diff --git a/CHANGELOG.md b/CHANGELOG.md
index d1492220ee..e61ce24e8a 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -24,6 +24,9 @@ and this project adheres to [Semantic Versioning](http://semver.org/spec/v2.0.0.
 
 * Lambda lifting in `while` conditions (#2038).
 
+* Size expressions in local function parameters had an interesting
+  interaction with defunctionalisation (#2040).
+
 ## [0.25.6]
 
 ### Added
diff --git a/src/Futhark/Internalise/Monomorphise.hs b/src/Futhark/Internalise/Monomorphise.hs
index a95c66a712..f4669b1f75 100644
--- a/src/Futhark/Internalise/Monomorphise.hs
+++ b/src/Futhark/Internalise/Monomorphise.hs
@@ -513,10 +513,11 @@ transformAppExp (LetFun fname (tparams, params, retdecl, Info ret, body) e loc)
         let (bs_local, bs_prop) = Seq.partition ((== fname) . fst) bs
         pure (unfoldLetFuns (map snd $ toList bs_local) e', const bs_prop)
   | otherwise = do
-      body' <- scoping (S.fromList (foldMap patNames params)) $ transformExp body
-      ret' <- transformRetTypeSizes (S.fromList (foldMap patNames params)) ret
+      params' <- mapM transformPat params
+      body' <- scoping (S.fromList (foldMap patNames params')) $ transformExp body
+      ret' <- transformRetTypeSizes (S.fromList (foldMap patNames params')) ret
       AppExp
-        <$> ( LetFun fname (tparams, params, retdecl, Info ret', body')
+        <$> ( LetFun fname (tparams, params', retdecl, Info ret', body')
                 <$> scoping (S.singleton fname) (transformExp e)
                 <*> pure loc
             )