com/griddynamics/genesis/service/impl/GroovyTemplateService.scala
@@ -48,6 +48,7 @@ import org.codehaus.groovy.control.CompilerConfiguration
 import org.codehaus.groovy.control.customizers.ASTTransformationCustomizer
 import support.VariablesSupport
 import com.griddynamics.genesis.template.dsl.groovy.transformations.{MacroExpand, PhaseContainer, Context}
+import scala.tools.ant.sabbus.CompilationFailure
 
 @RemoteGateway("groovy template service")
 class GroovyTemplateService(val templateRepoService : TemplateRepoService,
@@ -156,7 +157,8 @@ class GroovyTemplateService(val templateRepoService : TemplateRepoService,
       groovyShell.evaluate(body)
       projectId.foreach (evaluateIncludes(_, templateDecl.includes, groovyShell))
     } catch {
-      case e: GroovyRuntimeException => throw new IllegalStateException("can't process template", e)
+      case compilation: CompilationFailure => throw new IllegalStateException("Conpilation error: " + compilation.message, compilation)
+      case e: GroovyRuntimeException => throw new IllegalStateException("can't process template: " + e.getMessage, e)
     }
     templateDecl.bodies.headOption.map { body => DslDelegate(body).to(builder).newTemplate() }
   }
diff --git a/backend/src/main/scala/com/griddynamics/genesis/template/dsl/groovy/transformations/MacroASTTransformation.scala b/backend/src/main/scala/com/griddynamics/genesis/template/dsl/groovy/transformations/MacroASTTransformation.scala
index ddcf783ff..64170bac7 100644
--- a/backend/src/main/scala/com/griddynamics/genesis/template/dsl/groovy/transformations/MacroASTTransformation.scala
+++ b/backend/src/main/scala/com/griddynamics/genesis/template/dsl/groovy/transformations/MacroASTTransformation.scala
@@ -3,12 +3,14 @@ package com.griddynamics.genesis.template.dsl.groovy.transformations
 import org.codehaus.groovy.transform.{ASTTransformation, GroovyASTTransformation}
 import org.codehaus.groovy.control.{SourceUnit, CompilePhase}
 import com.griddynamics.genesis.util.Logging
-import org.codehaus.groovy.ast.{CodeVisitorSupport, ASTNode}
+import org.codehaus.groovy.ast.{Parameter, CodeVisitorSupport, ASTNode}
 import org.codehaus.groovy.ast.expr._
 import scala.collection.mutable
 import org.codehaus.groovy.ast.stmt.{ExpressionStatement, Statement, BlockStatement}
 import java.util
 import scala.collection.JavaConversions._
+import com.griddynamics.genesis.template.dsl.groovy.transformations.exceptions.MacroParametersException
+import org.codehaus.groovy.control.messages.SimpleMessage
 
 @GroovyASTTransformation(phase = CompilePhase.CONVERSION)
 class MacroASTTransformation extends ASTTransformation with Logging {
@@ -16,21 +18,171 @@ class MacroASTTransformation extends ASTTransformation with Logging {
     log.trace(s"Inside a macros transformer: ${nodes.length}")
     val methods = source.getAST.getStatementBlock.getStatements
     val it = methods.iterator().next()
-    val collector = new MacroCollector
+    val collector = new MacroCollector(source)
     it.visit(new NameMatchArgumentTransformer("template", collector))
     if (collector.macros.size > 0) {
-      methods.iterator().next().visit(new MacroExpandVisitor(collector.macros.toMap))
+      val replacementMap = new mutable.HashMap[Statement, Expression]()
+      log.trace(s"Found ${collector.macros.size} macros")
+      methods.iterator().next().visit(new MacroExpandVisitor(collector.macros.toMap, replacementMap, source))
     }
+    log.trace("Done")
   }
 }
 
