diff --git a/src/cmd/compile/internal/escape/escape.go b/src/cmd/compile/internal/escape/escape.go
index 5ee6d4f498..883e68a730 100644
--- a/src/cmd/compile/internal/escape/escape.go
+++ b/src/cmd/compile/internal/escape/escape.go
@@ -218,6 +218,10 @@ func Batch(fns []*ir.Func, recursive bool) {
 
 	// Construct data-flow graph from syntax trees.
 	for _, fn := range fns {
+		if base.Flag.W > 1 {
+			s := fmt.Sprintf("\nbefore escape %v", fn)
+			ir.Dump(s, fn)
+		}
 		b.initFunc(fn)
 	}
 	for _, fn := range fns {
diff --git a/src/cmd/compile/internal/inline/inl.go b/src/cmd/compile/internal/inline/inl.go
index aa194ebab2..7778bc56c4 100644
--- a/src/cmd/compile/internal/inline/inl.go
+++ b/src/cmd/compile/internal/inline/inl.go
@@ -180,7 +180,7 @@ func CanInline(fn *ir.Func) {
 	n.Func.Inl = &ir.Inline{
 		Cost: inlineMaxBudget - visitor.budget,
 		Dcl:  pruneUnusedAutos(n.Defn.(*ir.Func).Dcl, &visitor),
-		Body: ir.DeepCopyList(src.NoXPos, fn.Body),
+		Body: inlcopylist(fn.Body),
 	}
 
 	if base.Flag.LowerM > 1 {
@@ -217,10 +217,8 @@ func Inline_Flood(n *ir.Name, exportsym func(*ir.Name)) {
 
 	typecheck.ImportedBody(fn)
 
-	// Recursively identify all referenced functions for
-	// reexport. We want to include even non-called functions,
-	// because after inlining they might be callable.
-	ir.VisitList(ir.Nodes(fn.Inl.Body), func(n ir.Node) {
+	var doFlood func(n ir.Node)
+	doFlood = func(n ir.Node) {
 		switch n.Op() {
 		case ir.OMETHEXPR, ir.ODOTMETH:
 			Inline_Flood(ir.MethodExprName(n), exportsym)
@@ -239,15 +237,16 @@ func Inline_Flood(n *ir.Name, exportsym func(*ir.Name)) {
 			// Okay, because we don't yet inline indirect
 			// calls to method values.
 		case ir.OCLOSURE:
-			// If the closure is inlinable, we'll need to
-			// flood it too. But today we don't support
-			// inlining functions that contain closures.
-			//
-			// When we do, we'll probably want:
-			//     inlFlood(n.Func.Closure.Func.Nname)
-			base.Fatalf("unexpected closure in inlinable function")
+			// VisitList doesn't visit closure bodies, so force a
+			// recursive call to VisitList on the body of the closure.
+			ir.VisitList(n.(*ir.ClosureExpr).Func.Body, doFlood)
 		}
-	})
+	}
+
+	// Recursively identify all referenced functions for
+	// reexport. We want to include even non-called functions,
+	// because after inlining they might be callable.
+	ir.VisitList(ir.Nodes(fn.Inl.Body), doFlood)
 }
 
 // hairyVisitor visits a function body to determine its inlining
@@ -360,8 +359,13 @@ func (v *hairyVisitor) doNode(n ir.Node) error {
 		// the right panic value, so it needs an argument frame.
 		return errors.New("call to recover")
 
-	case ir.OCLOSURE,
-		ir.ORANGE,
+	case ir.OCLOSURE:
+		// TODO(danscales) - fix some bugs when budget is lowered below 30
+		// Maybe make budget proportional to number of closure variables, e.g.:
+		//v.budget -= int32(len(n.(*ir.ClosureExpr).Func.ClosureVars) * 3)
+		v.budget -= 30
+
+	case ir.ORANGE,
 		ir.OSELECT,
 		ir.OGO,
 		ir.ODEFER,
@@ -449,6 +453,52 @@ func isBigFunc(fn *ir.Func) bool {
 	})
 }
 
