diff --git a/ASTPlayground/MainForm.pas b/ASTPlayground/MainForm.pas
index d707702..222069d 100644
--- a/ASTPlayground/MainForm.pas
+++ b/ASTPlayground/MainForm.pas
@@ -164,12 +164,12 @@ begin
                             TAst.Identifier('n'),
                             TAst.BinaryExpr(
                                 TAst.FunctionCall(
-                                    TAst.Identifier('fib'),
+                                    TAst.Identifier('Self'),
                                     [TAst.BinaryExpr(TAst.Identifier('n'), boSubtract, TAst.Constant(TScalar.FromInt64(1)))]
                                 ),
                                 boAdd,
                                 TAst.FunctionCall(
-                                    TAst.Identifier('fib'),
+                                    TAst.Identifier('Self'),
                                     [TAst.BinaryExpr(TAst.Identifier('n'), boSubtract, TAst.Constant(TScalar.FromInt64(2)))]
                                 )
                             )
@@ -230,7 +230,7 @@ begin
                                 TAst.Identifier('n'),
                                 boMultiply,
                                 TAst.FunctionCall(
-                                    TAst.Identifier('factorial'),
+                                    TAst.Identifier('Self'),
                                     [TAst.BinaryExpr(TAst.Identifier('n'), boSubtract, TAst.Constant(TScalar.FromInt64(1)))]
                                 )
                             )
diff --git a/Src/AST/Myc.Ast.Evaluator.pas b/Src/AST/Myc.Ast.Evaluator.pas
index f29ddb6..a52f2ed 100644
--- a/Src/AST/Myc.Ast.Evaluator.pas
+++ b/Src/AST/Myc.Ast.Evaluator.pas
@@ -88,19 +88,25 @@ type
     // The signature for a native Delphi function callable from the script.
     TNativeFunction = function(const Args: TArray<TAstValue>): TAstValue;
 
-    // Concrete implementation of the TAstValue.IClosure interface for script-defined functions.
     TClosureValue = class(TInterfacedObject, TAstValue.IClosure)
     private
         FBody: IExpressionNode;
         FClosureScope: IExecutionScope;
         FLambdaNode: ILambdaExpressionNode;
+        FUpvalues: TArray<IValueCell>;
         function GetBody: IExpressionNode;
         function GetParameters: TArray<IIdentifierNode>;
         function GetClosureScope: IExecutionScope;
+        function GetUpvalues: TArray<IValueCell>;
     public
-        constructor Create(const ALambdaNode: ILambdaExpressionNode; const AClosureScope: IExecutionScope);
+        constructor Create(
+            const ALambdaNode: ILambdaExpressionNode;
+            const AClosureScope: IExecutionScope;
+            const AUpvalues: TArray<IValueCell>
+        );
         property ClosureScope: IExecutionScope read GetClosureScope;
         property LambdaNode: ILambdaExpressionNode read FLambdaNode;
+        property Upvalues: TArray<IValueCell> read FUpvalues;
     end;
 
     // Concrete implementation of TAstValue.IClosure for native Delphi functions.
@@ -110,6 +116,7 @@ type
         function GetBody: IExpressionNode;
         function GetParameters: TArray<IIdentifierNode>;
         function GetClosureScope: IExecutionScope;
+        function GetUpvalues: TArray<IValueCell>;
     public
         constructor Create(const AMethod: TNativeFunction);
         property Method: TNativeFunction read FMethod;
@@ -205,12 +212,17 @@ end;
 
 { TClosureValue }
 
-constructor TClosureValue.Create(const ALambdaNode: ILambdaExpressionNode; const AClosureScope: IExecutionScope);
+constructor TClosureValue.Create(
+    const ALambdaNode: ILambdaExpressionNode;
+    const AClosureScope: IExecutionScope;
+    const AUpvalues: TArray<IValueCell>
+);
 begin
     inherited Create;
     FLambdaNode := ALambdaNode;
     FBody := ALambdaNode.Body;
     FClosureScope := AClosureScope;
+    FUpvalues := AUpvalues; // Store the captured cells
 end;
 
 function TClosureValue.GetBody: IExpressionNode;
@@ -228,6 +240,11 @@ begin
     Result := FLambdaNode.Parameters;
 end;
 
