diff --git a/compiler/forget/packages/babel-plugin-react-forget/src/HIR/FindContextIdentifiers.ts b/compiler/forget/packages/babel-plugin-react-forget/src/HIR/FindContextIdentifiers.ts
index 9ca3901a02..a60cb1b2db 100644
--- a/compiler/forget/packages/babel-plugin-react-forget/src/HIR/FindContextIdentifiers.ts
+++ b/compiler/forget/packages/babel-plugin-react-forget/src/HIR/FindContextIdentifiers.ts
@@ -6,7 +6,9 @@ import { GeneratedSource } from "./HIR";
 type FindContextIdentifierState = {
   inLambda: number;
   currentLambda: Array<
-    NodePath<t.FunctionExpression> | NodePath<t.ArrowFunctionExpression>
+    | NodePath<t.FunctionDeclaration>
+    | NodePath<t.FunctionExpression>
+    | NodePath<t.ArrowFunctionExpression>
   >;
   contextIdentifiers: Set<t.Identifier>;
 };
@@ -22,6 +24,20 @@ export function findContextIdentifiers(
 
   func.traverse<FindContextIdentifierState>(
     {
+      FunctionDeclaration: {
+        enter(
+          fn: NodePath<t.FunctionDeclaration>,
+          state: FindContextIdentifierState
+        ): void {
+          state.currentLambda.push(fn);
+        },
+        exit(
+          fn: NodePath<t.FunctionDeclaration>,
+          state: FindContextIdentifierState
+        ): void {
+          state.currentLambda.pop();
+        },
+      },
       FunctionExpression: {
         enter(
           fn: NodePath<t.FunctionExpression>,
@@ -69,6 +85,7 @@ export function findContextIdentifiers(
 
 function handleAssignment(
   currentLambda:
+    | NodePath<t.FunctionDeclaration>
     | NodePath<t.FunctionExpression>
     | NodePath<t.ArrowFunctionExpression>,
   contextIdentifiers: Set<t.Identifier>,
diff --git a/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/declare-reassign-variable-in-function-declaration.expect.md b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/declare-reassign-variable-in-function-declaration.expect.md
new file mode 100644
index 0000000000..a18fd717ab
--- /dev/null
+++ b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/declare-reassign-variable-in-function-declaration.expect.md
@@ -0,0 +1,46 @@
+
+## Input
+
+```javascript
+function Component() {
+  let x = null;
+  function foo() {
+    x = 9;
+  }
+  const y = bar(foo);
+  return <Child y={y} />;
+}
+
+```
+
+## Code
+
+```javascript
+import { unstable_useMemoCache as useMemoCache } from "react";
+function Component() {
+  const $ = useMemoCache(2);
+  let t0;
+  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
+    let x;
+    x = null;
+    const foo = function foo() {
+      x = 9;
+    };
+    t0 = bar(foo);
+    $[0] = t0;
+  } else {
+    t0 = $[0];
+  }
+  const y = t0;
+  let t1;
+  if ($[1] === Symbol.for("react.memo_cache_sentinel")) {
+    t1 = <Child y={y} />;
+    $[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/declare-reassign-variable-in-function-declaration.js b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/declare-reassign-variable-in-function-declaration.js
new file mode 100644
index 0000000000..ca3ff47860
--- /dev/null
+++ b/compiler/forget/packages/babel-plugin-react-forget/src/__tests__/fixtures/compiler/declare-reassign-variable-in-function-declaration.js
@@ -0,0 +1,8 @@
+function Component() {
+  let x = null;
+  function foo() {
+    x = 9;
+  }
+  const y = bar(foo);
+  return <Child y={y} />;
+}