diff --git a/src/diffusers/pipelines/stable_diffusion/pipeline_stable_diffusion_inpaint.py b/src/diffusers/pipelines/stable_diffusion/pipeline_stable_diffusion_inpaint.py
index 077a7b0748d9..abcc7fba6e8a 100644
--- a/src/diffusers/pipelines/stable_diffusion/pipeline_stable_diffusion_inpaint.py
+++ b/src/diffusers/pipelines/stable_diffusion/pipeline_stable_diffusion_inpaint.py
@@ -5,7 +5,6 @@
 import torch
 
 import PIL
-from tqdm.auto import tqdm
 from transformers import CLIPFeatureExtractor, CLIPTextModel, CLIPTokenizer
 
 from ...configuration_utils import FrozenDict
@@ -17,30 +16,24 @@
 from .safety_checker import StableDiffusionSafetyChecker
 
 
-logger = logging.get_logger(__name__)
+logger = logging.get_logger(__name__)  # pylint: disable=invalid-name
 
 
-def preprocess_image(image):
-    w, h = image.size
-    w, h = map(lambda x: x - x % 32, (w, h))  # resize to integer multiple of 32
-    image = image.resize((w, h), resample=PIL.Image.LANCZOS)
-    image = np.array(image).astype(np.float32) / 255.0
+def prepare_mask_and_masked_image(image, mask):
+    image = np.array(image.convert("RGB"))
     image = image[None].transpose(0, 3, 1, 2)
-    image = torch.from_numpy(image)
-    return 2.0 * image - 1.0
-
-
-def preprocess_mask(mask):
-    mask = mask.convert("L")
-    w, h = mask.size
-    w, h = map(lambda x: x - x % 32, (w, h))  # resize to integer multiple of 32
-    mask = mask.resize((w // 8, h // 8), resample=PIL.Image.NEAREST)
-    mask = np.array(mask).astype(np.float32) / 255.0
-    mask = np.tile(mask, (4, 1, 1))
-    mask = mask[None].transpose(0, 1, 2, 3)  # what does this step do?
-    mask = 1 - mask  # repaint white, keep black
+    image = torch.from_numpy(image).to(dtype=torch.float32) / 127.5 - 1.0
+
+    mask = np.array(mask.convert("L"))
+    mask = mask.astype(np.float32) / 255.0
+    mask = mask[None, None]
+    mask[mask < 0.5] = 0
+    mask[mask >= 0.5] = 1
     mask = torch.from_numpy(mask)
-    return mask
+
+    masked_image = image * (mask < 0.5)
+
+    return mask, masked_image
 
 
 class StableDiffusionInpaintPipeline(DiffusionPipeline):
@@ -82,6 +75,7 @@ def __init__(
         feature_extractor: CLIPFeatureExtractor,
     ):
         super().__init__()
+
         if hasattr(scheduler.config, "steps_offset") and scheduler.config.steps_offset != 1:
             deprecation_message = (
                 f"The configuration file of this scheduler: {scheduler} is outdated. `steps_offset`"
@@ -140,22 +134,24 @@ def disable_attention_slicing(self):
         Disable sliced attention computation. If `enable_attention_slicing` was previously invoked, this method will go
         back to computing attention in one step.
         """
-        # set slice_size = `None` to disable `set_attention_slice`
+        # set slice_size = `None` to disable `attention slicing`
         self.enable_attention_slicing(None)
 