+function TClosureValue.GetUpvalues: TArray<IValueCell>;
+begin
+    Result := FUpvalues;
+end;
+
 { TNativeClosure }
 
 constructor TNativeClosure.Create(const AMethod: TNativeFunction);
@@ -251,6 +268,10 @@ begin
     Result := nil;
 end;
 
+function TNativeClosure.GetUpvalues: TArray<IValueCell>;
+begin
+end;
+
 { TEvaluatorVisitor }
 
 constructor TEvaluatorVisitor.Create(const AScope: IExecutionScope);
@@ -475,8 +496,27 @@ begin
 end;
 
 function TEvaluatorVisitor.VisitLambdaExpression(const Node: ILambdaExpressionNode): TAstValue;
+var
+    capturedCells: TArray<IValueCell>;
+    i: Integer;
+    sourceAddr: TResolvedAddress;
+    sourceAddresses: TArray<TResolvedAddress>;
 begin
-    Result := TAstValue.FromClosure(TClosureValue.Create(Node, FScope));
+    // The binder has identified the upvalues. Capture the cells from the current scope
+    // using the original source addresses provided by the binder.
+    sourceAddresses := Node.UpvalueSourceAddresses;
+    SetLength(capturedCells, Length(sourceAddresses));
+    for i := 0 to High(sourceAddresses) do
+    begin
+        sourceAddr := sourceAddresses[i];
+        // The binder gives the depth relative to the lambda's
+        // inner scope. The evaluator is in the outer scope, so we adjust the
+        // depth by -1 to find the cell in the current context.
+        dec(sourceAddr.ScopeDepth);
+        capturedCells[i] := FScope.GetCell(sourceAddr);
+    end;
+
+    Result := TAstValue.FromClosure(TClosureValue.Create(Node, FScope, capturedCells));
 end;
 
 function TEvaluatorVisitor.VisitFunctionCall(const Node: IFunctionCallNode): TAstValue;
@@ -510,17 +550,21 @@ begin
         if not Assigned(descriptor) then
             raise EParserError.Create('Lambda has no scope descriptor. Did the binder run?');
 
-        var callScope := descriptor.CreateScope(closure.ClosureScope);
+        // Create the execution scope for the call, providing the captured upvalues.
+        var callScope := TExecutionScope.Create(closure.ClosureScope, descriptor, (closure as TClosureValue).Upvalues) as IExecutionScope;
 
         var adr: TResolvedAddress;
+        adr.Kind := akLocalOrParent;
         adr.ScopeDepth := 0;
+
+        // Slot 0 is 'Self'.
         adr.SlotIndex := 0;
-        callScope[adr] := calleeValue;
+        callScope.Values[adr] := calleeValue;
 
         for i := 0 to Node.Arguments.Count - 1 do
         begin
             adr.SlotIndex := closure.Parameters[i].Address.SlotIndex;
-            callScope[adr] := Node.Arguments[i].Accept(Self);
+            callScope.Values[adr] := Node.Arguments[i].Accept(Self);
         end;
 
         Result := closure.Body.Accept(CreateVisitorForScope(callScope));
diff --git a/Src/AST/Myc.Ast.Nodes.pas b/Src/AST/Myc.Ast.Nodes.pas
index fca1309..9ce284c 100644
--- a/Src/AST/Myc.Ast.Nodes.pas
+++ b/Src/AST/Myc.Ast.Nodes.pas
@@ -46,6 +46,7 @@ type
     ISeriesLengthNode = interface;
     IExecutionScope = interface;
     IScopeDescriptor = interface;
+    IValueCell = interface;
 
     // --- Concrete Type Definitions ---
 
@@ -56,10 +57,12 @@ type
                 function GetBody: IExpressionNode;
                 function GetClosureScope: IExecutionScope;
                 function GetParameters: TArray<IIdentifierNode>;
+                function GetUpvalues: TArray<IValueCell>;
                 {$endregion}
                 property Body: IExpressionNode read GetBody;
                 property ClosureScope: IExecutionScope read GetClosureScope;
                 property Parameters: TArray<IIdentifierNode> read GetParameters;
+                property Upvalues: TArray<IValueCell> read GetUpvalues;
             end;
 