+// inlcopylist (together with inlcopy) recursively copies a list of nodes, except
+// that it keeps the same ONAME, OTYPE, and OLITERAL nodes. It is used for copying
+// the body and dcls of an inlineable function.
+func inlcopylist(ll []ir.Node) []ir.Node {
+	s := make([]ir.Node, len(ll))
+	for i, n := range ll {
+		s[i] = inlcopy(n)
+	}
+	return s
+}
+
+// inlcopy is like DeepCopy(), but does extra work to copy closures.
+func inlcopy(n ir.Node) ir.Node {
+	var edit func(ir.Node) ir.Node
+	edit = func(x ir.Node) ir.Node {
+		switch x.Op() {
+		case ir.ONAME, ir.OTYPE, ir.OLITERAL, ir.ONIL:
+			return x
+		}
+		m := ir.Copy(x)
+		ir.EditChildren(m, edit)
+		if x.Op() == ir.OCLOSURE {
+			x := x.(*ir.ClosureExpr)
+			// Need to save/duplicate x.Func.Nname,
+			// x.Func.Nname.Ntype, x.Func.Dcl, x.Func.ClosureVars, and
+			// x.Func.Body for iexport and local inlining.
+			oldfn := x.Func
+			newfn := ir.NewFunc(oldfn.Pos())
+			if oldfn.ClosureCalled() {
+				newfn.SetClosureCalled(true)
+			}
+			m.(*ir.ClosureExpr).Func = newfn
+			newfn.Nname = ir.NewNameAt(oldfn.Nname.Pos(), oldfn.Nname.Sym())
+			// XXX OK to share fn.Type() ??
+			newfn.Nname.SetType(oldfn.Nname.Type())
+			newfn.Nname.Ntype = inlcopy(oldfn.Nname.Ntype).(ir.Ntype)
+			newfn.Body = inlcopylist(oldfn.Body)
+			// Make shallow copy of the Dcl and ClosureVar slices
+			newfn.Dcl = append([]*ir.Name(nil), oldfn.Dcl...)
+			newfn.ClosureVars = append([]*ir.Name(nil), oldfn.ClosureVars...)
+		}
+		return m
+	}
+	return edit(n)
+}
+
 // Inlcalls/nodelist/node walks fn's statements and expressions and substitutes any
 // calls made to inlineable functions. This is the external entry point.
 func InlineCalls(fn *ir.Func) {
@@ -925,6 +975,7 @@ func mkinlcall(n *ir.CallExpr, fn *ir.Func, maxCost int32, inlMap map[*ir.Func]b
 		inlvars:      inlvars,
 		bases:        make(map[*src.PosBase]*src.PosBase),
 		newInlIndex:  newIndex,
+		fn:           fn,
 	}
 	subst.edit = subst.node
 
@@ -1031,6 +1082,12 @@ type inlsubst struct {
 	newInlIndex int
 
 	edit func(ir.Node) ir.Node // cached copy of subst.node method value closure
+
+	// If non-nil, we are inside a closure inside the inlined function, and
+	// newclofn is the Func of the new inlined closure.
+	newclofn *ir.Func
+
+	fn *ir.Func // For debug -- the func that is being inlined
 }
 
 // list inlines a list of nodes.
@@ -1042,6 +1099,157 @@ func (subst *inlsubst) list(ll ir.Nodes) []ir.Node {
 	return s
 }
 