     @torch.no_grad()
     def __call__(
         self,
         prompt: Union[str, List[str]],
-        init_image: Union[torch.FloatTensor, PIL.Image.Image],
+        image: Union[torch.FloatTensor, PIL.Image.Image],
         mask_image: Union[torch.FloatTensor, PIL.Image.Image],
-        strength: float = 0.8,
-        num_inference_steps: Optional[int] = 50,
-        guidance_scale: Optional[float] = 7.5,
+        height: int = 512,
+        width: int = 512,
+        num_inference_steps: int = 50,
+        guidance_scale: float = 7.5,
         negative_prompt: Optional[Union[str, List[str]]] = None,
         num_images_per_prompt: Optional[int] = 1,
-        eta: Optional[float] = 0.0,
+        eta: float = 0.0,
         generator: Optional[torch.Generator] = None,
+        latents: Optional[torch.FloatTensor] = None,
         output_type: Optional[str] = "pil",
         return_dict: bool = True,
         callback: Optional[Callable[[int, int, torch.FloatTensor], None]] = None,
@@ -168,22 +164,21 @@ def __call__(
         Args:
             prompt (`str` or `List[str]`):
                 The prompt or prompts to guide the image generation.
-            init_image (`torch.FloatTensor` or `PIL.Image.Image`):
-                `Image`, or tensor representing an image batch, that will be used as the starting point for the
-                process. This is the image whose masked region will be inpainted.
-            mask_image (`torch.FloatTensor` or `PIL.Image.Image`):
-                `Image`, or tensor representing an image batch, to mask `init_image`. White pixels in the mask will be
-                replaced by noise and therefore repainted, while black pixels will be preserved. If `mask_image` is a
-                PIL image, it will be converted to a single channel (luminance) before use. If it's a tensor, it should
-                contain one color channel (L) instead of 3, so the expected shape would be `(B, H, W, 1)`.
-            strength (`float`, *optional*, defaults to 0.8):
-                Conceptually, indicates how much to inpaint the masked area. Must be between 0 and 1. When `strength`
-                is 1, the denoising process will be run on the masked area for the full number of iterations specified
-                in `num_inference_steps`. `init_image` will be used as a reference for the masked area, adding more
-                noise to that region the larger the `strength`. If `strength` is 0, no inpainting will occur.
+            image (`PIL.Image.Image`):
+                `Image`, or tensor representing an image batch which will be inpainted, *i.e.* parts of the image will
+                be masked out with `mask_image` and repainted according to `prompt`.
+            mask_image (`PIL.Image.Image`):
+                `Image`, or tensor representing an image batch, to mask `image`. White pixels in the mask will be
+                repainted, while black pixels will be preserved. If `mask_image` is a PIL image, it will be converted
+                to a single channel (luminance) before use. If it's a tensor, it should contain one color channel (L)
+                instead of 3, so the expected shape would be `(B, H, W, 1)`.
+            height (`int`, *optional*, defaults to 512):
+                The height in pixels of the generated image.
+            width (`int`, *optional*, defaults to 512):
+                The width in pixels of the generated image.
             num_inference_steps (`int`, *optional*, defaults to 50):
-                The reference number of denoising steps. More denoising steps usually lead to a higher quality image at
-                the expense of slower inference. This parameter will be modulated by `strength`, as explained above.
+                The number of denoising steps. More denoising steps usually lead to a higher quality image at the
+                expense of slower inference.
             guidance_scale (`float`, *optional*, defaults to 7.5):
                 Guidance scale as defined in [Classifier-Free Diffusion Guidance](https://arxiv.org/abs/2207.12598).
                 `guidance_scale` is defined as `w` of equation 2. of [Imagen
@@ -201,6 +196,10 @@ def __call__(
             generator (`torch.Generator`, *optional*):
                 A [torch generator](https://pytorch.org/docs/stable/generated/torch.Generator.html) to make generation
                 deterministic.
+            latents (`torch.FloatTensor`, *optional*):
+                Pre-generated noisy latents, sampled from a Gaussian distribution, to be used as inputs for image
+                generation. Can be used to tweak the same generation with different prompts. If not provided, a latents
+                tensor will ge generated by sampling using the supplied random `generator`.
             output_type (`str`, *optional*, defaults to `"pil"`):
                 The output format of the generate image. Choose between
                 [PIL](https://pillow.readthedocs.io/en/stable/): `PIL.Image.Image` or `np.array`.
@@ -221,7 +220,6 @@ def __call__(
             list of `bool`s denoting whether the corresponding generated image likely represents "not-safe-for-work"
             (nsfw) content, according to the `safety_checker`.
         """
-        # TODO(Suraj) - adapt to your use case
 
         if isinstance(prompt, str):
             batch_size = 1
@@ -230,8 +228,8 @@ def __call__(
         else:
             raise ValueError(f"`prompt` has to be of type `str` or `list` but is {type(prompt)}")
 