             TVal<T> = class(TInterfacedObject)
@@ -96,7 +99,21 @@ type
         property Kind: TAstValueKind read GetKind;
     end;
 
+    // A managed, reference-counted cell that holds a TAstValue,
+    // allowing it to be shared by reference between scopes (for closures).
+    IValueCell = interface
+        {$region 'private'}
+        function GetValue: TAstValue;
+        procedure SetValue(const AValue: TAstValue);
+        {$endregion}
+        property Value: TAstValue read GetValue write SetValue;
+    end;
+
+    // Defines how an identifier's address was resolved.
+    TAddressKind = (akUnresolved, akLocalOrParent, akUpvalue);
+
     TResolvedAddress = record
+        Kind: TAddressKind;
         ScopeDepth: Integer;
         SlotIndex: Integer;
     end;
@@ -106,12 +123,14 @@ type
         function GetParent: IExecutionScope;
         function GetValues(const Address: TResolvedAddress): TAstValue;
         procedure SetValues(const Address: TResolvedAddress; const Value: TAstValue);
+        function GetCell(const Address: TResolvedAddress): IValueCell;
         {$endregion}
 
         procedure Define(const Name: string; const Value: TAstValue);
         function Dump: string;
         procedure Clear;
 
+        property Cell[const Address: TResolvedAddress]: IValueCell read GetCell;
         property Values[const Address: TResolvedAddress]: TAstValue read GetValues write SetValues; default;
 
         property Parent: IExecutionScope read GetParent;
@@ -222,10 +241,14 @@ type
         function GetParameters: TArray<IIdentifierNode>;
         function GetBody: IExpressionNode;
         function GetScopeDescriptor: IScopeDescriptor;
+        function GetUpvalues: TArray<IIdentifierNode>;
+        function GetUpvalueSourceAddresses: TArray<TResolvedAddress>;
         {$endregion}
         property Parameters: TArray<IIdentifierNode> read GetParameters;
         property Body: IExpressionNode read GetBody;
         property ScopeDescriptor: IScopeDescriptor read GetScopeDescriptor;
+        property Upvalues: TArray<IIdentifierNode> read GetUpvalues;
+        property UpvalueSourceAddresses: TArray<TResolvedAddress> read GetUpvalueSourceAddresses;
     end;
 
     IFunctionCallNode = interface(IExpressionNode)
diff --git a/Src/AST/Myc.Ast.Scope.pas b/Src/AST/Myc.Ast.Scope.pas
index f3aaf16..6326e83 100644
--- a/Src/AST/Myc.Ast.Scope.pas
+++ b/Src/AST/Myc.Ast.Scope.pas
@@ -12,21 +12,28 @@ type
     TExecutionScope = class(TInterfacedObject, IExecutionScope)
     private
         FParent: IExecutionScope;
-        FValues: TArray<TAstValue>;
+        FValues: TArray<IValueCell>;
+        // Stores references to the value cells captured by a closure.
+        FCapturedUpvalues: TArray<IValueCell>;
         FNameToIndex: TDictionary<string, Integer>;
         procedure DumpScope(const ABuilder: TStringBuilder; AIndent: Integer);
         function GetValues(const Address: TResolvedAddress): TAstValue;
         procedure SetValues(const Address: TResolvedAddress; const Value: TAstValue);
         function GetParent: IExecutionScope;
+        function GetCell(const Address: TResolvedAddress): IValueCell;
     public
-        constructor Create(AParent: IExecutionScope = nil; const ADescriptor: IScopeDescriptor = nil);
+        constructor Create(
+            AParent: IExecutionScope = nil;
+            const ADescriptor: IScopeDescriptor = nil;
+            const ACapturedUpvalues: TArray<IValueCell> = nil
+        );
         destructor Destroy; override;
         procedure Clear;
         function Dump: string;
         procedure Define(const Name: string; const Value: TAstValue);
         property NameToIndex: TDictionary<string, Integer> read FNameToIndex;
         property Parent: IExecutionScope read FParent;
-        property Values: TArray<TAstValue> read FValues;
+        property Values: TArray<IValueCell> read FValues;
     end;
 
 implementation
@@ -34,19 +41,54 @@ implementation
 uses
     System.Generics.Defaults;
 