+// fields returns a list of the fields of a struct type representing receiver,
+// params, or results, after duplicating the field nodes and substituting the
+// Nname nodes inside the field nodes.
+func (subst *inlsubst) fields(oldt *types.Type) []*types.Field {
+	oldfields := oldt.FieldSlice()
+	newfields := make([]*types.Field, len(oldfields))
+	for i := range oldfields {
+		newfields[i] = oldfields[i].Copy()
+		if oldfields[i].Nname != nil {
+			newfields[i].Nname = subst.node(oldfields[i].Nname.(*ir.Name))
+		}
+	}
+	return newfields
+}
+
+// clovar creates a new ONAME node for a local variable or param of a closure
+// inside a function being inlined.
+func (subst *inlsubst) clovar(n *ir.Name) *ir.Name {
+	// TODO(danscales): want to get rid of this shallow copy, with code like the
+	// following, but it is hard to copy all the necessary flags in a maintainable way.
+	// m := ir.NewNameAt(n.Pos(), n.Sym())
+	// m.Class = n.Class
+	// m.SetType(n.Type())
+	// m.SetTypecheck(1)
+	//if n.IsClosureVar() {
+	//	m.SetIsClosureVar(true)
+	//}
+	m := &ir.Name{}
+	*m = *n
+	m.Curfn = subst.newclofn
+	if n.Defn != nil && n.Defn.Op() == ir.ONAME {
+		if !n.IsClosureVar() {
+			base.FatalfAt(n.Pos(), "want closure variable, got: %+v", n)
+		}
+		if n.Sym().Pkg != types.LocalPkg {
+			// If the closure came from inlining a function from
+			// another package, must change package of captured
+			// variable to localpkg, so that the fields of the closure
+			// struct are local package and can be accessed even if
+			// name is not exported. If you disable this code, you can
+			// reproduce the problem by running 'go test
+			// go/internal/srcimporter'. TODO(mdempsky) - maybe change
+			// how we create closure structs?
+			m.SetSym(types.LocalPkg.Lookup(n.Sym().Name))
+		}
+		// Make sure any inlvar which is the Defn
+		// of an ONAME closure var is rewritten
+		// during inlining. Don't substitute
+		// if Defn node is outside inlined function.
+		if subst.inlvars[n.Defn.(*ir.Name)] != nil {
+			m.Defn = subst.node(n.Defn)
+		}
+	}
+	if n.Outer != nil {
+		// Either the outer variable is defined in function being inlined,
+		// and we will replace it with the substituted variable, or it is
+		// defined outside the function being inlined, and we should just
+		// skip the outer variable (the closure variable of the function
+		// being inlined).
+		s := subst.node(n.Outer).(*ir.Name)
+		if s == n.Outer {
+			s = n.Outer.Outer
+		}
+		m.Outer = s
+	}
+	return m
+}
+
+// closure does the necessary substitions for a ClosureExpr n and returns the new
+// closure node.
+func (subst *inlsubst) closure(n *ir.ClosureExpr) ir.Node {
+	m := ir.Copy(n)
+	m.SetPos(subst.updatedPos(m.Pos()))
+	ir.EditChildren(m, subst.edit)
+
+	//fmt.Printf("Inlining func %v with closure into %v\n", subst.fn, ir.FuncName(ir.CurFunc))
+
+	// The following is similar to funcLit
+	oldfn := n.Func
+	newfn := ir.NewFunc(oldfn.Pos())
+	// These three lines are not strictly necessary, but just to be clear
+	// that new function needs to redo typechecking and inlinability.
+	newfn.SetTypecheck(0)
+	newfn.SetInlinabilityChecked(false)
+	newfn.Inl = nil
+	newfn.SetIsHiddenClosure(true)
+	newfn.Nname = ir.NewNameAt(n.Pos(), ir.BlankNode.Sym())
+	newfn.Nname.Func = newfn
+	newfn.Nname.Ntype = subst.node(oldfn.Nname.Ntype).(ir.Ntype)
+	newfn.Nname.Defn = newfn
+
+	m.(*ir.ClosureExpr).Func = newfn
+	newfn.OClosure = m.(*ir.ClosureExpr)
+
+	if subst.newclofn != nil {
+		//fmt.Printf("Inlining a closure with a nested closure\n")
+	}
+	prevxfunc := subst.newclofn
+
+	// Mark that we are now substituting within a closure (within the
+	// inlined function), and create new nodes for all the local
+	// vars/params inside this closure.
+	subst.newclofn = newfn
+	newfn.Dcl = nil
+	newfn.ClosureVars = nil
+	for _, oldv := range oldfn.Dcl {
+		newv := subst.clovar(oldv)
+		subst.inlvars[oldv] = newv
+		newfn.Dcl = append(newfn.Dcl, newv)
+	}
+	for _, oldv := range oldfn.ClosureVars {
+		newv := subst.clovar(oldv)
+		subst.inlvars[oldv] = newv
+		newfn.ClosureVars = append(newfn.ClosureVars, newv)
+	}
+
+	// Need to replace ONAME nodes in
+	// newfn.Type().FuncType().Receiver/Params/Results.FieldSlice().Nname
+	oldt := oldfn.Type()
+	newrecvs := subst.fields(oldt.Recvs())
+	var newrecv *types.Field
+	if len(newrecvs) > 0 {
+		newrecv = newrecvs[0]
+	}
+	newt := types.NewSignature(oldt.Pkg(), newrecv,
+		subst.fields(oldt.Params()), subst.fields(oldt.Results()))
+
+	newfn.Nname.SetType(newt)
+	newfn.Body = subst.list(oldfn.Body)
+
+	// Remove the nodes for the current closure from subst.inlvars
+	for _, oldv := range oldfn.Dcl {
+		delete(subst.inlvars, oldv)
+	}
+	for _, oldv := range oldfn.ClosureVars {
+		delete(subst.inlvars, oldv)
+	}
+	// Go back to previous closure func
+	subst.newclofn = prevxfunc
+
+	// Actually create the named function for the closure, now that
+	// the closure is inlined in a specific function.
+	m.SetTypecheck(0)
+	if oldfn.ClosureCalled() {
+		typecheck.Callee(m)
+	} else {
+		typecheck.Expr(m)
+	}
+	return m
+}
+
 // node recursively copies a node from the saved pristine body of the
 // inlined function, substituting references to input/output
 // parameters with ones to the tmpnames, and substituting returns with
@@ -1056,13 +1264,17 @@ func (subst *inlsubst) node(n ir.Node) ir.Node {
 		n := n.(*ir.Name)
 
 		// Handle captured variables when inlining closures.
-		if n.IsClosureVar() {
+		if n.IsClosureVar() && subst.newclofn == nil {
 			o := n.Outer
 
+			// Deal with case where sequence of closures are inlined.
+			// TODO(danscales) - write test case to see if we need to
+			// go up multiple levels.
+			if o.Curfn != ir.CurFunc {
+				o = o.Outer
+			}
+
 			// make sure the outer param matches the inlining location
-			// NB: if we enabled inlining of functions containing OCLOSURE or refined
-			// the reassigned check via some sort of copy propagation this would most
-			// likely need to be changed to a loop to walk up to the correct Param
 			if o == nil || o.Curfn != ir.CurFunc {
 				base.Fatalf("%v: unresolvable capture %v\n", ir.Line(n), n)
 			}
@@ -1098,6 +1310,10 @@ func (subst *inlsubst) node(n ir.Node) ir.Node {
 		}
 
 	case ir.ORETURN:
+		if subst.newclofn != nil {
+			// Don't do special substitutions if inside a closure
+			break
+		}
 		// Since we don't handle bodies with closures,
 		// this return is guaranteed to belong to the current inlined function.
 		n := n.(*ir.ReturnStmt)
@@ -1136,6 +1352,10 @@ func (subst *inlsubst) node(n ir.Node) ir.Node {
 		return m
 
