diff --git a/compiler/forget/packages/babel-plugin-react-forget/src/SSA/EliminateRedundantPhi.ts b/compiler/forget/packages/babel-plugin-react-forget/src/SSA/EliminateRedundantPhi.ts
index 427e7f8f4a..07559fd8e6 100644
--- a/compiler/forget/packages/babel-plugin-react-forget/src/SSA/EliminateRedundantPhi.ts
+++ b/compiler/forget/packages/babel-plugin-react-forget/src/SSA/EliminateRedundantPhi.ts
@@ -27,9 +27,13 @@ import {
  * and phis rewrite all their identifiers based on this table. The algorithm loops over the CFG repeatedly
  * until there are no new rewrites: for a CFG without back-edges it completes in a single pass.
  */
-export function eliminateRedundantPhi(fn: HIRFunction): void {
+export function eliminateRedundantPhi(
+  fn: HIRFunction,
+  sharedRewrites?: Map<Identifier, Identifier>
+): void {
   const ir = fn.body;
-  const rewrites: Map<Identifier, Identifier> = new Map();
+  const rewrites: Map<Identifier, Identifier> =
+    sharedRewrites != null ? sharedRewrites : new Map();
 
   // Whether or the CFG has a back-edge (a loop). We determine this dynamically
   // during the first iteration over the CFG by recording which blocks were already
@@ -102,6 +106,13 @@ export function eliminateRedundantPhi(fn: HIRFunction): void {
         for (const place of eachInstructionOperand(instr)) {
           rewritePlace(place, rewrites);
         }
+        if (instr.value.kind === "FunctionExpression") {
+          const { context } = instr.value.loweredFunc;
+          for (const place of context) {
+            rewritePlace(place, rewrites);
+          }
+        }
+
         rewritePlace(instr.lvalue, rewrites);
 
         // visit function expressions on first iteration of each block
@@ -110,7 +121,7 @@ export function eliminateRedundantPhi(fn: HIRFunction): void {
           instr.value.kind === "FunctionExpression" &&
           fn.env.enableOptimizeFunctionExpressions
         ) {
-          eliminateRedundantPhi(instr.value.loweredFunc);
+          eliminateRedundantPhi(instr.value.loweredFunc, rewrites);
         }
       }
 
diff --git a/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/e2e/constant-prop.e2e.js b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/e2e/constant-prop.e2e.js
new file mode 100644
index 0000000000..3446030107
--- /dev/null
+++ b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/e2e/constant-prop.e2e.js
@@ -0,0 +1,124 @@
+/**
+ * Copyright (c) Meta Platforms, Inc. and affiliates.
+ *
+ * This source code is licensed under the MIT license found in the
+ * LICENSE file in the root directory of this source tree.
+ */
+
+import * as React from "react";
+import { render } from "@testing-library/react";
+
+globalThis.constantValue = "global test value";
+
+test("literal-constant-propagation", () => {
+  function Component() {
+    const x = "test value 1";
+    return <div>{x}</div>;
+  }
+  const { asFragment, rerender } = render(<Component />);
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+    <DocumentFragment>
+      <div>
+        test value 1
+      </div>
+    </DocumentFragment>
+  `);
+
+  rerender(<Component />);
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+    <DocumentFragment>
+      <div>
+        test value 1
+      </div>
+    </DocumentFragment>
+  `);
+});
+
+test("global-constant-propagation", () => {
+  function Component() {
+    const x = constantValue;
+
+    return <div>{x}</div>;
+  }
+  const { asFragment, rerender } = render(<Component />);
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+    <DocumentFragment>
+      <div>
+        global test value
+      </div>
+    </DocumentFragment>
+  `);
+
+  rerender(<Component />);
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+    <DocumentFragment>
+      <div>
+        global test value
+      </div>
+    </DocumentFragment>
+  `);
+});
+
+test("lambda-constant-propagation", () => {
+  function Component() {
+    const x = "test value 1";
+    const getDiv = () => <div>{x}</div>;
+    return getDiv();
+  }
+  const { asFragment, rerender } = render(<Component />);
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+      <DocumentFragment>
+        <div>
+          test value 1
+        </div>
+      </DocumentFragment>
+    `);
+
+  rerender(<Component />);
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+      <DocumentFragment>
+        <div>
+          test value 1
+        </div>
+      </DocumentFragment>
+    `);
+});
+
+test("lambda-constant-propagation-of-phi-node", () => {
+  function Component({ noopCallback }) {
+    const x = "test value 1";
+    if (constantValue) {
+      noopCallback();
+    }
+    const getDiv = () => <div>{x}</div>;
+    return getDiv();
+  }
+
+  const { asFragment, rerender } = render(
+    <Component noopCallback={() => {}} />
+  );
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+      <DocumentFragment>
+        <div>
+          test value 1
+        </div>
+      </DocumentFragment>
+    `);
+
+  rerender(<Component noopCallback={() => {}} />);
+
+  expect(asFragment()).toMatchInlineSnapshot(`
+    <DocumentFragment>
+      <div>
+        test value 1
+      </div>
+    </DocumentFragment>
+  `);
+});
diff --git a/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/rewrite-phis-in-lambda-capture-context.expect.md b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/rewrite-phis-in-lambda-capture-context.expect.md
new file mode 100644
index 0000000000..fbf001317a
--- /dev/null
+++ b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/rewrite-phis-in-lambda-capture-context.expect.md
@@ -0,0 +1,43 @@
+
+## Input
+
+```javascript
+function ConstantPropagationBug() {
+  const x = CONSTANT1;
+  const createPhiNode = CONSTANT2 || 5;
+
+  const getFoo = () => <Foo x={x} y={createPhiNode} />;
+
+  return getFoo();
+}
+
+```
+
+## Code
+
+```javascript
+import { unstable_useMemoCache as useMemoCache } from "react";
+function ConstantPropagationBug() {
+  const $ = useMemoCache(2);
+
+  const createPhiNode = CONSTANT2 || 5;
+  let t0;
+  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
+    t0 = () => <Foo x={CONSTANT1} y={createPhiNode} />;
+    $[0] = t0;
+  } else {
+    t0 = $[0];
+  }
+  const getFoo = t0;
+  let t1;
+  if ($[1] === Symbol.for("react.memo_cache_sentinel")) {
+    t1 = getFoo();
+    $[1] = t1;
+  } else {
+    t1 = $[1];
+  }
+  return t1;
+}
+
+```
+      
\ No newline at end of file
diff --git a/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/rewrite-phis-in-lambda-capture-context.js b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/rewrite-phis-in-lambda-capture-context.js
new file mode 100644
index 0000000000..8ed131ece9
--- /dev/null
+++ b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/rewrite-phis-in-lambda-capture-context.js
@@ -0,0 +1,8 @@
+function ConstantPropagationBug() {
+  const x = CONSTANT1;
+  const createPhiNode = CONSTANT2 || 5;
+
+  const getFoo = () => <Foo x={x} y={createPhiNode} />;
+
+  return getFoo();
+}