-        if strength < 0 or strength > 1:
-            raise ValueError(f"The value of strength should in [0.0, 1.0] but is {strength}")
+        if height % 8 != 0 or width % 8 != 0:
+            raise ValueError(f"`height` and `width` have to be divisible by 8 but are {height} and {width}.")
 
         if (callback_steps is None) or (
             callback_steps is not None and (not isinstance(callback_steps, int) or callback_steps <= 0)
@@ -241,9 +239,6 @@ def __call__(
                 f" {type(callback_steps)}."
             )
 
-        # set timesteps
-        self.scheduler.set_timesteps(num_inference_steps)
-
         # get prompt text embeddings
         text_inputs = self.tokenizer(
             prompt,
@@ -262,8 +257,10 @@ def __call__(
             text_input_ids = text_input_ids[:, : self.tokenizer.model_max_length]
         text_embeddings = self.text_encoder(text_input_ids.to(self.device))[0]
 
-        # duplicate text embeddings for each generation per prompt
-        text_embeddings = text_embeddings.repeat_interleave(num_images_per_prompt, dim=0)
+        # duplicate text embeddings for each generation per prompt, using mps friendly method
+        bs_embed, seq_len, _ = text_embeddings.shape
+        text_embeddings = text_embeddings.repeat(1, num_images_per_prompt, 1)
+        text_embeddings = text_embeddings.view(bs_embed * num_images_per_prompt, seq_len, -1)
 
         # here `guidance_scale` is defined analog to the guidance weight `w` of equation (2)
         # of the Imagen paper: https://arxiv.org/pdf/2205.11487.pdf . `guidance_scale = 1`
@@ -300,50 +297,78 @@ def __call__(
             )
             uncond_embeddings = self.text_encoder(uncond_input.input_ids.to(self.device))[0]
 
-            # duplicate unconditional embeddings for each generation per prompt
-            uncond_embeddings = uncond_embeddings.repeat_interleave(batch_size * num_images_per_prompt, dim=0)
+            # duplicate unconditional embeddings for each generation per prompt, using mps friendly method
+            seq_len = uncond_embeddings.shape[1]
+            uncond_embeddings = uncond_embeddings.repeat(batch_size, num_images_per_prompt, 1)
+            uncond_embeddings = uncond_embeddings.view(batch_size * num_images_per_prompt, seq_len, -1)
 
             # For classifier free guidance, we need to do two forward passes.
             # Here we concatenate the unconditional and text embeddings into a single batch
             # to avoid doing two forward passes
             text_embeddings = torch.cat([uncond_embeddings, text_embeddings])
 
-        # preprocess image
-        if not isinstance(init_image, torch.FloatTensor):
-            init_image = preprocess_image(init_image)
-
-        # encode the init image into latents and scale the latents
+        # get the initial random noise unless the user supplied it
+        # Unlike in other pipelines, latents need to be generated in the target device
+        # for 1-to-1 results reproducibility with the CompVis implementation.
+        # However this currently doesn't work in `mps`.
+        num_channels_latents = self.vae.config.latent_channels
+        latents_shape = (batch_size * num_images_per_prompt, num_channels_latents, height // 8, width // 8)
         latents_dtype = text_embeddings.dtype
-        init_image = init_image.to(device=self.device, dtype=latents_dtype)
-        init_latent_dist = self.vae.encode(init_image).latent_dist
-        init_latents = init_latent_dist.sample(generator=generator)
-        init_latents = 0.18215 * init_latents
+        if latents is None:
+            if self.device.type == "mps":
+                # randn does not exist on mps
+                latents = torch.randn(latents_shape, generator=generator, device="cpu", dtype=latents_dtype).to(
+                    self.device
+                )
+            else:
+                latents = torch.randn(latents_shape, generator=generator, device=self.device, dtype=latents_dtype)
+        else:
+            if latents.shape != latents_shape:
+                raise ValueError(f"Unexpected latents shape, got {latents.shape}, expected {latents_shape}")
+            latents = latents.to(self.device)
+
+        # prepare mask and masked_image
+        mask, masked_image = prepare_mask_and_masked_image(image, mask_image)
+        mask = mask.to(device=self.device, dtype=text_embeddings.dtype)
+        masked_image = masked_image.to(device=self.device, dtype=text_embeddings.dtype)
 