 	case ir.OLABEL:
+		if subst.newclofn != nil {
+			// Don't do special substitutions if inside a closure
+			break
+		}
 		n := n.(*ir.LabelStmt)
 		m := ir.Copy(n).(*ir.LabelStmt)
 		m.SetPos(subst.updatedPos(m.Pos()))
@@ -1143,10 +1363,10 @@ func (subst *inlsubst) node(n ir.Node) ir.Node {
 		p := fmt.Sprintf("%s·%d", n.Label.Name, inlgen)
 		m.Label = typecheck.Lookup(p)
 		return m
-	}
 
-	if n.Op() == ir.OCLOSURE {
-		base.Fatalf("cannot inline function containing closure: %+v", n)
+	case ir.OCLOSURE:
+		return subst.closure(n.(*ir.ClosureExpr))
+
 	}
 
 	m := ir.Copy(n)
diff --git a/src/cmd/compile/internal/ir/fmt.go b/src/cmd/compile/internal/ir/fmt.go
index 01197ad272..1a05079dac 100644
--- a/src/cmd/compile/internal/ir/fmt.go
+++ b/src/cmd/compile/internal/ir/fmt.go
@@ -1020,6 +1020,15 @@ func dumpNodeHeader(w io.Writer, n Node) {
 		fmt.Fprintf(w, " defn(%p)", n.Name().Defn)
 	}
 
+	if base.Debug.DumpPtrs != 0 && n.Name() != nil && n.Name().Curfn != nil {
+		// Useful to see where Defn is set and what node it points to
+		fmt.Fprintf(w, " curfn(%p)", n.Name().Curfn)
+	}
+	if base.Debug.DumpPtrs != 0 && n.Name() != nil && n.Name().Outer != nil {
+		// Useful to see where Defn is set and what node it points to
+		fmt.Fprintf(w, " outer(%p)", n.Name().Outer)
+	}
+
 	if EscFmt != nil {
 		if esc := EscFmt(n); esc != "" {
 			fmt.Fprintf(w, " %s", esc)
@@ -1187,6 +1196,18 @@ func dumpNode(w io.Writer, n Node, depth int) {
 				dumpNode(w, dcl, depth+1)
 			}
 		}
+		if len(fn.ClosureVars) > 0 {
+			indent(w, depth)
+			fmt.Fprintf(w, "%+v-ClosureVars", n.Op())
+			for _, cv := range fn.ClosureVars {
+				dumpNode(w, cv, depth+1)
+			}
+		}
+		if len(fn.Enter) > 0 {
+			indent(w, depth)
+			fmt.Fprintf(w, "%+v-Enter", n.Op())
+			dumpNodes(w, fn.Enter, depth+1)
+		}
 		if len(fn.Body) > 0 {
 			indent(w, depth)
 			fmt.Fprintf(w, "%+v-body", n.Op())
diff --git a/src/cmd/compile/internal/ir/node.go b/src/cmd/compile/internal/ir/node.go
index 291e1286bb..ffa7daf6b2 100644
--- a/src/cmd/compile/internal/ir/node.go
+++ b/src/cmd/compile/internal/ir/node.go
@@ -291,6 +291,10 @@ const (
 	OTSLICE // []int
 
 	// misc
+	// intermediate representation of an inlined call.  Uses Init (assignments
+	// for the captured variables, parameters, retvars, & INLMARK op),
+	// Body (body of the inlined function), and ReturnVars (list of
+	// return values)
 	OINLCALL       // intermediary representation of an inlined call.
 	OEFACE         // itable and data words of an empty-interface value.
 	OITAB          // itable word of an interface value.
diff --git a/src/cmd/compile/internal/noder/noder.go b/src/cmd/compile/internal/noder/noder.go
index 99c0e4adde..0ea72a28dc 100644
--- a/src/cmd/compile/internal/noder/noder.go
+++ b/src/cmd/compile/internal/noder/noder.go
@@ -142,7 +142,15 @@ func Package() {
 	for i := 0; i < len(typecheck.Target.Decls); i++ {
 		n := typecheck.Target.Decls[i]
 		if n.Op() == ir.ODCLFUNC {
+			if base.Flag.W > 1 {
+				s := fmt.Sprintf("\nbefore typecheck %v", n)
+				ir.Dump(s, n)
+			}
 			typecheck.FuncBody(n.(*ir.Func))
+			if base.Flag.W > 1 {
+				s := fmt.Sprintf("\nafter typecheck %v", n)
+				ir.Dump(s, n)
+			}
 			fcount++
 		}
 	}
diff --git a/src/cmd/compile/internal/typecheck/func.go b/src/cmd/compile/internal/typecheck/func.go
index b576590d4d..f624773c8f 100644
--- a/src/cmd/compile/internal/typecheck/func.go
+++ b/src/cmd/compile/internal/typecheck/func.go
@@ -145,7 +145,7 @@ func ImportedBody(fn *ir.Func) {
 	// declarations are added to fn.Func.Dcl by funcBody(). Move them
 	// to fn.Func.Inl.Dcl for consistency with how local functions
 	// behave. (Append because ImportedBody may be called multiple
-	// times.)
+	// times on same fn.)
 	fn.Inl.Dcl = append(fn.Inl.Dcl, fn.Dcl...)
 	fn.Dcl = nil
 
