diff --git a/src/gt4py/next/iterator/ir_utils/ir_makers.py b/src/gt4py/next/iterator/ir_utils/ir_makers.py
index b2662fa278..19e26f24b6 100644
--- a/src/gt4py/next/iterator/ir_utils/ir_makers.py
+++ b/src/gt4py/next/iterator/ir_utils/ir_makers.py
@@ -446,7 +446,7 @@ def domain(
     )
 
 
-def as_fieldop(expr: itir.Expr, domain: Optional[itir.FunCall] = None) -> call:
+def as_fieldop(expr: itir.Expr, domain: Optional[itir.Expr] = None) -> call:
     """
     Create an `as_fieldop` call.
 
diff --git a/src/gt4py/next/iterator/transforms/fuse_as_fieldop.py b/src/gt4py/next/iterator/transforms/fuse_as_fieldop.py
new file mode 100644
index 0000000000..51bbd91d83
--- /dev/null
+++ b/src/gt4py/next/iterator/transforms/fuse_as_fieldop.py
@@ -0,0 +1,204 @@
+# GT4Py - GridTools Framework
+#
+# Copyright (c) 2014-2024, ETH Zurich
+# All rights reserved.
+#
+# Please, refer to the LICENSE file in the root directory.
+# SPDX-License-Identifier: BSD-3-Clause
+
+import dataclasses
+from typing import Optional
+
+from gt4py import eve
+from gt4py.eve import utils as eve_utils
+from gt4py.next.iterator import ir as itir
+from gt4py.next.iterator.ir_utils import common_pattern_matcher as cpm, ir_makers as im
+from gt4py.next.iterator.transforms import inline_lambdas, inline_lifts, trace_shifts
+from gt4py.next.iterator.type_system import (
+    inference as type_inference,
+    type_specifications as it_ts,
+)
+from gt4py.next.type_system import type_info, type_specifications as ts
+
+
+def _merge_arguments(
+    args1: dict[str, itir.Expr], arg2: dict[str, itir.Expr]
+) -> dict[str, itir.Expr]:
+    new_args = {**args1}
+    for stencil_param, stencil_arg in arg2.items():
+        if stencil_param not in new_args:
+            new_args[stencil_param] = stencil_arg
+        else:
+            assert new_args[stencil_param] == stencil_arg
+    return new_args
+
+
+def _canonicalize_as_fieldop(expr: itir.FunCall) -> itir.FunCall:
+    """
+    Canonicalize applied `as_fieldop`s.
+
+    In case the stencil argument is a `deref` wrap it into a lambda such that we have a unified
+    format to work with (e.g. each parameter has a name without the need to special case).
+    """
+    assert cpm.is_applied_as_fieldop(expr)
+
+    stencil = expr.fun.args[0]  # type: ignore[attr-defined]
+    domain = expr.fun.args[1] if len(expr.fun.args) > 1 else None  # type: ignore[attr-defined]
+    if cpm.is_ref_to(stencil, "deref"):
+        stencil = im.lambda_("arg")(im.deref("arg"))
+        new_expr = im.as_fieldop(stencil, domain)(*expr.args)
+        type_inference.copy_type(from_=expr, to=new_expr)
+
+        return new_expr
+
+    return expr
+
+
+@dataclasses.dataclass
+class FuseAsFieldOp(eve.NodeTranslator):
+    """
+    Merge multiple `as_fieldop` calls into one.
