diff --git a/src/pkg/exp/template/doc.go b/src/pkg/exp/template/doc.go
index 9dcb6b12be7..41e60027869 100644
--- a/src/pkg/exp/template/doc.go
+++ b/src/pkg/exp/template/doc.go
@@ -153,8 +153,8 @@ Execute.
 
 Variables
 
-A pipeline inside an "if" or "with" action may initialize a variable to capture
-the result.  The initialization has syntax
+A pipeline inside an action may initialize a variable to capture the result.
+The initialization has syntax
 
 	$variable := pipeline
 
@@ -171,8 +171,10 @@ array/slice index or map key and element, respectively.  Note that if there is
 only one variable, it is assigned the element; this is opposite to the
 convention in Go range clauses.
 
-A variable's scope extends to the "end" action of the control structure
-declaring it.
+A variable's scope extends to the "end" action of the control structure ("if",
+"with", or "range") in which it is declared, or to the end of the template if
+there is no such control structure.  A template invocation does not inherit
+variables from the point of its invocation.
 
 When execution begins, $ is set to the data argument passed to Execute, that is,
 to the starting value of dot.
diff --git a/src/pkg/exp/template/exec.go b/src/pkg/exp/template/exec.go
index d60b107687e..169c8c69183 100644
--- a/src/pkg/exp/template/exec.go
+++ b/src/pkg/exp/template/exec.go
@@ -98,9 +98,6 @@ func (t *Template) ExecuteInSet(wr io.Writer, data interface{}, set *Set) (err o
 		state.errorf("must be parsed before execution")
 	}
 	state.walk(value, t.root)
-	if state.mark() != 1 {
-		t.errorf("internal error: variable stack at %d", state.mark())
-	}
 	return
 }
 
@@ -110,7 +107,7 @@ func (s *state) walk(dot reflect.Value, n node) {
 	switch n := n.(type) {
 	case *actionNode:
 		s.line = n.line
-		defer s.pop(s.mark())
+		// Do not pop variables so they persist until next end.
 		s.printValue(n, s.evalPipeline(dot, n.pipe))
 	case *ifNode:
 		s.line = n.line
@@ -235,7 +232,7 @@ func (s *state) walkTemplate(dot reflect.Value, t *templateNode) {
 	if tmpl == nil {
 		s.errorf("template %q not in set", t.name)
 	}
-	defer s.pop(s.mark())
+	// Variables declared by the pipeline persist.
 	dot = s.evalPipeline(dot, t.pipe)
 	newState := *s
 	newState.tmpl = tmpl
diff --git a/src/pkg/exp/template/exec_test.go b/src/pkg/exp/template/exec_test.go
index 7d73f89701a..efac443668e 100644
--- a/src/pkg/exp/template/exec_test.go
+++ b/src/pkg/exp/template/exec_test.go
@@ -197,6 +197,7 @@ var execTests = []execTest{
 	{"$ int", "{{$}}", "123", 123, true},
 	{"$.I", "{{$.I}}", "17", tVal, true},
 	{"$.U.V", "{{$.U.V}}", "v", tVal, true},
+	{"declare in action", "{{$x := $.U.V}},{{$x}}", "v,v", tVal, true},
 
 	// Pointers.
 	{"*int", "{{.PI}}", "23", tVal, true},
@@ -309,7 +310,8 @@ var execTests = []execTest{
 	{"with map", "{{with .MSIone}}{{.}}{{else}}EMPTY{{end}}", "map[one:1]", tVal, true},
 	{"with empty interface, struct field", "{{with .Empty4}}{{.V}}{{end}}", "v", tVal, true},
 	{"with $x int", "{{with $x := .I}}{{$x}}{{end}}", "17", tVal, true},
-	{"with $x struct.U.V", "{{with $x := $}}{{$.U.V}}{{end}}", "v", tVal, true},
+	{"with $x struct.U.V", "{{with $x := $}}{{$x.U.V}}{{end}}", "v", tVal, true},
+	{"with variable and action", "{{with $x := $}}{{$y := $.U.V}},{{$y}}{{end}}", "v,v", tVal, true},
 
 	// Range.
 	{"range []int", "{{range .SI}}-{{.}}-{{end}}", "-3--4--5-", tVal, true},
diff --git a/src/pkg/exp/template/parse.go b/src/pkg/exp/template/parse.go
index 96099357556..9208d0d04d6 100644
--- a/src/pkg/exp/template/parse.go
+++ b/src/pkg/exp/template/parse.go
@@ -695,14 +695,14 @@ func (t *Template) action() (n node) {
 		return t.withControl()
 	}
 	t.backup()
-	defer t.popVars(len(t.vars))
-	return newAction(t.lex.lineNumber(), t.pipeline("command", false))
+	// Do not pop variables; they persist until "end".
+	return newAction(t.lex.lineNumber(), t.pipeline("command"))
 }
 
 // Pipeline:
 //	field or command
 //	pipeline "|" pipeline
-func (t *Template) pipeline(context string, allowDecls bool) (pipe *pipeNode) {
+func (t *Template) pipeline(context string) (pipe *pipeNode) {
 	var decl []*variableNode
 	// Are there declarations?
 	for {
@@ -714,9 +714,6 @@ func (t *Template) pipeline(context string, allowDecls bool) (pipe *pipeNode) {
 				if len(variable.ident) != 1 {
 					t.errorf("illegal variable in declaration: %s", v.val)
 				}
-				if !allowDecls {
-					t.errorf("variable %q declared but cannot be referenced", v.val)
-				}
 				decl = append(decl, variable)
 				t.vars = append(t.vars, v.val)
 				if next.typ == itemChar && next.val == "," {
@@ -753,7 +750,7 @@ func (t *Template) pipeline(context string, allowDecls bool) (pipe *pipeNode) {
 func (t *Template) parseControl(context string) (lineNum int, pipe *pipeNode, list, elseList *listNode) {
 	lineNum = t.lex.lineNumber()
 	defer t.popVars(len(t.vars))
-	pipe = t.pipeline(context, true)
+	pipe = t.pipeline(context)
 	var next node
 	list, next = t.itemList(false)
 	switch next.typ() {
@@ -827,8 +824,8 @@ func (t *Template) templateControl() node {
 	var pipe *pipeNode
 	if t.next().typ != itemRightDelim {
 		t.backup()
-		defer t.popVars(len(t.vars))
-		pipe = t.pipeline("template", false)
+		// Do not pop variables; they persist until "end".
+		pipe = t.pipeline("template")
 	}
 	return newTemplate(t.lex.lineNumber(), name, pipe)
 }
diff --git a/src/pkg/exp/template/parse_test.go b/src/pkg/exp/template/parse_test.go
index 7a1468c3839..6b4ca1989f7 100644
--- a/src/pkg/exp/template/parse_test.go
+++ b/src/pkg/exp/template/parse_test.go
@@ -181,6 +181,8 @@ var parseTests = []parseTest{
 		"[(action: [(command: [I=printf S=`%d` N=23])])]"},
 	{"pipeline", "{{.X|.Y}}", noError,
 		`[(action: [(command: [F=[X]]) (command: [F=[Y]])])]`},
+	{"pipeline with decl", "{{$x := .X|.Y}}", noError,
+		`[(action: [V=[$x]] := [(command: [F=[X]]) (command: [F=[Y]])])]`},
 	{"declaration", "{{.X|.Y}}", noError,
 		`[(action: [(command: [F=[X]]) (command: [F=[Y]])])]`},
 	{"simple if", "{{if .X}}hello{{end}}", noError,
@@ -224,7 +226,6 @@ var parseTests = []parseTest{
 	{"invalid punctuation", "{{printf 3, 4}}", hasError, ""},
 	{"multidecl outside range", "{{with $v, $u := 3}}{{end}}", hasError, ""},
 	{"too many decls in range", "{{range $u, $v, $w := 3}}{{end}}", hasError, ""},
-	{"useless declaration", "{{$x := .X|.Y}}", hasError, ""},
 }
 
 func TestParse(t *testing.T) {
diff --git a/src/pkg/exp/template/set_test.go b/src/pkg/exp/template/set_test.go
index 2f347c37dc9..b28a352a34a 100644
--- a/src/pkg/exp/template/set_test.go
+++ b/src/pkg/exp/template/set_test.go
@@ -81,6 +81,7 @@ var setExecTests = []execTest{
 	{"invoke dot []int", `{{template "dot" .SI}}`, "[3 4 5]", tVal, true},
 	{"invoke dotV", `{{template "dotV" .U}}`, "v", tVal, true},
 	{"invoke nested int", `{{template "nested" .I}}`, "17", tVal, true},
+	{"variable declared by template", `{{template "nested" $x=.SI}},{{index $x 1}}`, "[3 4 5],4", tVal, true},
 
 	// User-defined function: test argument evaluator.
 	{"testFunc literal", `{{oneArg "joe"}}`, "oneArg=joe", tVal, true},