-class MacroExpandVisitor(val macrodefs: Map[String, ClosureExpression]) extends CodeVisitorSupport with Logging {
+trait SourceReporting {
+  def source: SourceUnit
+  def error[B](message: String)(value: B) = {
+    source.getErrorCollector.addError(new SimpleMessage(message, "", source))
+    value
+  }
+}
+
+class ApplyVariablesVisitor(values: Map[String, Expression], replacements: mutable.Map[Statement, Expression]) extends CodeVisitorSupport with ExpressionTransformer
+  with Logging {
+  override def visitExpressionStatement(statement: ExpressionStatement) {
+    val expression: Expression = statement.getExpression
+    //expression.visit(this)
+    val toChange: Expression = expression
+    val newExpression: Expression = toChange.transformExpression(this)
+    statement.setExpression(newExpression)
+    super.visitExpressionStatement(statement)
+  }
+
+
+  override def visitMapEntryExpression(expression: MapEntryExpression) {
+    val key: Expression = expression.getKeyExpression
+    val value: Expression = expression.getValueExpression
+    expression.setKeyExpression(transform(key))
+    expression.setValueExpression(transform(value))
+    super.visitMapEntryExpression(expression)
+  }
+
+  override def visitBinaryExpression(expression: BinaryExpression) {
+    expression.setLeftExpression(transform(expression.getLeftExpression))
+    expression.setRightExpression(transform(expression.getRightExpression))
+    super.visitBinaryExpression(expression)
+  }
+
+  def transform(expression: Expression): Expression = {
+    expression match {
+      case variable: VariableExpression => {
+        values.get(variable.getName).getOrElse(variable)
+      }
+      case constant: ConstantExpression if constant.getText.startsWith("$") =>
+        values.get(constant.getText).getOrElse(constant)
+      case other => other
+    }
+  }
+}
 
+class MacroExpandVisitor(val macrodefs: Map[String, Macro], replacements: mutable.Map[Statement,Expression], val source: SourceUnit) extends CodeVisitorSupport with Logging with SourceReporting {
   val nameExtract: PartialFunction[Expression, String] = {
     case call if call.isInstanceOf[MethodCallExpression] => call.asInstanceOf[MethodCallExpression].getMethodAsString
   }
+  private def substitute(code: Macro, call: MethodCallExpression): Statement = {
+    val arguments: Expression = call.getArguments
+    //possible variants: ArgumentListExpression, Map
+    val passed: Seq[PassedParameter] = arguments match {
+      case list: ArgumentListExpression => list.getExpressions.zipWithIndex.map({case (expr, index) => new PositionedParameter(index, expr)}).toSeq
+      case tuple: TupleExpression => tuple.getExpressions.flatMap(e => e match {
+        case named: NamedArgumentListExpression => {
+          named.getMapEntryExpressions.map(expr => expr.getKeyExpression match {
+            case constant: ConstantExpression => Some(NamedParameter(constant.getText, expr.getValueExpression))
+            case other => error("Only constants allowed in macro named arguments")(None)
+          })
+        }
+      }).flatten
+      case other => error("Macro parameters can be passed as comma-separated list or as named pairs")(Seq())
+    }
+    //apply
+    val values: Map[String, Option[Expression]] = code.parameters.zipWithIndex.map({case ((name, value), idx) => {
+      val found = passed.find({
+        case named: NamedParameter => named.name == name
+        case pos: PositionedParameter => pos.position == idx
+      }).map(_.value).orElse(value)
+      (name, found)
+    }}).toMap
+    val unsassigned = values.collect({case (name, value) if value.isEmpty || value.get == null => name})
+    if (unsassigned.size > 0) {
+      error(s"Some arguments for macro `${code.name}` were not assigned and they don't have default value: " + unsassigned.mkString(", "))(code.code)
+    } else {
+      applyArguments(values.map({case (name, expr) => (name, expr.get)}), code.code)
+    }
+  }
+
+  private def applyArguments(values: Map[String, Expression], code: BlockStatement) : BlockStatement = {
+    val visitor = new ApplyVariablesVisitor(values, replacements)
+    log.debug(s"Applying variables $values")
+    val copy = copyBlock(code)
+    log.trace(s"Initial code is: $code")
+    copy.visit(visitor)
+    log.debug(s"Copy with expanded variables: $copy")
+    copy
+  }
 