@@ -303,8 +303,15 @@ func tcClosure(clo *ir.ClosureExpr, top int) {
 		return
 	}
 
-	fn.Nname.SetSym(closurename(ir.CurFunc))
-	ir.MarkFunc(fn.Nname)
+	// Don't give a name and add to xtop if we are typechecking an inlined
+	// body in ImportedBody(), since we only want to create the named function
+	// when the closure is actually inlined (and then we force a typecheck
+	// explicitly in (*inlsubst).node()).
+	inTypeCheckInl := ir.CurFunc != nil && ir.CurFunc.Body == nil
+	if !inTypeCheckInl {
+		fn.Nname.SetSym(closurename(ir.CurFunc))
+		ir.MarkFunc(fn.Nname)
+	}
 	Func(fn)
 	clo.SetType(fn.Type())
 
@@ -338,7 +345,14 @@ func tcClosure(clo *ir.ClosureExpr, top int) {
 	}
 	fn.ClosureVars = fn.ClosureVars[:out]
 
-	Target.Decls = append(Target.Decls, fn)
+	if base.Flag.W > 1 {
+		s := fmt.Sprintf("New closure func: %s", ir.FuncName(fn))
+		ir.Dump(s, fn)
+	}
+	if !inTypeCheckInl {
+		// Add function to xtop once only when we give it a name
+		Target.Decls = append(Target.Decls, fn)
+	}
 }
 
 // type check function definition
diff --git a/src/cmd/compile/internal/typecheck/iexport.go b/src/cmd/compile/internal/typecheck/iexport.go
index 1ba8771139..be4a689836 100644
--- a/src/cmd/compile/internal/typecheck/iexport.go
+++ b/src/cmd/compile/internal/typecheck/iexport.go
@@ -423,9 +423,13 @@ type exportWriter struct {
 	prevLine   int64
 	prevColumn int64
 
-	// dclIndex maps function-scoped declarations to their index
-	// within their respective Func's Dcl list.
-	dclIndex map[*ir.Name]int
+	// dclIndex maps function-scoped declarations to an int used to refer to
+	// them later in the function. For local variables/params, the int is
+	// non-negative and in order of the appearance in the Func's Dcl list. For
+	// closure variables, the index is negative starting at -2.
+	dclIndex           map[*ir.Name]int
+	maxDclIndex        int
+	maxClosureVarIndex int
 }
 
 func (p *iexporter) doDecl(n *ir.Name) {
@@ -1038,14 +1042,19 @@ func (w *exportWriter) typeExt(t *types.Type) {
 
 // Inline bodies.
 
-func (w *exportWriter) funcBody(fn *ir.Func) {
-	w.int64(int64(len(fn.Inl.Dcl)))
-	for i, n := range fn.Inl.Dcl {
+func (w *exportWriter) writeNames(dcl []*ir.Name) {
+	w.int64(int64(len(dcl)))
+	for i, n := range dcl {
 		w.pos(n.Pos())
 		w.localIdent(n.Sym())
 		w.typ(n.Type())
-		w.dclIndex[n] = i
+		w.dclIndex[n] = w.maxDclIndex + i
 	}
+	w.maxDclIndex += len(dcl)
+}
+
+func (w *exportWriter) funcBody(fn *ir.Func) {
+	w.writeNames(fn.Inl.Dcl)
 
 	w.stmtList(fn.Inl.Body)
 }
@@ -1315,8 +1324,30 @@ func (w *exportWriter) expr(n ir.Node) {
 	// case OTARRAY, OTMAP, OTCHAN, OTSTRUCT, OTINTER, OTFUNC:
 	// 	should have been resolved by typechecking - handled by default case
 
-	// case OCLOSURE:
-	//	unimplemented - handled by default case
+	case ir.OCLOSURE:
+		n := n.(*ir.ClosureExpr)
+		w.op(ir.OCLOSURE)
+		w.pos(n.Pos())
+		w.signature(n.Type())
+
+		// Write out id for the Outer of each conditional variable. The
+		// conditional variable itself for this closure will be re-created
+		// during import.
+		w.int64(int64(len(n.Func.ClosureVars)))
+		for i, cv := range n.Func.ClosureVars {
+			w.pos(cv.Pos())
+			w.localName(cv.Outer)
+			// Closure variable (which will be re-created during
+			// import) is given via a negative id, starting at -2,
+			// which is used to refer to it later in the function
+			// during export. -1 represents blanks.
+			w.dclIndex[cv] = -(i + 2) - w.maxClosureVarIndex
+		}
+		w.maxClosureVarIndex += len(n.Func.ClosureVars)
+
+		// like w.funcBody(n.Func), but not for .Inl
+		w.writeNames(n.Func.Dcl)
+		w.stmtList(n.Func.Body)
 