-        # Expand init_latents for batch_size and num_images_per_prompt
-        init_latents = torch.cat([init_latents] * batch_size * num_images_per_prompt, dim=0)
-        init_latents_orig = init_latents
+        # resize the mask to latents shape as we concatenate the mask to the latents
+        mask = torch.nn.functional.interpolate(mask, size=(height // 8, width // 8))
+
+        # encode the mask image into latents space so we can concatenate it to the latents
+        masked_image_latents = self.vae.encode(masked_image).latent_dist.sample(generator=generator)
+        masked_image_latents = 0.18215 * masked_image_latents
+
+        # duplicate mask and masked_image_latents for each generation per prompt, using mps friendly method
+        mask = mask.repeat(num_images_per_prompt, 1, 1, 1)
+        masked_image_latents = masked_image_latents.repeat(num_images_per_prompt, 1, 1, 1)
+
+        mask = torch.cat([mask] * 2) if do_classifier_free_guidance else mask
+        masked_image_latents = (
+            torch.cat([masked_image_latents] * 2) if do_classifier_free_guidance else masked_image_latents
+        )
 
-        # preprocess mask
-        if not isinstance(mask_image, torch.FloatTensor):
-            mask_image = preprocess_mask(mask_image)
-        mask_image = mask_image.to(device=self.device, dtype=latents_dtype)
-        mask = torch.cat([mask_image] * batch_size * num_images_per_prompt)
+        num_channels_mask = mask.shape[1]
+        num_channels_masked_image = masked_image_latents.shape[1]
 
-        # check sizes
-        if not mask.shape == init_latents.shape:
-            raise ValueError("The mask and init_image should be the same size!")
+        if num_channels_latents + num_channels_mask + num_channels_masked_image != self.unet.config.in_channels:
+            raise ValueError(
+                f"Incorrect configuration settings! The config of `pipeline.unet`: {self.unet.config} expects"
+                f" {self.unet.config.in_channels} but received `num_channels_latents`: {num_channels_latents} +"
+                f" `num_channels_mask`: {num_channels_mask} + `num_channels_masked_image`: {num_channels_masked_image}"
+                f" = {num_channels_latents+num_channels_masked_image+num_channels_mask}. Please verify the config of"
+                " `pipeline.unet` or your `mask_image` or `image` input."
+            )
 
-        # get the original timestep using init_timestep
-        offset = self.scheduler.config.get("steps_offset", 0)
-        init_timestep = int(num_inference_steps * strength) + offset
-        init_timestep = min(init_timestep, num_inference_steps)
+        # set timesteps
+        self.scheduler.set_timesteps(num_inference_steps)
 
-        timesteps = self.scheduler.timesteps[-init_timestep]
-        timesteps = torch.tensor([timesteps] * batch_size * num_images_per_prompt, device=self.device)
+        # Some schedulers like PNDM have timesteps as arrays
+        # It's more optimized to move all timesteps to correct device beforehand
+        timesteps_tensor = self.scheduler.timesteps.to(self.device)
 
-        # add noise to latents using the timesteps
-        noise = torch.randn(init_latents.shape, generator=generator, device=self.device, dtype=latents_dtype)
-        init_latents = self.scheduler.add_noise(init_latents, noise, timesteps)
+        # scale the initial noise by the standard deviation required by the scheduler
+        latents = latents * self.scheduler.init_noise_sigma
 
         # prepare extra kwargs for the scheduler step, since not all schedulers have the same signature
         # eta (η) is only used with the DDIMScheduler, it will be ignored for other schedulers.
@@ -354,17 +379,13 @@ def __call__(
         if accepts_eta:
             extra_step_kwargs["eta"] = eta
 