+
+    >>> from gt4py import next as gtx
+    >>> from gt4py.next.iterator.ir_utils import ir_makers as im
+    >>> IDim = gtx.Dimension("IDim")
+    >>> field_type = ts.FieldType(dims=[IDim], dtype=ts.ScalarType(kind=ts.ScalarKind.INT32))
+    >>> d = im.domain("cartesian_domain", {IDim: (0, 1)})
+    >>> nested_as_fieldop = im.op_as_fieldop("plus", d)(
+    ...     im.op_as_fieldop("multiplies", d)(
+    ...         im.ref("inp1", field_type), im.ref("inp2", field_type)
+    ...     ),
+    ...     im.ref("inp3", field_type),
+    ... )
+    >>> print(nested_as_fieldop)
+    as_fieldop(λ(__arg0, __arg1) → ·__arg0 + ·__arg1, c⟨ IDimₕ: [0, 1) ⟩)(
+      as_fieldop(λ(__arg0, __arg1) → ·__arg0 × ·__arg1, c⟨ IDimₕ: [0, 1) ⟩)(inp1, inp2), inp3
+    )
+    >>> print(
+    ...     FuseAsFieldOp.apply(
+    ...         nested_as_fieldop, offset_provider={}, allow_undeclared_symbols=True
+    ...     )
+    ... )
+    as_fieldop(λ(inp1, inp2, inp3) → ·inp1 × ·inp2 + ·inp3, c⟨ IDimₕ: [0, 1) ⟩)(inp1, inp2, inp3)
+    """  # noqa: RUF002  # ignore ambiguous multiplication character
+
+    uids: eve_utils.UIDGenerator
+
+    def _inline_as_fieldop_arg(self, arg: itir.Expr) -> tuple[itir.Expr, dict[str, itir.Expr]]:
+        assert cpm.is_applied_as_fieldop(arg)
+        arg = _canonicalize_as_fieldop(arg)
+
+        stencil, *_ = arg.fun.args  # type: ignore[attr-defined]  # ensured by `is_applied_as_fieldop`
+        inner_args: list[itir.Expr] = arg.args
+        extracted_args: dict[str, itir.Expr] = {}  # mapping from outer-stencil param to arg
+
+        stencil_params: list[itir.Sym] = []
+        stencil_body: itir.Expr = stencil.expr
+
+        for inner_param, inner_arg in zip(stencil.params, inner_args, strict=True):
+            if isinstance(inner_arg, itir.SymRef):
+                stencil_params.append(inner_param)
+                extracted_args[inner_arg.id] = inner_arg
+            elif isinstance(inner_arg, itir.Literal):
+                # note: only literals, not all scalar expressions are required as it doesn't make sense
+                # for them to be computed per grid point.
+                stencil_body = im.let(inner_param, im.promote_to_const_iterator(inner_arg))(
+                    stencil_body
+                )
+            else:
+                # a scalar expression, a previously not inlined `as_fieldop` call or an opaque
+                # expression e.g. containing a tuple
+                stencil_params.append(inner_param)
+                new_outer_stencil_param = self.uids.sequential_id(prefix="__iasfop")
+                extracted_args[new_outer_stencil_param] = inner_arg
+
+        return im.lift(im.lambda_(*stencil_params)(stencil_body))(
+            *extracted_args.keys()
+        ), extracted_args
+
+    @classmethod
+    def apply(
+        cls,
+        node: itir.Program,
+        *,
+        offset_provider,
+        uids: Optional[eve_utils.UIDGenerator] = None,
+        allow_undeclared_symbols=False,
+    ):
+        node = type_inference.infer(
+            node, offset_provider=offset_provider, allow_undeclared_symbols=allow_undeclared_symbols
+        )
+
+        if not uids:
+            uids = eve_utils.UIDGenerator()
+
+        return cls(uids=uids).visit(node)
+
+    def visit_FunCall(self, node: itir.FunCall):
+        node = self.generic_visit(node)
+
+        if cpm.is_call_to(node.fun, "as_fieldop"):
+            node = _canonicalize_as_fieldop(node)
+
+        if cpm.is_call_to(node.fun, "as_fieldop") and isinstance(node.fun.args[0], itir.Lambda):
+            stencil: itir.Lambda = node.fun.args[0]
+            domain = node.fun.args[1] if len(node.fun.args) > 1 else None
+
+            shifts = trace_shifts.trace_stencil(stencil)
+
+            args: list[itir.Expr] = node.args
+
+            new_args: dict[str, itir.Expr] = {}
+            new_stencil_body: itir.Expr = stencil.expr