 	// case OCOMPLIT:
 	// 	should have been resolved by typechecking - handled by default case
diff --git a/src/cmd/compile/internal/typecheck/iimport.go b/src/cmd/compile/internal/typecheck/iimport.go
index c2610229ec..f2682257f3 100644
--- a/src/cmd/compile/internal/typecheck/iimport.go
+++ b/src/cmd/compile/internal/typecheck/iimport.go
@@ -265,6 +265,9 @@ type importReader struct {
 
 	// curfn is the current function we're importing into.
 	curfn *ir.Func
+	// Slice of all dcls for function, including any interior closures
+	allDcls        []*ir.Name
+	allClosureVars []*ir.Name
 }
 
 func (p *iimporter) newReader(off uint64, pkg *types.Pkg) *importReader {
@@ -721,6 +724,7 @@ func (r *importReader) doInline(fn *ir.Func) {
 		base.Fatalf("%v already has inline body", fn)
 	}
 
+	//fmt.Printf("Importing %v\n", n)
 	r.funcBody(fn)
 
 	importlist = append(importlist, fn)
@@ -754,6 +758,24 @@ func (r *importReader) funcBody(fn *ir.Func) {
 	r.curfn = fn
 
 	// Import local declarations.
+	fn.Inl.Dcl = r.readFuncDcls(fn)
+
+	// Import function body.
+	body := r.stmtList()
+	if body == nil {
+		// Make sure empty body is not interpreted as
+		// no inlineable body (see also parser.fnbody)
+		// (not doing so can cause significant performance
+		// degradation due to unnecessary calls to empty
+		// functions).
+		body = []ir.Node{}
+	}
+	fn.Inl.Body = body
+
+	r.curfn = outerfn
+}
+
+func (r *importReader) readNames(fn *ir.Func) []*ir.Name {
 	dcls := make([]*ir.Name, r.int64())
 	for i := range dcls {
 		n := ir.NewDeclNameAt(r.pos(), ir.ONAME, r.localIdent())
@@ -762,7 +784,12 @@ func (r *importReader) funcBody(fn *ir.Func) {
 		n.SetType(r.typ())
 		dcls[i] = n
 	}
-	fn.Inl.Dcl = dcls
+	r.allDcls = append(r.allDcls, dcls...)
+	return dcls
+}
+
+func (r *importReader) readFuncDcls(fn *ir.Func) []*ir.Name {
+	dcls := r.readNames(fn)
 
 	// Fixup parameter classes and associate with their
 	// signature's type fields.
@@ -787,28 +814,18 @@ func (r *importReader) funcBody(fn *ir.Func) {
 	for _, f := range typ.Results().FieldSlice() {
 		fix(f, ir.PPARAMOUT)
 	}
-
-	// Import function body.
-	body := r.stmtList()
-	if body == nil {
-		// Make sure empty body is not interpreted as
-		// no inlineable body (see also parser.fnbody)
-		// (not doing so can cause significant performance
-		// degradation due to unnecessary calls to empty
-		// functions).
-		body = []ir.Node{}
-	}
-	fn.Inl.Body = body
-
-	r.curfn = outerfn
+	return dcls
 }
 
 func (r *importReader) localName() *ir.Name {
 	i := r.int64()
-	if i < 0 {
+	if i == -1 {
 		return ir.BlankNode.(*ir.Name)
 	}
-	return r.curfn.Inl.Dcl[i]
+	if i < 0 {
+		return r.allClosureVars[-i-2]
+	}
+	return r.allDcls[i]
 }
 
 func (r *importReader) stmtList() []ir.Node {
@@ -924,8 +941,38 @@ func (r *importReader) node() ir.Node {
 	// case OTARRAY, OTMAP, OTCHAN, OTSTRUCT, OTINTER, OTFUNC:
 	//      unreachable - should have been resolved by typechecking
 
-	// case OCLOSURE:
-	//	unimplemented
+	case ir.OCLOSURE:
+		//println("Importing CLOSURE")
+		pos := r.pos()
+		typ := r.signature(nil)
+
+		// All the remaining code below is similar to (*noder).funcLit(), but
+		// with Dcls and ClosureVars lists already set up
+		fn := ir.NewFunc(pos)
+		fn.SetIsHiddenClosure(true)
+		fn.Nname = ir.NewNameAt(pos, ir.BlankNode.Sym())
+		fn.Nname.Func = fn
+		fn.Nname.Ntype = ir.TypeNode(typ)
+		fn.Nname.Defn = fn
+		fn.Nname.SetType(typ)
+
+		cvars := make([]*ir.Name, r.int64())
+		for i := range cvars {
+			cvars[i] = ir.CaptureName(r.pos(), fn, r.localName().Canonical())
+		}
+		fn.ClosureVars = cvars
+		r.allClosureVars = append(r.allClosureVars, cvars...)
+
+		fn.Dcl = r.readFuncDcls(fn)
+		body := r.stmtList()
+		ir.FinishCaptureNames(pos, r.curfn, fn)
+
+		clo := ir.NewClosureExpr(pos, fn)
+		fn.OClosure = clo
+
+		fn.Body = body
+
+		return clo
 