-        latents = init_latents
-
-        t_start = max(num_inference_steps - init_timestep + offset, 0)
-
-        # Some schedulers like PNDM have timesteps as arrays
-        # It's more optimized to move all timesteps to correct device beforehand
-        timesteps = self.scheduler.timesteps[t_start:].to(self.device)
-
-        for i, t in tqdm(enumerate(timesteps)):
+        for i, t in enumerate(self.progress_bar(timesteps_tensor)):
             # expand the latents if we are doing classifier free guidance
             latent_model_input = torch.cat([latents] * 2) if do_classifier_free_guidance else latents
+
+            # concat latents, mask, masked_image_latents in the channel dimension
+            latent_model_input = torch.cat([latent_model_input, mask, masked_image_latents], dim=1)
+
             latent_model_input = self.scheduler.scale_model_input(latent_model_input, t)
 
             # predict the noise residual
@@ -377,10 +398,6 @@ def __call__(
 
             # compute the previous noisy sample x_t -> x_t-1
             latents = self.scheduler.step(noise_pred, t, latents, **extra_step_kwargs).prev_sample
-            # masking
-            init_latents_proper = self.scheduler.add_noise(init_latents_orig, noise, torch.tensor([t]))
-
-            latents = (init_latents_proper * mask) + (latents * (1 - mask))
 
             # call the callback, if provided
             if callback is not None and i % callback_steps == 0:
@@ -390,13 +407,17 @@ def __call__(
         image = self.vae.decode(latents).sample
 
         image = (image / 2 + 0.5).clamp(0, 1)
-        image = image.cpu().permute(0, 2, 3, 1).numpy()
+
+        # we always cast to float32 as this does not cause significant overhead and is compatible with bfloa16
+        image = image.cpu().permute(0, 2, 3, 1).float().numpy()
 
         if self.safety_checker is not None:
             safety_checker_input = self.feature_extractor(self.numpy_to_pil(image), return_tensors="pt").to(
                 self.device
             )
-            image, has_nsfw_concept = self.safety_checker(images=image, clip_input=safety_checker_input.pixel_values)
+            image, has_nsfw_concept = self.safety_checker(
+                images=image, clip_input=safety_checker_input.pixel_values.to(text_embeddings.dtype)
+            )
         else:
             has_nsfw_concept = None
 
diff --git a/tests/test_pipelines.py b/tests/test_pipelines.py
index 44811eeb0367..e40d01e198e1 100644
--- a/tests/test_pipelines.py
+++ b/tests/test_pipelines.py
@@ -46,6 +46,7 @@
     ScoreSdeVeScheduler,
     StableDiffusionImg2ImgPipeline,
     StableDiffusionInpaintPipeline,
+    StableDiffusionInpaintPipelineLegacy,
     StableDiffusionPipeline,
     UNet2DConditionModel,
     UNet2DModel,
@@ -189,6 +190,21 @@ def dummy_cond_unet(self):
         )
         return model
 
+    @property
+    def dummy_cond_unet_inpaint(self):
+        torch.manual_seed(0)
+        model = UNet2DConditionModel(
+            block_out_channels=(32, 64),
+            layers_per_block=2,
+            sample_size=32,
+            in_channels=9,
+            out_channels=4,
+            down_block_types=("DownBlock2D", "CrossAttnDownBlock2D"),
+            up_block_types=("CrossAttnUpBlock2D", "UpBlock2D"),
+            cross_attention_dim=32,
+        )
+        return model
+
     @property
     def dummy_vq_model(self):
         torch.manual_seed(0)
@@ -897,7 +913,7 @@ def test_stable_diffusion_img2img_k_lms(self):
         assert np.abs(image_slice.flatten() - expected_slice).max() < 1e-2
         assert np.abs(image_from_tuple_slice.flatten() - expected_slice).max() < 1e-2
 
-    def test_stable_diffusion_inpaint(self):
+    def test_stable_diffusion_inpaint_legacy(self):
         device = "cpu"  # ensure determinism for the device-dependent torch.Generator
         unet = self.dummy_cond_unet
         scheduler = PNDMScheduler(skip_prk_steps=True)
@@ -910,7 +926,7 @@ def test_stable_diffusion_inpaint(self):
         mask_image = Image.fromarray(np.uint8(image + 4)).convert("RGB").resize((128, 128))
 