+type
+    TValueCell = class(TInterfacedObject, IValueCell)
+    private
+        FValue: TAstValue;
+        function GetValue: TAstValue;
+        procedure SetValue(const AValue: TAstValue);
+    end;
+
+{ TValueCell }
+
+function TValueCell.GetValue: TAstValue;
+begin
+    Result := FValue;
+end;
+
+procedure TValueCell.SetValue(const AValue: TAstValue);
+begin
+    FValue := AValue;
+end;
+
 { TExecutionScope }
 
-constructor TExecutionScope.Create(AParent: IExecutionScope = nil; const ADescriptor: IScopeDescriptor = nil);
+{ TExecutionScope }
+
+constructor TExecutionScope.Create(
+    AParent: IExecutionScope;
+    const ADescriptor: IScopeDescriptor;
+    const ACapturedUpvalues: TArray<IValueCell>
+);
+var
+    slotCount: Integer;
+    i: Integer;
 begin
     inherited Create;
     FParent := AParent;
     FValues := [];
     FNameToIndex := TDictionary<string, Integer>.Create;
+    FCapturedUpvalues := ACapturedUpvalues; // Store upvalues
+
     if ADescriptor <> nil then
     begin
         for var item in ADescriptor.Symbols do
             FNameToIndex.AddOrSetValue(item.Key, item.Value);
-        SetLength(FValues, ADescriptor.SlotCount);
+
+        slotCount := ADescriptor.SlotCount;
+        SetLength(FValues, slotCount);
+        for i := 0 to slotCount - 1 do
+            FValues[i] := TValueCell.Create as IValueCell;
     end;
 end;
 
@@ -56,6 +98,26 @@ begin
     inherited Destroy;
 end;
 
+function TExecutionScope.GetCell(const Address: TResolvedAddress): IValueCell;
+var
+    targetScope: TExecutionScope;
+    i: Integer;
+begin
+    // Cells can only be retrieved from local/parent scopes.
+    if Address.Kind <> akLocalOrParent then
+        raise EInvalidOpException.Create('Cannot get a cell for a non-local address.');
+
+    targetScope := Self;
+    for i := 1 to Address.ScopeDepth do
+    begin
+        targetScope := targetScope.Parent as TExecutionScope;
+        Assert(Assigned(targetScope), 'Invalid scope depth during cell retrieval.');
+    end;
+
+    Assert((Address.SlotIndex >= 0) and (Address.SlotIndex < Length(targetScope.FValues)), 'Invalid scope index during cell retrieval.');
+    Result := targetScope.FValues[Address.SlotIndex];
+end;
+
 function TExecutionScope.GetParent: IExecutionScope;
 begin
     Result := FParent;
@@ -76,7 +138,8 @@ begin
 
     index := Length(FValues);
     SetLength(FValues, index + 1);
-    FValues[index] := Value;
+    FValues[index] := TValueCell.Create as IValueCell;
+    FValues[index].Value := Value;
     FNameToIndex.Add(Name, index);
 end;
 
@@ -97,7 +160,8 @@ begin
         );
 
