diff --git a/src/backend/rewrite/rewriteHandler.c b/src/backend/rewrite/rewriteHandler.c
new file mode 100644
index b6452e9..aeb757c
--- a/src/backend/rewrite/rewriteHandler.c
+++ b/src/backend/rewrite/rewriteHandler.c
@@ -353,6 +353,7 @@ rewriteRuleAction(Query *parsetree,
 	Query	   *sub_action;
 	Query	  **sub_action_ptr;
 	acquireLocksOnSubLinks_context context;
+	ListCell   *lc;
 
 	context.for_execute = true;
 
@@ -392,6 +393,19 @@ rewriteRuleAction(Query *parsetree,
 				   PRS2_OLD_VARNO + rt_length, rt_index, 0);
 
 	/*
+	 * Mark any subquery RTEs in the rule action as LATERAL if they contain
+	 * Vars referring to the current query level (references to NEW/OLD).
+	 */
+	foreach(lc, sub_action->rtable)
+	{
+		RangeTblEntry *rte = (RangeTblEntry *) lfirst(lc);
+
+		if (rte->rtekind == RTE_SUBQUERY &&
+			contain_vars_of_level((Node *) rte->subquery, 1))
+			rte->lateral = true;
+	}
+
+	/*
 	 * Generate expanded rtable consisting of main parsetree's rtable plus
 	 * rule action's rtable; this becomes the complete rtable for the rule
 	 * action.  Some of the entries may be unused after we finish rewriting,
@@ -439,8 +453,6 @@ rewriteRuleAction(Query *parsetree,
 	 */
 	if (parsetree->hasSubLinks && !sub_action->hasSubLinks)
 	{
-		ListCell   *lc;
-
 		foreach(lc, parsetree->rtable)
 		{
 			RangeTblEntry *rte = (RangeTblEntry *) lfirst(lc);
@@ -538,8 +550,6 @@ rewriteRuleAction(Query *parsetree,
 	 */
 	if (parsetree->cteList != NIL && sub_action->commandType != CMD_UTILITY)
 	{
-		ListCell   *lc;
-
 		/*
 		 * Annoying implementation restriction: because CTEs are identified by
 		 * name within a cteList, we can't merge a CTE from the original query
diff --git a/src/test/regress/expected/rules.out b/src/test/regress/expected/rules.out
new file mode 100644
index a3a5a62..e953d1f
--- a/src/test/regress/expected/rules.out
+++ b/src/test/regress/expected/rules.out
@@ -3083,6 +3083,31 @@ Rules:
 
 drop table rule_t1, rule_dest;
 --
+-- Test implicit LATERAL references to old/new in rules
+--
+CREATE TABLE rule_t1(a int, b text DEFAULT 'xxx', c int);
+CREATE VIEW rule_v1 AS SELECT * FROM rule_t1;
+CREATE RULE v1_ins AS ON INSERT TO rule_v1
+  DO ALSO INSERT INTO rule_t1
+  SELECT * FROM (SELECT a + 10 FROM rule_t1 WHERE a = NEW.a) tt;
+CREATE RULE v1_upd AS ON UPDATE TO rule_v1
+  DO ALSO UPDATE rule_t1 t
+  SET c = tt.a * 10
+  FROM (SELECT a FROM rule_t1 WHERE a = OLD.a) tt WHERE t.a = tt.a;
+INSERT INTO rule_v1 VALUES (1, 'a'), (2, 'b');
+UPDATE rule_v1 SET b = upper(b);
+SELECT * FROM rule_t1;
+ a  |  b  |  c  
+----+-----+-----
+  1 | A   |  10
+  2 | B   |  20
+ 11 | XXX | 110
+ 12 | XXX | 120
+(4 rows)
+
+DROP TABLE rule_t1 CASCADE;
+NOTICE:  drop cascades to view rule_v1
+--
 -- check alter rename rule
 --
 CREATE TABLE rule_t1 (a INT);
diff --git a/src/test/regress/sql/rules.sql b/src/test/regress/sql/rules.sql
new file mode 100644
index ac1a4ce..4caab34
--- a/src/test/regress/sql/rules.sql
+++ b/src/test/regress/sql/rules.sql
@@ -1047,6 +1047,23 @@ create rule rr as on update to rule_t1 d
 drop table rule_t1, rule_dest;
 
 --
+-- Test implicit LATERAL references to old/new in rules
+--
+CREATE TABLE rule_t1(a int, b text DEFAULT 'xxx', c int);
+CREATE VIEW rule_v1 AS SELECT * FROM rule_t1;
+CREATE RULE v1_ins AS ON INSERT TO rule_v1
+  DO ALSO INSERT INTO rule_t1
+  SELECT * FROM (SELECT a + 10 FROM rule_t1 WHERE a = NEW.a) tt;
+CREATE RULE v1_upd AS ON UPDATE TO rule_v1
+  DO ALSO UPDATE rule_t1 t
+  SET c = tt.a * 10
+  FROM (SELECT a FROM rule_t1 WHERE a = OLD.a) tt WHERE t.a = tt.a;
+INSERT INTO rule_v1 VALUES (1, 'a'), (2, 'b');
+UPDATE rule_v1 SET b = upper(b);
+SELECT * FROM rule_t1;
+DROP TABLE rule_t1 CASCADE;
+
+--
 -- check alter rename rule
 --
 CREATE TABLE rule_t1 (a INT);