+
+            for stencil_param, arg, arg_shifts in zip(stencil.params, args, shifts, strict=True):
+                assert isinstance(arg.type, ts.TypeSpec)
+                dtype = type_info.extract_dtype(arg.type)
+                # TODO(tehrengruber): make this configurable
+                should_inline = isinstance(arg, itir.Literal) or (
+                    isinstance(arg, itir.FunCall)
+                    and (cpm.is_call_to(arg.fun, "as_fieldop") or cpm.is_call_to(arg, "if_"))
+                    and (isinstance(dtype, it_ts.ListType) or len(arg_shifts) <= 1)
+                )
+                if should_inline:
+                    if cpm.is_applied_as_fieldop(arg):
+                        pass
+                    elif cpm.is_call_to(arg, "if_"):
+                        # TODO(tehrengruber): revisit if we want to inline if_
+                        type_ = arg.type
+                        arg = im.op_as_fieldop("if_")(*arg.args)
+                        arg.type = type_
+                    elif isinstance(arg, itir.Literal):
+                        arg = im.op_as_fieldop(im.lambda_()(arg))()
+                    else:
+                        raise NotImplementedError()
+
+                    inline_expr, extracted_args = self._inline_as_fieldop_arg(arg)
+
+                    new_stencil_body = im.let(stencil_param, inline_expr)(new_stencil_body)
+
+                    new_args = _merge_arguments(new_args, extracted_args)
+                else:
+                    new_param: str
+                    if isinstance(
+                        arg, itir.SymRef
+                    ):  # use name from outer scope (optional, just to get a nice IR)
+                        new_param = arg.id
+                        new_stencil_body = im.let(stencil_param.id, arg.id)(new_stencil_body)
+                    else:
+                        new_param = stencil_param.id
+                    new_args = _merge_arguments(new_args, {new_param: arg})
+
+            # simplify stencil directly to keep the tree small
+            new_stencil_body = inline_lambdas.InlineLambdas.apply(
+                new_stencil_body, opcount_preserving=True
+            )
+            new_stencil_body = inline_lifts.InlineLifts().visit(new_stencil_body)
+
+            new_node = im.as_fieldop(im.lambda_(*new_args.keys())(new_stencil_body), domain)(
+                *new_args.values()
+            )
+            type_inference.copy_type(from_=node, to=new_node)
+
+            return new_node
+        return node
diff --git a/src/gt4py/next/iterator/type_system/inference.py b/src/gt4py/next/iterator/type_system/inference.py
index bc1095dfb8..fccaa56232 100644
--- a/src/gt4py/next/iterator/type_system/inference.py
+++ b/src/gt4py/next/iterator/type_system/inference.py
@@ -96,6 +96,16 @@ def _set_node_type(node: itir.Node, type_: ts.TypeSpec) -> None:
     node.type = type_
 
 
+def copy_type(from_: itir.Node, to: itir.Node) -> None:
+    """
+    Copy type from one node to another.
+
+    This function mainly exists for readability reasons.
+    """
+    assert isinstance(from_.type, ts.TypeSpec)
+    _set_node_type(to, from_.type)
+
+
 def on_inferred(callback: Callable, *args: Union[ts.TypeSpec, ObservableTypeSynthesizer]) -> None:
     """
     Execute `callback` as soon as all `args` have a type.
diff --git a/tests/next_tests/unit_tests/iterator_tests/transforms_tests/test_fuse_as_fieldop.py b/tests/next_tests/unit_tests/iterator_tests/transforms_tests/test_fuse_as_fieldop.py
new file mode 100644
index 0000000000..da2c16336e
--- /dev/null
+++ b/tests/next_tests/unit_tests/iterator_tests/transforms_tests/test_fuse_as_fieldop.py
@@ -0,0 +1,112 @@
+# GT4Py - GridTools Framework
+#
+# Copyright (c) 2014-2024, ETH Zurich
+# All rights reserved.
+#
+# Please, refer to the LICENSE file in the root directory.