         for pair in sortedPairs do
-            ABuilder.AppendLine(indentStr + Format('  [%d] %s: %s', [pair.Value, pair.Key, FValues[pair.Value].ToString]));
+            // Access the value inside the cell for printing.
+            ABuilder.AppendLine(indentStr + Format('  [%d] %s: %s', [pair.Value, pair.Key, FValues[pair.Value].Value.ToString]));
     end
     else
     begin
@@ -130,16 +194,33 @@ var
     targetScope: TExecutionScope;
     i: Integer;
 begin
-    targetScope := Self;
-
-    for i := 0 to Address.ScopeDepth - 1 do
-    begin
-        targetScope := targetScope.Parent as TExecutionScope;
-        Assert(Assigned(targetScope), 'Invalid scope depth during value retrieval.');
+    case Address.Kind of
+        akUpvalue:
+        begin
+            Assert(Assigned(FCapturedUpvalues), 'Attempt to access an upvalue in a scope with no closure context.');
+            Assert(
+                (Address.SlotIndex >= 0) and (Address.SlotIndex < Length(FCapturedUpvalues)),
+                'Invalid upvalue index during value retrieval.'
+            );
+            Result := FCapturedUpvalues[Address.SlotIndex].Value;
+        end;
+        akLocalOrParent:
+        begin
+            targetScope := Self;
+            for i := 1 to Address.ScopeDepth do
+            begin
+                targetScope := targetScope.Parent as TExecutionScope;
+                Assert(Assigned(targetScope), 'Invalid scope depth during value retrieval.');
+            end;
+            Assert(
+                (Address.SlotIndex >= 0) and (Address.SlotIndex < Length(targetScope.Values)),
+                'Invalid scope index during value retrieval.'
+            );
+            Result := targetScope.Values[Address.SlotIndex].Value;
+        end;
+    else
+        raise EInvalidOpException.Create('Cannot get value for an unresolved address.');
     end;
-
-    Assert((Address.SlotIndex >= 0) and (Address.SlotIndex < Length(targetScope.Values)), 'Invalid scope index during value retrieval.');
-    Result := targetScope.Values[Address.SlotIndex];
 end;
 
 procedure TExecutionScope.SetValues(const Address: TResolvedAddress; const Value: TAstValue);
@@ -147,18 +228,34 @@ var
     targetScope: IExecutionScope;
     i: Integer;
 begin
-    targetScope := Self;
-    for i := 1 to Address.ScopeDepth do
-    begin
-        if Assigned(targetScope) then
-            targetScope := targetScope.Parent
-        else
-            raise EInvalidOpException.Create('Invalid scope depth during assignment.');
-    end;
+    case Address.Kind of
+        akUpvalue:
+        begin
+            Assert(Assigned(FCapturedUpvalues), 'Attempt to access an upvalue in a scope with no closure context.');
+            Assert(
+                (Address.SlotIndex >= 0) and (Address.SlotIndex < Length(FCapturedUpvalues)),
+                'Invalid upvalue index during value assignment.'
+            );
+            FCapturedUpvalues[Address.SlotIndex].Value := Value;
+        end;
+        akLocalOrParent:
+        begin
+            targetScope := Self;
+            for i := 0 to Address.ScopeDepth - 1 do
+            begin
+                if Assigned(targetScope) then
+                    targetScope := targetScope.Parent
+                else
+                    raise EInvalidOpException.Create('Invalid scope depth during assignment.');
+            end;
 
-    if Address.SlotIndex >= Length((targetScope as TExecutionScope).FValues) then
-        raise EInvalidOpException.Create('Invalid scope index during assignment.');
-    (targetScope as TExecutionScope).FValues[Address.SlotIndex] := Value;
+            if Address.SlotIndex >= Length((targetScope as TExecutionScope).Values) then
+                raise EInvalidOpException.Create('Invalid scope index during assignment.');
+            (targetScope as TExecutionScope).Values[Address.SlotIndex].Value := Value;
+        end;
+    else
+        raise EInvalidOpException.Create('Cannot set value for an unresolved address.');
+    end;
 end;
 
