diff --git a/collects/tests/racket/syntax.rktl b/collects/tests/racket/syntax.rktl
index 5508dc767b..9e1090275c 100644
--- a/collects/tests/racket/syntax.rktl
+++ b/collects/tests/racket/syntax.rktl
@@ -1353,7 +1353,24 @@
             (syntax-case stx ()
               [(_ v) (datum->syntax stx (kw/f #:x #'v opt))]))
           (kw/g 7))))
-      
+
+;; ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
+;; Check mutation of local define-for-syntax in let-syntax:
+
+(module set-local-dfs racket/base
+  (require (for-syntax racket/base))
+  (provide ten)
+
+  (define-for-syntax tl-var 9)
+
+  (define ten
+    (let-syntax ([x1 (lambda (stx)
+                       (set! tl-var (add1 tl-var))
+                       (datum->syntax stx tl-var))])
+      (x1))))
+
+(test 10 dynamic-require ''set-local-dfs 'ten)
+
 ;; ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
 
 (report-errs)
diff --git a/src/racket/src/env.c b/src/racket/src/env.c
index 68fc08596e..f82162c125 100644
--- a/src/racket/src/env.c
+++ b/src/racket/src/env.c
@@ -3112,7 +3112,10 @@ scheme_lookup_binding(Scheme_Object *find_id, Scheme_Comp_Env *env, int flags,
 				       modpos, SCHEME_INT_VAL(mod_defn_phase));
   }
 
-  if (!modname && (flags & (SCHEME_SETTING | SCHEME_REFERENCING)) && genv->module) {
+  if (!modname 
+      && (flags & (SCHEME_SETTING | SCHEME_REFERENCING)) 
+      && genv->module
+      && !(flags & SCHEME_RESOLVE_MODIDS)) {
     /* Need to return a variable reference in this case, too. */
     return scheme_hash_module_variable(env->genv, genv->module->self_modidx, find_global_id, 
 				       genv->module->insp,