diff --git a/doc/whats-new.rst b/doc/whats-new.rst
index 77d6296acac..d3cc3356102 100644
--- a/doc/whats-new.rst
+++ b/doc/whats-new.rst
@@ -79,6 +79,8 @@ Bug fixes
   By `Victor Negîrneac <https://github.com/caenrigen>`_.
 - Don't allow passing ``axis`` to :py:meth:`Dataset.reduce` methods (:issue:`3510`, :pull:`4940`).
   By `Justus Magin <https://github.com/keewis>`_.
+- Convert to IndexVariable or Variable during renaming as appropriate. (:issue:`4107`, :issue:`4417`, :pull:`4108`)
+  By `Deepak Cherian <https://github.com/dcherian>`_.
 - Decode values as signed if attribute `_Unsigned = "false"` (:issue:`4954`)
   By `Tobias Kölling <https://github.com/d70-t>`_.
 
diff --git a/xarray/core/dataset.py b/xarray/core/dataset.py
index 19b3eec5f07..086e496bf39 100644
--- a/xarray/core/dataset.py
+++ b/xarray/core/dataset.py
@@ -3006,7 +3006,7 @@ def _rename_dims(self, name_dict):
 
     def _rename_indexes(self, name_dict, dims_set):
         if self._indexes is None:
-            return None
+            return {}
         indexes = {}
         for k, v in self.indexes.items():
             new_name = name_dict.get(k, k)
@@ -3024,6 +3024,24 @@ def _rename_all(self, name_dict, dims_dict):
         variables, coord_names = self._rename_vars(name_dict, dims_dict)
         dims = self._rename_dims(dims_dict)
         indexes = self._rename_indexes(name_dict, dims.keys())
+
+        # Variable could be renamed to an existing dimension name
+        # in this case, convert to IndexVariable and set indexes
+        # GH4107
+        for name in set(self.dims) & set(variables) - set(indexes):
+            variables[name] = variables[name].to_index_variable()
+            indexes[name] = variables[name].to_index()
+            coord_names.add(name)
+
+        # rename_dims was called to rename an indexed dimension
+        # the new renamed dimension is unindexed
+        # remove the old variable from indexes and convert to a base variable
+        if indexes:
+            for name, newname in dims_dict.items():
+                if name != newname and name in indexes:
+                    variables[name] = variables[name].to_base_variable()
+                    del indexes[name]
+
         return variables, coord_names, dims, indexes
 
     def rename(
diff --git a/xarray/tests/test_dataset.py b/xarray/tests/test_dataset.py
index 52df7603034..c525db63160 100644
--- a/xarray/tests/test_dataset.py
+++ b/xarray/tests/test_dataset.py
@@ -2673,6 +2673,22 @@ def test_rename_vars(self):
         with pytest.raises(ValueError):
             original.rename_vars(names_dict_bad)
 
+    def test_rename_to_dim_name(self):
+        # regression test for GH4107
+        coord_1 = xr.DataArray([1, 2], dims=["coord_1"], attrs={"attrs": True})
+        ds = xr.Dataset()
+        ds["a"] = xr.DataArray([1, 0], [coord_1])
+        obj = ds.reset_index("coord_1").rename({"coord_1_": "coord_1"})
+        assert_equal(ds, obj)
+
+        newds = (
+            ds.reset_index("coord_1")
+            .reset_coords("coord_1_")
+            .rename({"coord_1_": "coord_1"})
+        )
+        assert "coord_1" not in newds.data_vars
+        assert_equal(newds, obj)
+
     def test_rename_multiindex(self):
         mindex = pd.MultiIndex.from_tuples(
             [([1, 2]), ([3, 4])], names=["level0", "level1"]