 end.
diff --git a/Src/AST/Myc.Ast.pas b/Src/AST/Myc.Ast.pas
index 129a3f1..df4d90c 100644
--- a/Src/AST/Myc.Ast.pas
+++ b/Src/AST/Myc.Ast.pas
@@ -6,6 +6,7 @@ uses
     System.Classes,
     System.SysUtils,
     System.Generics.Collections,
+    System.Generics.Defaults,
     Myc.Data.Scalar,
     Myc.Ast.Nodes,
     Myc.Ast.Scope;
@@ -121,9 +122,7 @@ type
     public
         constructor Create(AName: string);
         function Accept(const Visitor: IAstVisitor): TAstValue; override;
-
         property IsResolved: Boolean read GetIsResolved;
-
         property Name: string read FName;
         property Address: TResolvedAddress read GetAddress;
     end;
@@ -187,14 +186,20 @@ type
     private
         FParameters: TArray<IIdentifierNode>;
         FBody: IExpressionNode;
-        FScopeDescriptor: IScopeDescriptor; // Backing field for the new property
+        FScopeDescriptor: IScopeDescriptor;
+        FUpvalues: TArray<IIdentifierNode>;
+        FUpvalueSourceAddresses: TArray<TResolvedAddress>;
         function GetParameters: TArray<IIdentifierNode>;
         function GetBody: IExpressionNode;
         function GetScopeDescriptor: IScopeDescriptor;
+        function GetUpvalues: TArray<IIdentifierNode>;
+        function GetUpvalueSourceAddresses: TArray<TResolvedAddress>;
     public
         constructor Create(const AParameters: TArray<IIdentifierNode>; const ABody: IExpressionNode);
         function Accept(const Visitor: IAstVisitor): TAstValue; override;
+        procedure SetUpvalueData(const AUpvalues: TArray<IIdentifierNode>; const ASourceAddresses: TArray<TResolvedAddress>);
         property ScopeDescriptor: IScopeDescriptor read GetScopeDescriptor;
+        property Upvalues: TArray<IIdentifierNode> read GetUpvalues;
     end;
 
     { TFunctionCallNode }
@@ -303,21 +308,46 @@ type
         function Accept(const Visitor: IAstVisitor): TAstValue; override;
     end;
 
+    TResolvedAddressComparer = class(TEqualityComparer<TResolvedAddress>)
+    public
+        function Equals(const Left, Right: TResolvedAddress): Boolean; override;
+        function GetHashCode(const Value: TResolvedAddress): Integer; override;
+    end;
+
     // --- Binder Implementation ---
 
     TBinder = class(TAstTraverser)
     private
         FCurrentDescriptor: IScopeDescriptor;
+        FUpvalueMapStack: TStack<TDictionary<TResolvedAddress, Integer>>;
+        FUpvalueNodesStack: TStack<TList<IIdentifierNode>>;
         procedure EnterScope;
         procedure ExitScope;
     public
         constructor Create(const AInitialScope: IExecutionScope);
+        destructor Destroy; override;
         function VisitIdentifier(const Node: IIdentifierNode): TAstValue; override;
         function VisitLambdaExpression(const Node: ILambdaExpressionNode): TAstValue; override;
         function VisitVariableDeclaration(const Node: IVariableDeclarationNode): TAstValue; override;
         property CurrentDescriptor: IScopeDescriptor read FCurrentDescriptor;
     end;
 
+{ TResolvedAddressComparer }
+
+function TResolvedAddressComparer.Equals(const Left, Right: TResolvedAddress): Boolean;
+begin
+    Result := (Left.Kind = Right.Kind) and (Left.ScopeDepth = Right.ScopeDepth) and (Left.SlotIndex = Right.SlotIndex);
+end;
+
+function TResolvedAddressComparer.GetHashCode(const Value: TResolvedAddress): Integer;
+begin
+    // Simple combining hash function
+    Result := 17;
+    Result := Result * 23 + Ord(Value.Kind);
+    Result := Result * 23 + Value.ScopeDepth;
+    Result := Result * 23 + Value.SlotIndex;
+end;
+
 { TScopeDescriptor }
 
 constructor TScopeDescriptor.Create(AParent: IScopeDescriptor);
@@ -406,6 +436,8 @@ constructor TIdentifierNode.Create(AName: string);
 begin
     inherited Create;
     FName := AName;
+    // Default to unresolved.
+    FResolvedAddress.Kind := akUnresolved;
     FResolvedAddress.ScopeDepth := -1;
     FResolvedAddress.SlotIndex := -1;
 end;
@@ -417,7 +449,8 @@ end;
 
 function TIdentifierNode.GetIsResolved: Boolean;
 begin
-    Result := FResolvedAddress.ScopeDepth >= 0;
+    // An identifier is resolved if its kind is not unresolved anymore.
+    Result := FResolvedAddress.Kind <> akUnresolved;
 end;
 
 function TIdentifierNode.GetName: string;
@@ -429,7 +462,6 @@ function TIdentifierNode.GetAddress: TResolvedAddress;
 begin
     if not IsResolved then
         raise EInvalidOpException.Create('Identifier not bound');
-
     Result := FResolvedAddress;
 end;
 