         # make sure here that pndm scheduler skips prk
-        sd_pipe = StableDiffusionInpaintPipeline(
+        sd_pipe = StableDiffusionInpaintPipelineLegacy(
             unet=unet,
             scheduler=scheduler,
             vae=vae,
@@ -956,7 +972,66 @@ def test_stable_diffusion_inpaint(self):
         assert np.abs(image_slice.flatten() - expected_slice).max() < 1e-2
         assert np.abs(image_from_tuple_slice.flatten() - expected_slice).max() < 1e-2
 
-    def test_stable_diffusion_inpaint_negative_prompt(self):
+    def test_stable_diffusion_inpaint(self):
+        device = "cpu"  # ensure determinism for the device-dependent torch.Generator
+        unet = self.dummy_cond_unet_inpaint
+        scheduler = PNDMScheduler(skip_prk_steps=True)
+        vae = self.dummy_vae
+        bert = self.dummy_text_encoder
+        tokenizer = CLIPTokenizer.from_pretrained("hf-internal-testing/tiny-random-clip")
+
+        image = self.dummy_image.cpu().permute(0, 2, 3, 1)[0]
+        init_image = Image.fromarray(np.uint8(image)).convert("RGB").resize((128, 128))
+        mask_image = Image.fromarray(np.uint8(image + 4)).convert("RGB").resize((128, 128))
+
+        # make sure here that pndm scheduler skips prk
+        sd_pipe = StableDiffusionInpaintPipeline(
+            unet=unet,
+            scheduler=scheduler,
+            vae=vae,
+            text_encoder=bert,
+            tokenizer=tokenizer,
+            safety_checker=None,
+            feature_extractor=None,
+        )
+        sd_pipe = sd_pipe.to(device)
+        sd_pipe.set_progress_bar_config(disable=None)
+
+        prompt = "A painting of a squirrel eating a burger"
+        generator = torch.Generator(device=device).manual_seed(0)
+        output = sd_pipe(
+            [prompt],
+            generator=generator,
+            guidance_scale=6.0,
+            num_inference_steps=2,
+            output_type="np",
+            image=init_image,
+            mask_image=mask_image,
+        )
+
+        image = output.images
+
+        generator = torch.Generator(device=device).manual_seed(0)
+        image_from_tuple = sd_pipe(
+            [prompt],
+            generator=generator,
+            guidance_scale=6.0,
+            num_inference_steps=2,
+            output_type="np",
+            image=init_image,
+            mask_image=mask_image,
+            return_dict=False,
+        )[0]
+
+        image_slice = image[0, -3:, -3:, -1]
+        image_from_tuple_slice = image_from_tuple[0, -3:, -3:, -1]
+
+        assert image.shape == (1, 128, 128, 3)
+        expected_slice = np.array([0.5075, 0.4485, 0.4558, 0.5369, 0.5369, 0.5236, 0.5127, 0.4983, 0.4776])
+        assert np.abs(image_slice.flatten() - expected_slice).max() < 1e-2
+        assert np.abs(image_from_tuple_slice.flatten() - expected_slice).max() < 1e-2
+
+    def test_stable_diffusion_inpaint_legacy_negative_prompt(self):
         device = "cpu"  # ensure determinism for the device-dependent torch.Generator
         unet = self.dummy_cond_unet
         scheduler = PNDMScheduler(skip_prk_steps=True)
@@ -969,7 +1044,7 @@ def test_stable_diffusion_inpaint_negative_prompt(self):
         mask_image = Image.fromarray(np.uint8(image + 4)).convert("RGB").resize((128, 128))
 
         # make sure here that pndm scheduler skips prk
-        sd_pipe = StableDiffusionInpaintPipeline(
+        sd_pipe = StableDiffusionInpaintPipelineLegacy(
             unet=unet,
             scheduler=scheduler,
             vae=vae,
@@ -1122,7 +1197,7 @@ def test_stable_diffusion_img2img_num_images_per_prompt(self):
 
         assert images.shape == (batch_size * num_images_per_prompt, 32, 32, 3)
 
-    def test_stable_diffusion_inpaint_num_images_per_prompt(self):
+    def test_stable_diffusion_inpaint_legacy_num_images_per_prompt(self):
         device = "cpu"
         unet = self.dummy_cond_unet
         scheduler = PNDMScheduler(skip_prk_steps=True)
@@ -1135,7 +1210,7 @@ def test_stable_diffusion_inpaint_num_images_per_prompt(self):
         mask_image = Image.fromarray(np.uint8(image + 4)).convert("RGB").resize((128, 128))
 
