Index: tests/module-tests.scm
===================================================================
--- tests/module-tests.scm	(revision 15157)
+++ tests/module-tests.scm	(working copy)
@@ -145,4 +145,15 @@
 	      (begin0 1 2 3))
 	    1)
 
+(module m14 (test-extlambda)
+  (import chicken scheme)
+  (define (test-extlambda string #!optional whatever)
+    string))
+
+(import m14)
+
+(test-equal "extended lambda list uses expansion environment"
+            "some text"
+            (test-extlambda "some text"))
+
 (test-end "modules")
Index: expand.scm
===================================================================
--- expand.scm	(revision 15157)
+++ expand.scm	(working copy)
@@ -484,18 +484,18 @@
 			  (loop 3 req opt '() r)
 			  (err "`#!key' argument marker in wrong context") ) ]
 		     [else
-		      (cond [(symbol? x)
+		      (cond [(symbol? var)
 			     (case mode
-			       [(0) (loop 0 (cons x req) '() '() r)]
-			       [(1) (loop 1 req (cons (list x #f) opt) '() r)]
+			       [(0) (loop 0 (cons var req) '() '() r)]
+			       [(1) (loop 1 req (cons (list var #f) opt) '() r)]
 			       [(2) (err "invalid lambda list syntax after `#!rest' marker")]
-			       [else (loop 3 req opt (cons (list x) key) r)] ) ]
-			    [(and (list? x) (eq? 2 (length x)))
+			       [else (loop 3 req opt (cons (list var) key) r)] ) ]
+			    [(and (list? var) (eq? 2 (length var)))
 			     (case mode
 			       [(0) (err "invalid required argument syntax")]
-			       [(1) (loop 1 req (cons x opt) '() r)]
+			       [(1) (loop 1 req (cons var opt) '() r)]
 			       [(2) (err "invalid lambda list syntax after `#!rest' marker")]
-			       [else (loop 3 req opt (cons x key) r)] ) ]
+			       [else (loop 3 req opt (cons var key) r)] ) ]
 			    [else (err "invalid lambda list syntax")] ) ] ) ) ] ) ) ) ) ) )