+# SPDX-License-Identifier: BSD-3-Clause
+from typing import Callable, Optional
+
+from gt4py import next as gtx
+from gt4py.next.iterator import ir as itir
+from gt4py.next.iterator.ir_utils import ir_makers as im
+from gt4py.next.iterator.transforms import fuse_as_fieldop
+from gt4py.next.type_system import type_specifications as ts
+
+IDim = gtx.Dimension("IDim")
+field_type = ts.FieldType(dims=[IDim], dtype=ts.ScalarType(kind=ts.ScalarKind.INT32))
+
+
+def test_trivial():
+    d = im.domain("cartesian_domain", {IDim: (0, 1)})
+    testee = im.op_as_fieldop("plus", d)(
+        im.op_as_fieldop("multiplies", d)(im.ref("inp1", field_type), im.ref("inp2", field_type)),
+        im.ref("inp3", field_type),
+    )
+    expected = im.as_fieldop(
+        im.lambda_("inp1", "inp2", "inp3")(
+            im.plus(im.multiplies_(im.deref("inp1"), im.deref("inp2")), im.deref("inp3"))
+        ),
+        d,
+    )(im.ref("inp1", field_type), im.ref("inp2", field_type), im.ref("inp3", field_type))
+    actual = fuse_as_fieldop.FuseAsFieldOp.apply(
+        testee, offset_provider={}, allow_undeclared_symbols=True
+    )
+    assert actual == expected
+
+
+def test_trivial_literal():
+    d = im.domain("cartesian_domain", {})
+    testee = im.op_as_fieldop("plus", d)(im.op_as_fieldop("multiplies", d)(1, 2), 3)
+    expected = im.as_fieldop(im.lambda_()(im.plus(im.multiplies_(1, 2), 3)), d)()
+    actual = fuse_as_fieldop.FuseAsFieldOp.apply(
+        testee, offset_provider={}, allow_undeclared_symbols=True
+    )
+    assert actual == expected
+
+
+def test_symref_used_twice():
+    d = im.domain("cartesian_domain", {IDim: (0, 1)})
+    testee = im.as_fieldop(im.lambda_("a", "b")(im.plus(im.deref("a"), im.deref("b"))), d)(
+        im.as_fieldop(im.lambda_("c", "d")(im.multiplies_(im.deref("c"), im.deref("d"))), d)(
+            im.ref("inp1", field_type), im.ref("inp2", field_type)
+        ),
+        im.ref("inp1", field_type),
+    )
+    expected = im.as_fieldop(
+        im.lambda_("inp1", "inp2")(
+            im.plus(im.multiplies_(im.deref("inp1"), im.deref("inp2")), im.deref("inp1"))
+        ),
+        d,
+    )("inp1", "inp2")
+    actual = fuse_as_fieldop.FuseAsFieldOp.apply(
+        testee, offset_provider={}, allow_undeclared_symbols=True
+    )
+    assert actual == expected
+
+
+def test_no_inline():
+    d1 = im.domain("cartesian_domain", {IDim: (1, 2)})
+    d2 = im.domain("cartesian_domain", {IDim: (0, 3)})
+    testee = im.as_fieldop(
+        im.lambda_("a")(
+            im.plus(im.deref(im.shift("IOff", 1)("a")), im.deref(im.shift("IOff", -1)("a")))
+        ),
+        d1,
+    )(im.as_fieldop(im.lambda_("inp1")(im.deref("inp1")), d2)(im.ref("inp1", field_type)))
+    actual = fuse_as_fieldop.FuseAsFieldOp.apply(
+        testee, offset_provider={"IOff": IDim}, allow_undeclared_symbols=True
+    )
+    assert actual == testee
+
+
+def test_partial_inline():
+    d1 = im.domain("cartesian_domain", {IDim: (1, 2)})
+    d2 = im.domain("cartesian_domain", {IDim: (0, 3)})
+    testee = im.as_fieldop(
+        # first argument read at multiple locations -> not inlined
+        # second argument only reat at a single location -> inlined
+        im.lambda_("a", "b")(
+            im.plus(
+                im.plus(im.deref(im.shift("IOff", 1)("a")), im.deref(im.shift("IOff", -1)("a"))),
+                im.deref("b"),
+            )
+        ),
+        d1,
+    )(
+        im.as_fieldop(im.lambda_("inp1")(im.deref("inp1")), d2)(im.ref("inp1", field_type)),
+        im.as_fieldop(im.lambda_("inp1")(im.deref("inp1")), d2)(im.ref("inp1", field_type)),
+    )
+    expected = im.as_fieldop(
+        im.lambda_("a", "inp1")(
+            im.plus(
+                im.plus(im.deref(im.shift("IOff", 1)("a")), im.deref(im.shift("IOff", -1)("a"))),
+                im.deref("inp1"),
+            )
+        ),
+        d1,
+    )(im.as_fieldop(im.lambda_("inp1")(im.deref("inp1")), d2)(im.ref("inp1", field_type)), "inp1")
+    actual = fuse_as_fieldop.FuseAsFieldOp.apply(
+        testee, offset_provider={"IOff": IDim}, allow_undeclared_symbols=True
+    )
+    assert actual == expected