@@ -555,6 +587,19 @@ begin
     FBody := ABody;
     FParameters := AParameters;
     FScopeDescriptor := nil;
+    FUpvalues := [];
+    FUpvalueSourceAddresses := []; // Initialize new field
+end;
+
+function TLambdaExpressionNode.GetUpvalueSourceAddresses: TArray<TResolvedAddress>;
+begin
+    Result := FUpvalueSourceAddresses;
+end;
+
+procedure TLambdaExpressionNode.SetUpvalueData(const AUpvalues: TArray<IIdentifierNode>; const ASourceAddresses: TArray<TResolvedAddress>);
+begin
+    FUpvalues := AUpvalues;
+    FUpvalueSourceAddresses := ASourceAddresses;
 end;
 
 function TLambdaExpressionNode.Accept(const Visitor: IAstVisitor): TAstValue;
@@ -577,6 +622,11 @@ begin
     Result := FScopeDescriptor;
 end;
 
+function TLambdaExpressionNode.GetUpvalues: TArray<IIdentifierNode>;
+begin
+    Result := FUpvalues;
+end;
+
 { TFunctionCallNode }
 
 constructor TFunctionCallNode.Create(const ACallee: IExpressionNode; const AArguments: array of IExpressionNode);
@@ -807,6 +857,21 @@ constructor TBinder.Create(const AInitialScope: IExecutionScope);
 begin
     inherited Create;
     FCurrentDescriptor := TAst.CreateDescriptor(AInitialScope);
+    FUpvalueMapStack := TStack<TDictionary<TResolvedAddress, Integer>>.Create;
+    FUpvalueNodesStack := TStack<TList<IIdentifierNode>>.Create;
+end;
+
+destructor TBinder.Destroy;
+begin
+    while FUpvalueMapStack.Count > 0 do
+        FUpvalueMapStack.Pop.Free;
+    FUpvalueMapStack.Free;
+
+    while FUpvalueNodesStack.Count > 0 do
+        FUpvalueNodesStack.Pop.Free;
+    FUpvalueNodesStack.Free;
+
+    inherited;
 end;
 
 procedure TBinder.EnterScope;
@@ -821,17 +886,45 @@ end;
 
 function TBinder.VisitIdentifier(const Node: IIdentifierNode): TAstValue;
 var
-    index, depth: Integer;
+    originalDepth, originalIndex: Integer;
     identNode: TIdentifierNode;
+    upvalueMap: TDictionary<TResolvedAddress, Integer>;
+    upvalueNodes: TList<IIdentifierNode>;
+    originalAddress: TResolvedAddress;
+    upvalueIndex: Integer;
 begin
     identNode := Node as TIdentifierNode;
     if identNode.IsResolved then
         Exit;
 