         # make sure here that pndm scheduler skips prk
-        sd_pipe = StableDiffusionInpaintPipeline(
+        sd_pipe = StableDiffusionInpaintPipelineLegacy(
             unet=unet,
             scheduler=scheduler,
             vae=vae,
@@ -1274,15 +1349,15 @@ def test_stable_diffusion_img2img_fp16(self):
 
     @unittest.skipIf(torch_device != "cuda", "This test requires a GPU")
     def test_stable_diffusion_inpaint_fp16(self):
-        """Test that stable diffusion inpaint works with fp16"""
-        unet = self.dummy_cond_unet
+        """Test that stable diffusion inpaint_legacy works with fp16"""
+        unet = self.dummy_cond_unet_inpaint
         scheduler = PNDMScheduler(skip_prk_steps=True)
         vae = self.dummy_vae
         bert = self.dummy_text_encoder
         tokenizer = CLIPTokenizer.from_pretrained("hf-internal-testing/tiny-random-clip")
 
         image = self.dummy_image.cpu().permute(0, 2, 3, 1)[0]
-        init_image = Image.fromarray(np.uint8(image)).convert("RGB")
+        init_image = Image.fromarray(np.uint8(image)).convert("RGB").resize((128, 128))
         mask_image = Image.fromarray(np.uint8(image + 4)).convert("RGB").resize((128, 128))
 
         # put models in fp16
@@ -1297,8 +1372,8 @@ def test_stable_diffusion_inpaint_fp16(self):
             vae=vae,
             text_encoder=bert,
             tokenizer=tokenizer,
-            safety_checker=self.dummy_safety_checker,
-            feature_extractor=self.dummy_extractor,
+            safety_checker=None,
+            feature_extractor=None,
         )
         sd_pipe = sd_pipe.to(torch_device)
         sd_pipe.set_progress_bar_config(disable=None)
@@ -1310,11 +1385,11 @@ def test_stable_diffusion_inpaint_fp16(self):
             generator=generator,
             num_inference_steps=2,
             output_type="np",
-            init_image=init_image,
+            image=init_image,
             mask_image=mask_image,
         ).images
 
-        assert image.shape == (1, 32, 32, 3)
+        assert image.shape == (1, 128, 128, 3)
 
 
 class PipelineTesterMixin(unittest.TestCase):
@@ -1924,6 +1999,90 @@ def test_stable_diffusion_img2img_pipeline_k_lms(self):
     @slow
     @unittest.skipIf(torch_device == "cpu", "Stable diffusion is supposed to run on GPU")
     def test_stable_diffusion_inpaint_pipeline(self):
+        init_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/overture-creations-5sI6fQgYIuo.png"
+        )
+        mask_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/overture-creations-5sI6fQgYIuo_mask.png"
+        )
+        expected_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/yellow_cat_sitting_on_a_park_bench.png"
+        )
+        expected_image = np.array(expected_image, dtype=np.float32) / 255.0
+
+        model_id = "fusing/sd-inpaint-temp"
+        pipe = StableDiffusionInpaintPipeline.from_pretrained(
+            model_id,
+            safety_checker=self.dummy_safety_checker,
+        )
+        pipe.to(torch_device)
+        pipe.set_progress_bar_config(disable=None)
+        pipe.enable_attention_slicing()
+
+        prompt = "Face of a yellow cat, high resolution, sitting on a park bench"
+
+        generator = torch.Generator(device=torch_device).manual_seed(0)
+        output = pipe(
+            prompt=prompt,
+            image=init_image,
+            mask_image=mask_image,
+            generator=generator,
+            output_type="np",
+        )
+        image = output.images[0]
+
+        assert image.shape == (512, 512, 3)
+        assert np.abs(expected_image - image).max() < 1e-2
+
+    @slow
+    @unittest.skipIf(torch_device == "cpu", "Stable diffusion is supposed to run on GPU")
+    def test_stable_diffusion_inpaint_pipeline_fp16(self):
+        init_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/overture-creations-5sI6fQgYIuo.png"
+        )
+        mask_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/overture-creations-5sI6fQgYIuo_mask.png"
+        )
+        expected_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/yellow_cat_sitting_on_a_park_bench.png"
+        )
+        expected_image = np.array(expected_image, dtype=np.float32) / 255.0
+
+        model_id = "fusing/sd-inpaint-temp"
+        pipe = StableDiffusionInpaintPipeline.from_pretrained(
+            model_id,
+            revision="fp16",
+            torch_dtype=torch.float16,
+            safety_checker=None,
+        )
+        pipe.to(torch_device)
+        pipe.set_progress_bar_config(disable=None)
+        pipe.enable_attention_slicing()
+
+        prompt = "Face of a yellow cat, high resolution, sitting on a park bench"
+
+        generator = torch.Generator(device=torch_device).manual_seed(0)
+        output = pipe(
+            prompt=prompt,
+            image=init_image,
+            mask_image=mask_image,
+            generator=generator,
+            output_type="np",
+        )
+        image = output.images[0]
+
+        assert image.shape == (512, 512, 3)
+        assert np.abs(expected_image - image).max() < 1e-2
+
+    @slow
+    @unittest.skipIf(torch_device == "cpu", "Stable diffusion is supposed to run on GPU")
+    def test_stable_diffusion_inpaint_legacy_pipeline(self):
         init_image = load_image(
             "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
             "/in_paint/overture-creations-5sI6fQgYIuo.png"
@@ -1966,7 +2125,49 @@ def test_stable_diffusion_inpaint_pipeline(self):
 