-  def replaceStatement(statement: BlockStatement, expression: ExpressionStatement): Statement = {
+  private def copyBlock(original: BlockStatement): BlockStatement = {
+    val bs = new BlockStatement()
+    addBlockToBlock(original, bs)
+    bs
+  }
+
+  private def addBlockToBlock(source: BlockStatement, target: BlockStatement) {
+    source.getStatements.foreach(addStatement(target))
+  }
+
+  private val copy: PartialFunction[Expression, Expression] = {
+    case variable: VariableExpression => new VariableExpression(variable.getName)
+    case constant: ConstantExpression => new ConstantExpression(constant.getText)
+    case binary: BinaryExpression => new BinaryExpression(copy(binary.getLeftExpression), binary.getOperation,
+      copy(binary.getRightExpression))
+    case closure: ClosureExpression => copyClosureExpression(closure)
+    case arguments: ArgumentListExpression => new ArgumentListExpression(arguments.getExpressions.map(copy))
+    case mapEntry: MapEntryExpression => new MapEntryExpression(copy(mapEntry.getKeyExpression), copy(mapEntry.getValueExpression))
+  }
+
+  private def copyClosureExpression(closure: ClosureExpression): ClosureExpression = {
+    def copyParameters (closure: ClosureExpression) = {
+        closure.getParameters.map(p => new Parameter(p.getType, p.getName, copy(p.getInitialExpression)))
+    }
+    closure.getCode match {
+      case bs: BlockStatement => new ClosureExpression(copyParameters(closure), copyBlock(bs))
+    }
+  }
+
+  private def addBinaryExpression(be: BinaryExpression, bs: BlockStatement) = {
+    bs.addStatement(new ExpressionStatement(copy(be)))
+  }
+
+  private def addMethodCall(objectExpr: Expression, method: String, arguments: Expression, statement: BlockStatement) {
+     val newExpr = new MethodCallExpression(objectExpr, method, copy(arguments))
+     statement.addStatement(new ExpressionStatement(newExpr))
+  }
+
+  private def addMapExpression(map: MapExpression, statement: BlockStatement) {
+    val copies = map.getMapEntryExpressions.map(entry => {
+       copy(entry).asInstanceOf[MapEntryExpression]
+    })
+    val newExpr = new MapExpression(copies.toList)
+    statement.addStatement(new ExpressionStatement(newExpr))
+  }
+
+  private def addStatement(blockStatement: BlockStatement)(statement: Statement) {
+     statement match {
+       case bs: BlockStatement => addBlockToBlock(bs, blockStatement)
+       case es: ExpressionStatement => {
+         val expr: Expression = es.getExpression
+         expr match {
+           case constant: ConstantExpression => blockStatement.addStatement(es)
+           case de: DeclarationExpression => blockStatement.addStatement(es)
+           case be: BinaryExpression => addBinaryExpression(be, blockStatement)
+           case method: MethodCallExpression => addMethodCall(method.getObjectExpression, method.getMethodAsString, method.getArguments, blockStatement)
+           case map: MapExpression => addMapExpression(map, blockStatement)
+         }
+       }
+     }
+  }
+
+  private def replaceStatement(statement: BlockStatement, expression: ExpressionStatement): Statement = {
     val initialStatements: util.List[Statement] = statement.getStatements
     val position = initialStatements.indexOf(expression)
     expression.getExpression match {
@@ -38,10 +190,12 @@ class MacroExpandVisitor(val macrodefs: Map[String, ClosureExpression]) extends
         val key: String = nameExtract(expression.getExpression)
         log.trace(s"Expanding call of $key at position $position")
         macrodefs.get(key).map(e => {
-          initialStatements.set(position, e.getCode)
-        }) orElse(throw new IllegalArgumentException(s"Macro $key not found anywhere in template"))
+          val code: Statement = if (e.parameters.isEmpty) e.code else substitute(e, mce)
+          initialStatements.set(position, code)
+          code
+        }) orElse error(s"Macro $key not found anywhere in template")(None)
       case other =>
-        throw new IllegalArgumentException("Macro call must have a form of function call: " + expression.getExpression)
+        error("Macro call must have a form of function call: " + expression.getExpression)_
     }
     val cleared = initialStatements.filterNot(_.getStatementLabel == "macro")
     new BlockStatement(cleared, statement.getVariableScope)
@@ -84,8 +238,23 @@ class MacroExpandVisitor(val macrodefs: Map[String, ClosureExpression]) extends
   }
 }
 
