diff --git a/common/framework/parsers/template/TemplateParser_v2.php b/common/framework/parsers/template/TemplateParser_v2.php
index 7251ab1e0..f85f30ccc 100644
--- a/common/framework/parsers/template/TemplateParser_v2.php
+++ b/common/framework/parsers/template/TemplateParser_v2.php
@@ -1084,6 +1084,37 @@ class TemplateParser_v2
 	 */
 	protected function _convertVariableScope(string $content): string
 	{
+		// Pre-escape function declarations and closures so that variables inside them are not converted.
+		$used_vars = [];
+		$function_regexp = '#\b(function(?:\s+[a-zA-Z_][a-zA-Z0-9_]*)?)' .
+			'(\s*)(' . self::_getRegexpForParentheses(3) . ')' .
+			'(\s*)(use\s*\([^()]+\))?' .
+			'(\s*:\s*\w+)?' .
+			'(\s*)(' . self::_getRegexpForCurlyBraces(8) . ')#';
+		$content = preg_replace_callback($function_regexp, function($match) use (&$used_vars) {
+			$fn = $match[1] . $match[2] . self::_escapeVars($match[3]) .
+				$match[4] . self::_escapeVars($match[5]) .
+				$match[6] . $match[7] . self::_escapeVars($match[8]);
+			if (str_starts_with($match[5], 'use'))
+			{
+				preg_match_all('#\$([a-zA-Z_][a-zA-Z0-9_]*)#', $match[5], $uses);
+				foreach ($uses[1] as $var)
+				{
+					$used_vars[$var] = true;
+				}
+			}
+			return $fn;
+		}, $content);
+		if (count($used_vars))
+		{
+			$prefix = ' ';
+			foreach ($used_vars as $var => $unused)
+			{
+				$prefix .= self::_escapeVars('$' . $var) . ' = &$__Context->' . $var . '; ';
+			}
+			$content = $prefix . $content;
+		}
+
 		// Replace variables that need to be enclosed in curly braces, using temporary entities to prevent double-replacement.
 		$content = preg_replace_callback('#(?<!\$__Context)->\$([a-zA-Z_][a-zA-Z0-9_]*)#', function($match) {
 			return '->' . self::_escapeCurly('{') . '$__Context->' . $match[1] . self::_escapeCurly('}');
@@ -1144,6 +1175,17 @@ class TemplateParser_v2
 		return '\([^)(]*+(?:(?' . $position_in_regexp . ')[^)(]*)*+\)';
 	}
 
+	/**
+	 * Same as above, but for curly braces.
+	 *
+	 * @param int $position_in_regexp
+	 * @return string
+	 */
+	protected static function _getRegexpForCurlyBraces(int $position_in_regexp): string
+	{
+		return '\{[^}{]*+(?:(?' . $position_in_regexp . ')[^}{]*)*+\}';
+	}
+
 	/**
 	 * Escape curly braces so that they will not be interpreted as echo statements.
 	 *
diff --git a/tests/_data/template/v2example.compiled.html b/tests/_data/template/v2example.compiled.html
index 280f116af..527c51341 100644
--- a/tests/_data/template/v2example.compiled.html
+++ b/tests/_data/template/v2example.compiled.html
@@ -62,6 +62,27 @@
 	<span<?php echo $this->_v2_buildAttribute('style', ['a' => false, 'b' => false]); ?>></span>
 </div>
 
+<?php $suffix = &$__Context->suffix;
+	$__Context->employees = [
+		['name' => 'Alice', 'age' => 30],
+		['name' => 'Bob', 'age' => 25],
+		['name' => 'Charlie', 'age' => 35],
+	];
+	$__Context->suffix = '님';
+	$__Context->names = array_map(function($e, $key = 'name') use ($suffix) {
+		return $e[$key] . $suffix;
+	}, $__Context->employees);
+	function convert_names(array $names = array()): array
+	{
+		return array_map(function($name) {
+			return ucfirst($name);
+		}, $names);
+	}
+?>
+<div class="employees">
+	<?php echo $this->config->context === 'HTML' ? htmlspecialchars(implode(', ', convert_names($__Context->names)), \ENT_QUOTES, 'UTF-8', false) : $this->_v2_escape(implode(', ', convert_names($__Context->names))); ?> welcome!
+</div>
+
 <script type="text/javascript"<?php $this->config->context = 'JS'; ?>>
 	const foo = '<?php echo $this->config->context === 'HTML' ? htmlspecialchars($__Context->foo ?? '', \ENT_QUOTES, 'UTF-8', false) : $this->_v2_escape($__Context->foo ?? ''); ?>';
 	const bar = <?php echo $this->config->context === 'JS' ? json_encode($__Context->bar, self::$_json_options2) : htmlspecialchars(json_encode($__Context->bar, self::$_json_options), \ENT_QUOTES, 'UTF-8', false); ?>;
diff --git a/tests/_data/template/v2example.executed.html b/tests/_data/template/v2example.executed.html
index 063b7ac16..61bd78c00 100644
--- a/tests/_data/template/v2example.executed.html
+++ b/tests/_data/template/v2example.executed.html
@@ -58,6 +58,10 @@
 	<span></span>
 </div>
 
+<div class="employees">
+	Alice님, Bob님, Charlie님 welcome!
+</div>
+
 <script type="text/javascript">
 	const foo = 'FOOFOO\u003C\u0022FOO\u0022\u003EBAR';
 	const bar = ["Rhy","miX","is","da","BEST!"];
diff --git a/tests/_data/template/v2example.html b/tests/_data/template/v2example.html
index 7ff552d2a..2575051fa 100644
--- a/tests/_data/template/v2example.html
+++ b/tests/_data/template/v2example.html
@@ -62,6 +62,27 @@
 	<span @style(['a' => false, 'b' => false])></span>
 </div>
 
+@php
+	$employees = [
+		['name' => 'Alice', 'age' => 30],
+		['name' => 'Bob', 'age' => 25],
+		['name' => 'Charlie', 'age' => 35],
+	];
+	$suffix = '님';
+	$names = array_map(function($e, $key = 'name') use ($suffix) {
+		return $e[$key] . $suffix;
+	}, $employees);
+	function convert_names(array $names = array()): array
+	{
+		return array_map(function($name) {
+			return ucfirst($name);
+		}, $names);
+	}
+@endphp
+<div class="employees">
+	{{ implode(', ', convert_names($names)) }} welcome!
+</div>
+
 <script type="text/javascript">
 	const foo = '{{ $foo }}';
 	const bar = @json($bar);