-    if (FCurrentDescriptor as TScopeDescriptor).FindSymbol(identNode.Name, index, depth) then
+    if (FCurrentDescriptor as TScopeDescriptor).FindSymbol(identNode.Name, originalIndex, originalDepth) then
     begin
-        identNode.FResolvedAddress.ScopeDepth := depth;
-        identNode.FResolvedAddress.SlotIndex := index;
+        if (originalDepth > 0) and (FUpvalueMapStack.Count > 0) then
+        begin
+            upvalueMap := FUpvalueMapStack.Peek;
+            upvalueNodes := FUpvalueNodesStack.Peek;
+
+            originalAddress.Kind := akLocalOrParent;
+            originalAddress.ScopeDepth := originalDepth;
+            originalAddress.SlotIndex := originalIndex;
+
+            if not upvalueMap.TryGetValue(originalAddress, upvalueIndex) then
+            begin
+                upvalueIndex := upvalueNodes.Count;
+                upvalueMap.Add(originalAddress, upvalueIndex);
+                upvalueNodes.Add(identNode);
+            end;
+
+            identNode.FResolvedAddress.Kind := akUpvalue;
+            identNode.FResolvedAddress.SlotIndex := upvalueIndex;
+            identNode.FResolvedAddress.ScopeDepth := 0;
+        end
+        else
+        begin
+            identNode.FResolvedAddress.Kind := akLocalOrParent;
+            identNode.FResolvedAddress.ScopeDepth := originalDepth;
+            identNode.FResolvedAddress.SlotIndex := originalIndex;
+        end;
     end
     else
         raise Exception.CreateFmt('Undefined identifier: "%s"', [identNode.Name]);
@@ -840,27 +933,65 @@ end;
 function TBinder.VisitLambdaExpression(const Node: ILambdaExpressionNode): TAstValue;
 var
     param: IIdentifierNode;
+    upvalueMap: TDictionary<TResolvedAddress, Integer>;
+    upvalueNodes: TList<IIdentifierNode>;
+    sourceAddresses: TArray<TResolvedAddress>;
+    sortedPairs: TArray<TPair<TResolvedAddress, Integer>>;
 begin
-    EnterScope;
+    FUpvalueMapStack.Push(TDictionary<TResolvedAddress, Integer>.Create(TResolvedAddressComparer.Default));
+    FUpvalueNodesStack.Push(TList<IIdentifierNode>.Create);
     try
-        (FCurrentDescriptor as TScopeDescriptor).Define('Self');
+        EnterScope;
+        try
+            (FCurrentDescriptor as TScopeDescriptor).Define('Self');
 
-        for param in Node.Parameters do
-            (FCurrentDescriptor as TScopeDescriptor).Define(param.Name);
+            for param in Node.Parameters do
+                (FCurrentDescriptor as TScopeDescriptor).Define(param.Name);
 
-        inherited VisitLambdaExpression(Node);
+            inherited VisitLambdaExpression(Node);
 
-        // Annotate the lambda node with the completed scope descriptor.
-        (Node as TLambdaExpressionNode).FScopeDescriptor := FCurrentDescriptor;
+            (Node as TLambdaExpressionNode).FScopeDescriptor := FCurrentDescriptor;
+        finally
+            ExitScope;
+        end;
     finally
-        ExitScope;
+        upvalueMap := FUpvalueMapStack.Pop;
+        upvalueNodes := FUpvalueNodesStack.Pop;
+
+        // The map's keys are the source addresses, and values are the indices.
+        // We need to sort by index to get the addresses in the correct order.
+        sortedPairs := upvalueMap.ToArray;
+        TArray.Sort<TPair<TResolvedAddress, Integer>>(
+            sortedPairs,
+            TComparer<TPair<TResolvedAddress, Integer>>.Construct(
+                function(const Left, Right: TPair<TResolvedAddress, Integer>): Integer begin Result := Left.Value - Right.Value; end
+            )
+        );
+
+        SetLength(sourceAddresses, Length(sortedPairs));
+        for var i := 0 to High(sortedPairs) do
+            sourceAddresses[i] := sortedPairs[i].Key;
+
+        (Node as TLambdaExpressionNode).SetUpvalueData(upvalueNodes.ToArray, sourceAddresses);
+
+        upvalueMap.Free;
+        upvalueNodes.Free;
     end;
 end;
 
 function TBinder.VisitVariableDeclaration(const Node: IVariableDeclarationNode): TAstValue;
+var
+    slotIndex: Integer;
+    identNode: TIdentifierNode;
 begin
-    (FCurrentDescriptor as TScopeDescriptor).Define(Node.Identifier.Name);
-    inherited;
+    identNode := Node.Identifier as TIdentifierNode;
+
+    Node.Initializer.Accept(Self);
+
+    slotIndex := (FCurrentDescriptor as TScopeDescriptor).Define(Node.Identifier.Name);
+    identNode.FResolvedAddress.Kind := akLocalOrParent;
+    identNode.FResolvedAddress.ScopeDepth := 0;
+    identNode.FResolvedAddress.SlotIndex := slotIndex;
 end;
 
 { TAst }