 	// case OPTRLIT:
 	//	unreachable - mapped to case OADDR below by exporter
diff --git a/test/closure3.dir/main.go b/test/closure3.dir/main.go
index e8e1e99860..2fc33753ed 100644
--- a/test/closure3.dir/main.go
+++ b/test/closure3.dir/main.go
@@ -93,11 +93,11 @@ func main() {
 		y := func(x int) int { // ERROR "can inline main.func11" "func literal does not escape"
 			return x + 2
 		}
-		y, sink = func() (func(int) int, int) { // ERROR "func literal does not escape"
-			return func(x int) int { // ERROR "can inline main.func12" "func literal escapes"
+		y, sink = func() (func(int) int, int) { // ERROR "can inline main.func12"
+			return func(x int) int { // ERROR "can inline main.func12"
 				return x + 1
 			}, 42
-		}()
+		}() // ERROR "func literal does not escape" "inlining call to main.func12"
 		if y(40) != 41 {
 			ppanic("y(40) != 41")
 		}
@@ -105,14 +105,14 @@ func main() {
 
 	{
 		func() { // ERROR "func literal does not escape"
-			y := func(x int) int { // ERROR "can inline main.func13.1" "func literal does not escape"
+			y := func(x int) int { // ERROR "func literal does not escape" "can inline main.func13.1"
 				return x + 2
 			}
-			y, sink = func() (func(int) int, int) { // ERROR "func literal does not escape"
-				return func(x int) int { // ERROR "can inline main.func13.2" "func literal escapes"
+			y, sink = func() (func(int) int, int) { // ERROR "can inline main.func13.2"
+				return func(x int) int { // ERROR "can inline main.func13.2"
 					return x + 1
 				}, 42
-			}()
+			}() // ERROR "inlining call to main.func13.2" "func literal does not escape"
 			if y(40) != 41 {
 				ppanic("y(40) != 41")
 			}
@@ -187,29 +187,29 @@ func main() {
 
 	{
 		x := 42
-		if z := func(y int) int { // ERROR "func literal does not escape"
-			return func() int { // ERROR "can inline main.func22.1"
+		if z := func(y int) int { // ERROR "can inline main.func22"
+			return func() int { // ERROR "can inline main.func22.1" "can inline main.func30"
 				return x + y
 			}() // ERROR "inlining call to main.func22.1"
-		}(1); z != 43 {
+		}(1); z != 43 { // ERROR "inlining call to main.func22" "inlining call to main.func30"
 			ppanic("z != 43")
 		}
-		if z := func(y int) int { // ERROR "func literal does not escape"
-			return func() int { // ERROR "can inline main.func23.1"
+		if z := func(y int) int { // ERROR "func literal does not escape" "can inline main.func23"
+			return func() int { // ERROR "can inline main.func23.1" "can inline main.func31"
 				return x + y
 			}() // ERROR "inlining call to main.func23.1"
-		}; z(1) != 43 {
+		}; z(1) != 43 { // ERROR "inlining call to main.func23" "inlining call to main.func31"
 			ppanic("z(1) != 43")
 		}
 	}
 