-class MacroCollector extends ExpressionTransformer with Logging {
-  var macros: mutable.Map[String, ClosureExpression] = new mutable.HashMap[String, ClosureExpression]()
+case class Macro(name: String, parameters: List[Macro.ParameterDefinition], code: BlockStatement) {
+  val parametersMap = parameters.toMap
+  val zippedMap = parameters.zipWithIndex.map({case (definition,index) => (index,definition)}).toMap
+}
+
+sealed trait PassedParameter {
+  def value: Expression
+}
+case class NamedParameter(name: String, value: Expression) extends PassedParameter
+case class PositionedParameter(position: Int, value: Expression) extends PassedParameter
+
+object Macro {
+  type ParameterDefinition = (String, Option[Expression])
+}
+
+class MacroCollector(val source: SourceUnit) extends ExpressionTransformer with Logging with SourceReporting {
+  var macros: mutable.Map[String, Macro] = new mutable.HashMap[String, Macro]()
   def transform(expression: Expression) : Expression = {
     expression match {
       case a: ClosureExpression => {
@@ -121,19 +290,33 @@ class MacroCollector extends ExpressionTransformer with Logging {
   }
 
   def saveExpr(expression: MethodCallExpression) {
-    def parseArgurmentList(mapExpr: NamedArgumentListExpression): (String, ClosureExpression) = {
+    def parseArgumentList(mapExpr: NamedArgumentListExpression): Option[(String, ClosureExpression)] = {
       val top = mapExpr.getMapEntryExpressions.iterator().next()
       val key: String = top.getKeyExpression.asInstanceOf[ConstantExpression].getValue.toString
-      val closure = top.getValueExpression.asInstanceOf[ClosureExpression]
-      (key, closure)
+      top.getValueExpression match {
+        case closure: ClosureExpression => Some(key, closure)
+        case other => error(s"Macro body must be a closure: $key; actual $other")(None)
+      }
+    }
+    def parseMacro(name: String, closure: ClosureExpression): Option[Macro] = {
+      val parameters = closure.getParameters.map(parameter => {
+        new Macro.ParameterDefinition(parameter.getName, Some(parameter.getInitialExpression))
+      })
+      closure.getCode match {
+        case bs: BlockStatement => Some(Macro(name, parameters.toList, closure.getCode.asInstanceOf[BlockStatement]))
+        case other => error(s"Macro body must be a block statement: $name; actual: $other")(None)
+      }
+
     }
-    val (name, body) = expression.getArguments match {
+    val nameAndCode: Option[(String, ClosureExpression)] = expression.getArguments match {
       case mapExpr: NamedArgumentListExpression =>
-        parseArgurmentList(mapExpr)
+        parseArgumentList(mapExpr)
       case tuple: TupleExpression =>
-        parseArgurmentList(tuple.getExpression(0).asInstanceOf[NamedArgumentListExpression])
+        tuple.getExpression(0) match {
+          case arguments: NamedArgumentListExpression => parseArgumentList(arguments)
+        }
     }
-    macros(name) = body
+    nameAndCode.flatMap ({case (name,body) => parseMacro(name,body) }) map (result => macros(result.name) = result)
   }
 
   def evalStatement(statement: Statement): Boolean = {
diff --git a/backend/src/test/resources/groovy/Macros.genesis b/backend/src/test/resources/groovy/Macros.genesis
index cefd07fbc..788ea97d6 100644
--- a/backend/src/test/resources/groovy/Macros.genesis
+++ b/backend/src/test/resources/groovy/Macros.genesis
@@ -5,13 +5,36 @@ template {
     createWorkflow("create")
     destroyWorkflow("destroy")
 
+    def MY_CONSTANT = "Set from constant"
 
-    defmacro "create_steps": {
+    defmacro "create_steps": { $message = "default" ->
+        1 + 2
         teststep {
-            text = "test from macro"
+            text = $message
         }
     }
 
+    defmacro "simple": {
+        teststep {
+            text = MY_CONSTANT
+        }
+    }
+
+    defmacro "map": { $key, $mapValue ->
+        withMap {
+            text = "Test"
+            map = { [ $key: $mapValue ] }
+        }
+    }
+
+    defmacro "bad_require": { $message ->
+        require {
+            $message { 1 == 2 }
+            "Oops again" { 2 == 1 }
+        }
+
+    }
+
     workflow("create") {
         steps {
             teststep {
@@ -23,12 +46,22 @@ template {
         }
     }
 