     @slow
     @unittest.skipIf(torch_device == "cpu", "Stable diffusion is supposed to run on GPU")
-    def test_stable_diffusion_inpaint_pipeline_k_lms(self):
+    def test_stable_diffusion_inpaint_pipeline_pndm(self):
+        init_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/overture-creations-5sI6fQgYIuo.png"
+        )
+        mask_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/overture-creations-5sI6fQgYIuo_mask.png"
+        )
+        expected_image = load_image(
+            "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
+            "/in_paint/yellow_cat_sitting_on_a_park_bench_pndm.png"
+        )
+        expected_image = np.array(expected_image, dtype=np.float32) / 255.0
+
+        pndm = PNDMScheduler(beta_start=0.00085, beta_end=0.012, beta_schedule="scaled_linear", skip_prk_steps=True)
+        model_id = "fusing/sd-inpaint-temp"
+        pipe = StableDiffusionInpaintPipeline.from_pretrained(
+            model_id, safety_checker=self.dummy_safety_checker, scheduler=pndm
+        )
+        pipe.to(torch_device)
+        pipe.set_progress_bar_config(disable=None)
+        pipe.enable_attention_slicing()
+
+        prompt = "Face of a yellow cat, high resolution, sitting on a park bench"
+
+        generator = torch.Generator(device=torch_device).manual_seed(0)
+        output = pipe(
+            prompt=prompt,
+            image=init_image,
+            mask_image=mask_image,
+            generator=generator,
+            output_type="np",
+        )
+        image = output.images[0]
+
+        assert image.shape == (512, 512, 3)
+        assert np.abs(expected_image - image).max() < 1e-2
+
+    @slow
+    @unittest.skipIf(torch_device == "cpu", "Stable diffusion is supposed to run on GPU")
+    def test_stable_diffusion_inpaint_legacy_pipeline_k_lms(self):
+        # TODO(Anton, Patrick) - I think we can remove this test soon
         init_image = load_image(
             "https://huggingface.co/datasets/hf-internal-testing/diffusers-images/resolve/main"
             "/in_paint/overture-creations-5sI6fQgYIuo.png"
@@ -2199,7 +2400,7 @@ def test_callback_fn(step: int, timestep: int, latents: torch.FloatTensor) -> No
 
     @slow
     @unittest.skipIf(torch_device == "cpu", "Stable diffusion is supposed to run on GPU")
-    def test_stable_diffusion_inpaint_intermediate_state(self):
+    def test_stable_diffusion_inpaint_legacy_intermediate_state(self):
         number_of_steps = 0
 
         def test_callback_fn(step: int, timestep: int, latents: torch.FloatTensor) -> None: