diff --git a/iwyu_ast_util.cc b/iwyu_ast_util.cc
index 55c5190..4c75628 100644
--- a/iwyu_ast_util.cc
+++ b/iwyu_ast_util.cc
@@ -1507,4 +1507,9 @@ string GetKindName(const TypeLoc typeloc) {
   return string(typeloc.getTypePtr()->getTypeClassName()) + "TypeLoc";
 }
 
+bool IsDeclaredInsideFunction(const Decl* decl) {
+  const DeclContext* decl_ctx = decl->getDeclContext();
+  return isa<FunctionDecl>(decl_ctx);
+}
+
 }  // namespace include_what_you_use
diff --git a/iwyu_ast_util.h b/iwyu_ast_util.h
index e47ab3d..c70be3f 100644
--- a/iwyu_ast_util.h
+++ b/iwyu_ast_util.h
@@ -839,6 +839,10 @@ std::string GetKindName(const clang::Stmt* stmt);
 std::string GetKindName(const clang::Type* type);
 std::string GetKindName(const clang::TypeLoc typeloc);
 
+// Returns true if decl is entirely inside a function, which implies it's only
+// visible from said function.
+bool IsDeclaredInsideFunction(const clang::Decl* decl);
+
 }  // namespace include_what_you_use
 
 #endif  // INCLUDE_WHAT_YOU_USE_IWYU_AST_UTIL_H_
diff --git a/iwyu_output.cc b/iwyu_output.cc
index 6a86236..b5ee605 100644
--- a/iwyu_output.cc
+++ b/iwyu_output.cc
@@ -976,8 +976,9 @@ set<string> CalculateMinimalIncludes(
 // A4) If the file containing the use has a pragma inhibiting the forward
 //     declaration of the symbol, change the use to a full info use in order
 //     to make sure that the compiler can see some declaration of the symbol.
-// A5) If a nested class, discard this use (the parent class declaration
-//     is sufficient).
+// A5) If declaration is nested inside a class or a function, discard this use.
+//     The containing class/function is required to use the nested decl, and
+//     so will force use of the containing header.
 // A6) If any of the redeclarations of this declaration is in the same
 //     file as the use (and before it), and is actually a definition,
 //     discard the forward-declare use.
@@ -986,7 +987,9 @@ set<string> CalculateMinimalIncludes(
 // A8) If --no_fwd_decls has been passed, recategorize as a full use.
 
 // Trimming symbol uses (1st pass):
-// B1) TBD
+// B1) If declaration is nested inside a function, discard this use.
+//     The function is required to use the nested decl, and so will force use of
+//     the containing header.
 // B2) If the definition of a full use comes after the use, change the
 //     full use to a forward-declare use that points to a fwd-decl
 //     that comes before the use.  (This is for cases like typedefs
@@ -1108,7 +1111,8 @@ void ProcessForwardDeclare(OneUse* use,
     }
   }
 
-  // (A5) If using a nested class, discard this use.
+  // (A5) If using a nested class or a type declared inside a function, discard
+  // this use.
   if (IsNestedClass(tag_decl)) {
     // iwyu will require the full type of the parent class when it
     // recurses on the qualifier (any use of Foo::Bar requires the
@@ -1127,6 +1131,12 @@ void ProcessForwardDeclare(OneUse* use,
       use->set_ignore_use();
       return;
     }
+  } else if (IsDeclaredInsideFunction(tag_decl)) {
+    VERRS(6) << "Ignoring fwd-decl use of " << use->symbol_name() << " ("
+             << use->PrintableUseLoc() << "): declared inside a "
+             << "function\n";
+    use->set_ignore_use();
+    return;
   }
 
   // (A6) If a definition exists earlier in this file, discard this use.
@@ -1197,6 +1207,16 @@ void ProcessFullUse(OneUse* use,
   if (use->ignore_use())   // we're already ignoring it
     return;
 
+  // (B1) If declaration is inside a function, it can only be seen via said
+  // function. Discard this use and assume the use of the function provides.
+  if (IsDeclaredInsideFunction(use->decl())) {
+    VERRS(6) << "Ignoring full use of " << use->symbol_name() << " ("
+             << use->PrintableUseLoc() << "): declared inside a "
+             << "function\n";
+    use->set_ignore_use();
+    return;
+  }
+
   // We normally ignore uses for builtins, but when there is a mapping defined
   // for the symbol, we should respect that.  So, we need to determine whether
   // the symbol has any mappings.
diff --git a/tests/cxx/decl_inside_func-d1.h b/tests/cxx/decl_inside_func-d1.h
new file mode 100644
index 0000000..003a2a2
--- /dev/null
+++ b/tests/cxx/decl_inside_func-d1.h
@@ -0,0 +1,10 @@
+//===--- decl_inside_func-d1.h - test input file for iwyu -----------------===//
+//
+//                     The LLVM Compiler Infrastructure
+//
+// This file is distributed under the University of Illinois Open Source
+// License. See LICENSE.TXT for details.
+//
+//===----------------------------------------------------------------------===//
+
+#include "tests/cxx/decl_inside_func-i1.h"
diff --git a/tests/cxx/decl_inside_func-i1.h b/tests/cxx/decl_inside_func-i1.h
new file mode 100644
index 0000000..9d24a8b
--- /dev/null
+++ b/tests/cxx/decl_inside_func-i1.h
@@ -0,0 +1,34 @@
+//===--- decl_inside_func-i1.h - test input file for iwyu -----------------===//
+//
+//                     The LLVM Compiler Infrastructure
+//
+// This file is distributed under the University of Illinois Open Source
+// License. See LICENSE.TXT for details.
+//
+//===----------------------------------------------------------------------===//
+
+// Reduced/derived/copied from Quill 1.6.3:
+// https://github.com/odygrd/quill/blob/v1.6.3/quill/include/quill/PatternFormatter.h#L35
+
+// This macro defines a lambda containing a function-local declaration of a
+// union X, which is cleverly returned from the lambda.
+//
+// Declarations inside a function are only directly visible from the function
+// itself, so any uses of X should be ignored -- the only way to get in any
+// contact with X is to use MACRO, so this header will be desired already.
+
+#define MACRO(str)                    \
+  [] {                                \
+    union X {                         \
+      static constexpr auto value() { \
+        return str;                   \
+      }                               \
+    };                                \
+    return X{};                       \
+  }()
+
+/**** IWYU_SUMMARY
+
+(tests/cxx/decl_inside_func-i1.h has correct #includes/fwd-decls)
+
+***** IWYU_SUMMARY */
diff --git a/tests/cxx/decl_inside_func.cc b/tests/cxx/decl_inside_func.cc
new file mode 100644
index 0000000..18e5287
--- /dev/null
+++ b/tests/cxx/decl_inside_func.cc
@@ -0,0 +1,41 @@
+//===--- decl_inside_func.cc - test input file for iwyu -------------------===//
+//
+//                     The LLVM Compiler Infrastructure
+//
+// This file is distributed under the University of Illinois Open Source
+// License. See LICENSE.TXT for details.
+//
+//===----------------------------------------------------------------------===//
+
+// A declaration inside a function can sometimes escape (see implementation of
+// MACRO), and while such a declaration may look like it's independently used
+// here, the only way to make contact with it is through its containing
+// function.
+// Since we must have a declaration of _the function_ in order to call it, the
+// contained declaration will have followed along and we can ignore any direct
+// uses of the contained decl.
+// This used to lead to the contained declaration being fwd-decl used, and IWYU
+// crashing when trying to format a printable forward-decl. Ignoring it
+// completely avoids that malfunction.
+
+// IWYU_ARGS: -I . -Xiwyu --check_also="tests/cxx/decl_inside_func-i1.h"
+
+#include "tests/cxx/decl_inside_func-d1.h"
+
+const char* f() {
+  // IWYU: MACRO is ...*decl_inside_func-i1.h
+  return MACRO("bleh").value();
+}
+
+/**** IWYU_SUMMARY
+
+tests/cxx/decl_inside_func.cc should add these lines:
+#include "tests/cxx/decl_inside_func-i1.h"
+
+tests/cxx/decl_inside_func.cc should remove these lines:
+- #include "tests/cxx/decl_inside_func-d1.h"  // lines XX-XX
+
+The full include-list for tests/cxx/decl_inside_func.cc:
+#include "tests/cxx/decl_inside_func-i1.h"  // for MACRO
+
+***** IWYU_SUMMARY */