diff --git a/regression-tests/pure2-bugfix-for-function-returning-funcptr.cpp2 b/regression-tests/pure2-bugfix-for-function-returning-funcptr.cpp2
new file mode 100644
index 000000000..aa01b279c
--- /dev/null
+++ b/regression-tests/pure2-bugfix-for-function-returning-funcptr.cpp2
@@ -0,0 +1,32 @@
+g_inttemplate: std::optional<int> = std::nullopt;
+g_template: std::optional<*(_: int) -> void> = std::nullopt;
+g_signal_handlers: std::unordered_map<int, *(_: int) -> void> = ();
+
+intfuncptr: type == *(_: int) -> void;
+
+set_signal: (signum: int, handler: *(_: int) -> void) -> *(_: int) -> void = {
+    default_handler := :(foo: int) -> void = { 
+        // Default handler does nothing
+        _ = foo;
+    };
+    old_handler: intfuncptr = default_handler;
+    if g_signal_handlers.find(signum) != g_signal_handlers.end() {
+        old_handler = g_signal_handlers[signum];
+    }
+    g_signal_handlers[signum] = handler;
+    return old_handler;
+}
+
+g_signal: i64 = 0;
+inc_signal: (signum: int) -> void = {
+    g_signal += signum;
+}
+dec_signal: (signum: int) -> void = {
+    g_signal -= signum;
+}
+
+main: () -> int = {
+    _ = set_signal(1, inc_signal);
+    cmpx := set_signal(1, dec_signal);
+    return cmpx != inc_signal;
+}
diff --git a/regression-tests/test-results/pure2-bugfix-for-function-returning-funcptr.cpp b/regression-tests/test-results/pure2-bugfix-for-function-returning-funcptr.cpp
new file mode 100644
index 000000000..fee74ea77
--- /dev/null
+++ b/regression-tests/test-results/pure2-bugfix-for-function-returning-funcptr.cpp
@@ -0,0 +1,72 @@
+
+#define CPP2_IMPORT_STD          Yes
+
+//=== Cpp2 type declarations ====================================================
+
+
+#include "cpp2util.h"
+
+#line 1 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+
+
+//=== Cpp2 type definitions and function declarations ===========================
+
+#line 1 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+extern std::optional<int> g_inttemplate;
+#line 2 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+extern std::optional<void(*)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1)> g_template;
+extern std::unordered_map<int,void(*)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1)> g_signal_handlers;
+
+using intfuncptr = void(*)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1);
+
+[[nodiscard]] auto set_signal(cpp2::impl::in<int> signum, void(*handler)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1)) -> void(*)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1);
+
+#line 20 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+extern cpp2::i64 g_signal;
+auto inc_signal(cpp2::impl::in<int> signum) -> void;
+
+#line 24 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+auto dec_signal(cpp2::impl::in<int> signum) -> void;
+
+#line 28 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+[[nodiscard]] auto main() -> int;
+
+//=== Cpp2 function definitions =================================================
+
+#line 1 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+std::optional<int> g_inttemplate {std::nullopt}; 
+#line 2 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+std::optional<void(*)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1)> g_template {std::nullopt}; 
+std::unordered_map<int,void(*)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1)> g_signal_handlers {}; 
+
+#line 7 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+[[nodiscard]] auto set_signal(cpp2::impl::in<int> signum, void(*handler)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1)) -> void(*)([[maybe_unused]] cpp2::impl::in<int> unnamed_param_1){
+    auto default_handler {[](cpp2::impl::in<int> foo) -> void{
+        // Default handler does nothing
+        static_cast<void>(foo);
+    }}; 
+    intfuncptr old_handler {cpp2::move(default_handler)}; 
+    if (CPP2_UFCS(find)(g_signal_handlers, signum) != CPP2_UFCS(end)(g_signal_handlers)) {
+        old_handler = CPP2_ASSERT_IN_BOUNDS(g_signal_handlers, signum);
+    }
+    CPP2_ASSERT_IN_BOUNDS(g_signal_handlers, signum) = handler;
+    return old_handler; 
+}
+
+cpp2::i64 g_signal {0}; 
+#line 21 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+auto inc_signal(cpp2::impl::in<int> signum) -> void{
+    g_signal += signum;
+}
+#line 24 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+auto dec_signal(cpp2::impl::in<int> signum) -> void{
+    g_signal -= signum;
+}
+
+#line 28 "pure2-bugfix-for-function-returning-funcptr.cpp2"
+[[nodiscard]] auto main() -> int{
+    static_cast<void>(set_signal(1, inc_signal));
+    auto cmpx {set_signal(1, dec_signal)}; 
+    return cpp2::move(cmpx) != inc_signal; 
+}
+
diff --git a/regression-tests/test-results/pure2-bugfix-for-function-returning-funcptr.cpp2.output b/regression-tests/test-results/pure2-bugfix-for-function-returning-funcptr.cpp2.output
new file mode 100644
index 000000000..ba1b049ee
--- /dev/null
+++ b/regression-tests/test-results/pure2-bugfix-for-function-returning-funcptr.cpp2.output
@@ -0,0 +1,2 @@
+pure2-bugfix-for-function-returning-funcptr.cpp2... ok (all Cpp2, passes safety checks)
+
diff --git a/source/parse.h b/source/parse.h
index 4102558ed..831321b0b 100644
--- a/source/parse.h
+++ b/source/parse.h
@@ -7266,7 +7266,8 @@ class parser
     auto type_id(
         bool allow_omitting_type_name = false,
         bool allow_constraint         = false,
-        bool allow_function_type      = false
+        bool allow_function_type      = false,
+        bool allow_qualified_function_type = true
     )
         -> std::unique_ptr<type_id_node>
     {
@@ -7339,7 +7340,9 @@ class parser
             assert (n->id.index() == type_id_node::unqualified);
         }
         else if (std::unique_ptr<function_type_node> id = {};
-            allow_function_type
+            (allow_function_type || 
+                (allow_qualified_function_type && 
+                !n->pc_qualifiers.empty()))
             && (id = function_type({})) != nullptr
             )
         {
diff --git a/source/to_cpp1.h b/source/to_cpp1.h
index 74ab07acf..2796eb943 100644
--- a/source/to_cpp1.h
+++ b/source/to_cpp1.h
@@ -1978,9 +1978,8 @@ class cppfront
 
         //  Handle function types
         if (n.is_function_typeid()) {
-            //  If identifier is nonempty, we're doing a local variable with a (pointer to)
-            //  function typeid, so stick in the pointers here for inside-out Cpp1 declarations
-            if (!identifier.empty()) {
+            //  If there are qualifiers, stick in the pointers here for inside-out Cpp1 declarations
+            if (n.pc_qualifiers.size() > 0) {
                 for (auto q: n.pc_qualifiers) {
                     if (*q == "const") { identifier = " " + identifier; }
                     identifier = q->as_string_view() + identifier;