 	{
 		a := 1
-		func() { // ERROR "func literal does not escape"
-			func() { // ERROR "can inline main.func24"
+		func() { // ERROR "can inline main.func24"
+			func() { // ERROR "can inline main.func24" "can inline main.func32"
 				a = 2
 			}() // ERROR "inlining call to main.func24"
-		}()
+		}() // ERROR "inlining call to main.func24" "inlining call to main.func32"
 		if a != 2 {
 			ppanic("a != 2")
 		}
@@ -250,12 +250,12 @@ func main() {
 		a := 2
 		if r := func(x int) int { // ERROR "func literal does not escape"
 			b := 3
-			return func(y int) int { // ERROR "func literal does not escape"
+			return func(y int) int { // ERROR "can inline main.func27.1"
 				c := 5
-				return func(z int) int { // ERROR "can inline main.func27.1.1"
+				return func(z int) int { // ERROR "can inline main.func27.1.1" "can inline main.func27.2"
 					return a*x + b*y + c*z
 				}(10) // ERROR "inlining call to main.func27.1.1"
-			}(100)
+			}(100) // ERROR "inlining call to main.func27.1" "inlining call to main.func27.2"
 		}(1000); r != 2350 {
 			ppanic("r != 2350")
 		}
@@ -265,15 +265,15 @@ func main() {
 		a := 2
 		if r := func(x int) int { // ERROR "func literal does not escape"
 			b := 3
-			return func(y int) int { // ERROR "func literal does not escape"
+			return func(y int) int { // ERROR "can inline main.func28.1"
 				c := 5
-				func(z int) { // ERROR "can inline main.func28.1.1"
+				func(z int) { // ERROR "can inline main.func28.1.1" "can inline main.func28.2"
 					a = a * x
 					b = b * y
 					c = c * z
 				}(10) // ERROR "inlining call to main.func28.1.1"
 				return a + c
-			}(100) + b
+			}(100) + b // ERROR "inlining call to main.func28.1" "inlining call to main.func28.2"
 		}(1000); r != 2350 {
 			ppanic("r != 2350")
 		}
diff --git a/test/closure5.dir/a.go b/test/closure5.dir/a.go
new file mode 100644
index 0000000000..de8082b7b1
--- /dev/null
+++ b/test/closure5.dir/a.go
@@ -0,0 +1,11 @@
+// Copyright 2021 The Go Authors. All rights reserved.
+// Use of this source code is governed by a BSD-style
+// license that can be found in the LICENSE file.
+
+// Check correctness of various closure corner cases
+// that are expected to be inlined
+
+package a
+
+func f() bool               { return true }
+func G() func() func() bool { return func() func() bool { return f } }
diff --git a/test/closure5.dir/main.go b/test/closure5.dir/main.go
new file mode 100644
index 0000000000..ee5dba6481
--- /dev/null
+++ b/test/closure5.dir/main.go
@@ -0,0 +1,15 @@
+// Copyright 2021 The Go Authors. All rights reserved.
+// Use of this source code is governed by a BSD-style
+// license that can be found in the LICENSE file.
+
+// Check correctness of various closure corner cases
+// that are expected to be inlined
+package main
+
+import "a"
+
+func main() {
+	if !a.G()()() {
+		panic("FAIL")
+	}
+}
diff --git a/test/closure5.go b/test/closure5.go
new file mode 100644
index 0000000000..a7022b27a6
--- /dev/null
+++ b/test/closure5.go
@@ -0,0 +1,10 @@
+// compiledir
+
+// Copyright 2021 The Go Authors. All rights reserved.
+// Use of this source code is governed by a BSD-style
+// license that can be found in the LICENSE file.
+
+// Check correctness of various closure corner cases
+// that are expected to be inlined
+
+package ignored
diff --git a/test/inline.go b/test/inline.go
index d754f06e03..37965c0d9d 100644
--- a/test/inline.go
+++ b/test/inline.go
@@ -58,7 +58,7 @@ func _() int { // ERROR "can inline _"
 var somethingWrong error
 
 // local closures can be inlined
-func l(x, y int) (int, int, error) {
+func l(x, y int) (int, int, error) { // ERROR "can inline l"
 	e := func(err error) (int, int, error) { // ERROR "can inline l.func1" "func literal does not escape" "leaking param: err to result"
 		return 0, 0, err
 	}
@@ -90,19 +90,19 @@ func n() int {
 // make sure assignment inside closure is detected
 func o() int {
 	foo := func() int { return 1 } // ERROR "can inline o.func1" "func literal does not escape"
-	func(x int) {                  // ERROR "func literal does not escape"
+	func(x int) {                  // ERROR "can inline o.func2"
 		if x > 10 {
-			foo = func() int { return 2 } // ERROR "can inline o.func2" "func literal escapes"
+			foo = func() int { return 2 } // ERROR "can inline o.func2"
 		}
-	}(11)
+	}(11) // ERROR "func literal does not escape" "inlining call to o.func2"
 	return foo()
 }
 
-func p() int {
+func p() int { // ERROR "can inline p"
 	return func() int { return 42 }() // ERROR "can inline p.func1" "inlining call to p.func1"
 }
 
-func q(x int) int {
+func q(x int) int { // ERROR "can inline q"
 	foo := func() int { return x * 2 } // ERROR "can inline q.func1" "func literal does not escape"
 	return foo()                       // ERROR "inlining call to q.func1"
 }
@@ -111,15 +111,15 @@ func r(z int) int {
 	foo := func(x int) int { // ERROR "can inline r.func1" "func literal does not escape"
 		return x + z
 	}
-	bar := func(x int) int { // ERROR "func literal does not escape"
-		return x + func(y int) int { // ERROR "can inline r.func2.1"
+	bar := func(x int) int { // ERROR "func literal does not escape" "can inline r.func2"
+		return x + func(y int) int { // ERROR "can inline r.func2.1" "can inline r.func3"
 			return 2*y + x*z
 		}(x) // ERROR "inlining call to r.func2.1"
 	}
-	return foo(42) + bar(42) // ERROR "inlining call to r.func1"
+	return foo(42) + bar(42) // ERROR "inlining call to r.func1" "inlining call to r.func2" "inlining call to r.func3"
 }
 
-func s0(x int) int {
+func s0(x int) int { // ERROR "can inline s0"
 	foo := func() { // ERROR "can inline s0.func1" "func literal does not escape"
 		x = x + 1
 	}
@@ -127,7 +127,7 @@ func s0(x int) int {
 	return x
 }
 
-func s1(x int) int {
+func s1(x int) int { // ERROR "can inline s1"
 	foo := func() int { // ERROR "can inline s1.func1" "func literal does not escape"
 		return x
 	}