+    workflow("maps") {
+        steps {
+           macro:map("operation", "subst")
+        }
+    }
+
     workflow("macros") {
+        macro:bad_require("Oops")
         steps {
             teststep {
-                text = "It was here"
+                text = "Static"
             }
+            macro:create_steps("Passed from macro call")
+            macro:create_steps($message: "Set with map")
             macro:create_steps()
+            macro:simple()
         }
     }
 
diff --git a/backend/src/test/scala/com/griddynamics/genesis/service/impl/MacrosTest.scala b/backend/src/test/scala/com/griddynamics/genesis/service/impl/MacrosTest.scala
index 5e14a2631..617ec646f 100644
--- a/backend/src/test/scala/com/griddynamics/genesis/service/impl/MacrosTest.scala
+++ b/backend/src/test/scala/com/griddynamics/genesis/service/impl/MacrosTest.scala
@@ -13,12 +13,18 @@ import com.griddynamics.genesis.template.support.DatabagDataSourceFactory
 import com.griddynamics.genesis.cache.NullCacheManager
 import com.griddynamics.genesis.template.VersionedTemplate
 import com.griddynamics.genesis.api
-import com.griddynamics.genesis.plugin.StepBuilder
+import com.griddynamics.genesis.plugin.{StepBuilderFactory, StepBuilder}
+import com.griddynamics.genesis.service.TemplateDefinition
+import com.griddynamics.genesis.api.Failure
+import com.griddynamics.genesis.workflow.Step
+import scala.beans.BeanProperty
+import scala.collection.mutable
+import scala.collection.JavaConversions._
 
 
 class MacrosTest extends AssertionsForJUnit with MockitoSugar with DSLTestUniverse with Logging {
   val templateService = new GroovyTemplateService(templateRepoService,
-    List(new DoNothingStepBuilderFactory), new DefaultConversionService,
+    List(new DoNothingStepBuilderFactory, new StepWithMapFactory), new DefaultConversionService,
     Seq(new ListVarDSFactory, new DependentListVarDSFactory,
       new DatabagDataSourceFactory(databagRepository)), databagRepository, configService, NullCacheManager)
 
@@ -28,13 +34,55 @@ class MacrosTest extends AssertionsForJUnit with MockitoSugar with DSLTestUniver
   when(configService.get(Matchers.any(), Matchers.any())).thenReturn(Some(new api.Configuration(Some(0), "", 0, None, Map())))
 
   @Test
-  def testPhaseApplied() {
-    val createWorkflow = templateService.findTemplate(0, "Macros", "0.1", 0).flatMap(_.getWorkflow("macros")).get
-    val steps = createWorkflow.embody(Map())
-    expectResult(2)(steps.regular.size)
+  def testStepsInserted() {
+    val template: Option[TemplateDefinition] = templateService.findTemplate(0, "Macros", "0.1", 0)
+    val workflow = template.flatMap(_.getWorkflow("macros")).get
+    val steps = workflow.embody(Map())
+    expectResult(5)(steps.regular.size)
     val initialPhase: Option[StepBuilder] = steps.regular.find(_.phase == "auto_0")
+    val secondPhase: Option[StepBuilder] = steps.regular.find(_.phase == "auto_1")
     assert(initialPhase.isDefined)
     assert(initialPhase.get.getPrecedingPhases.isEmpty)
+    assert(secondPhase.isDefined)
+    assert(secondPhase.get.getPrecedingPhases.contains("auto_0"))
+    steps.regular.zip(Seq("Static", "Passed from macro call",
+        "Set with map", "default", "Set from constant")).map({
+      case (step, message) => step.newStep.actualStep match {
+        case nothing: DoNothingStep => expectResult(message)(nothing.name)
+      }
+    })
+  }
+
+  @Test
+  def testFullRequireFromMacro() {
+    val template: Option[TemplateDefinition] = templateService.findTemplate(0, "Macros", "0.1", 0)
+    assert(template.isDefined)
+    val result = template.map(_.getValidWorkflow("macros")).get
+    expectResult(Failure(compoundServiceErrors = Seq("Oops", "Oops again")))(result)
+  }
+
+  @Test
+  def testMacroWithMap() {
+    val template: Option[TemplateDefinition] = templateService.findTemplate(0, "Macros", "0.1", 0)
+    val result = template.get.getWorkflow("maps").get
+    val steps = result.embody(Map())
+    val values: Map[String, String] = steps.regular(0).newStep.actualStep.asInstanceOf[StepWithMap].values
+    expectResult(Map("operation" -> "subst"))(values)
+  }
+}
+
+case class StepWithMap(name: String, values: Map[String,String]) extends Step {
+  override def stepDescription = "Best step ever!"
+}
+
+class StepWithMapFactory extends StepBuilderFactory {
+  val stepName = "withMap"
+
+  def newStepBuilder = new StepBuilder {
+    @BeanProperty var text: String = _
+    @BeanProperty var map: java.util.Map[String, String] = _
+
+    def getDetails = StepWithMap(text, map.toMap)
   }
 }