diff --git a/scripts/kconfig/lkc_proto.h b/scripts/kconfig/lkc_proto.h
index c46929f..2b16d6e 100644
--- a/scripts/kconfig/lkc_proto.h
+++ b/scripts/kconfig/lkc_proto.h
@@ -50,6 +50,8 @@ const char * prop_get_type_name(enum prop_type type);
 
 /* preprocess.c */
 void env_write_dep(FILE *f, const char *auto_conf_name);
+void variable_add(const char *name, const char *value);
+void variable_all_del(void);
 char *expand_string(const char *in);
 char *expand_dollar(const char **str);
 char *expand_one_token(const char **str);
diff --git a/scripts/kconfig/preprocess.c b/scripts/kconfig/preprocess.c
index f4c606f..1b746e0 100644
--- a/scripts/kconfig/preprocess.c
+++ b/scripts/kconfig/preprocess.c
@@ -79,6 +79,72 @@ void env_write_dep(FILE *f, const char *autoconfig_name)
 }
 
 /*
+ * Variables and User-defined Functions
+ */
+static LIST_HEAD(variable_list);
+
+struct variable {
+	char *name;
+	char *value;
+	struct list_head node;
+};
+
+static struct variable *variable_lookup(const char *name)
+{
+	struct variable *v;
+
+	list_for_each_entry(v, &variable_list, node) {
+		if (!strcmp(name, v->name))
+			return v;
+	}
+
+	return NULL;
+}
+
+static char *variable_expand(const char *name, int argc, char *argv[])
+{
+	struct variable *v;
+
+	v = variable_lookup(name);
+	if (!v)
+		return NULL;
+
+	return expand_string_with_args(v->value, argc, argv);
+}
+
+void variable_add(const char *name, const char *value)
+{
+	struct variable *v;
+
+	v = variable_lookup(name);
+	if (v) {
+		free(v->value);
+	} else {
+		v = xmalloc(sizeof(*v));
+		v->name = xstrdup(name);
+		list_add_tail(&v->node, &variable_list);
+	}
+
+	v->value = xstrdup(value);
+}
+
+static void variable_del(struct variable *v)
+{
+	list_del(&v->node);
+	free(v->name);
+	free(v->value);
+	free(v);
+}
+
+void variable_all_del(void)
+{
+	struct variable *v, *tmp;
+
+	list_for_each_entry_safe(v, tmp, &variable_list, node)
+		variable_del(v);
+}
+
+/*
  * Built-in Functions
  */
 struct function {
@@ -175,16 +241,30 @@ static char *function_call(const char *name, int argc, char *argv[])
  * Evaluate a clause with arguments.  argc/argv are arguments from the upper
  * function call.
  *
+ * Let's say 'foo' is defined as:
+ *   foo = ABC$(1)PQR(2)XYZ
+ * and you want to evaluate $(foo x,y)
+ *
+ * First, this helper is called with:
+ *   in  :    foo x,y
+ *   argc:    0
+ * and then, recursively called with:
+ *   in:      ABC$(1)PQR(2)XYZ
+ *   argc:    2
+ *   argv[0]: x
+ *   argv[1]: y
+ *
  * Returned string must be freed when done
  */
 static char *eval_clause(const char *in, int argc, char *argv[])
 {
-	char *tmp, *prev, *p, *res, *name;
+	char *tmp, *prev, *p, *res, *endptr, *name;
 	char delim = ' ';
 	int new_argc = 0;
 	char *new_argv[FUNCTION_MAX_ARGS];
 	int nest = 0;
 	int i;
+	unsigned long n;
 
 	/*
 	 * Returns an empty string because '$()' should be evaluated
@@ -193,6 +273,15 @@ static char *eval_clause(const char *in, int argc, char *argv[])
 	if (!*in)
 		return xstrdup("");
 
+	/*
+	 * If variable name is '1', '2', etc.  It is generally an argument
+	 * from a user-function call (i.e. local-scope variable).  If not
+	 * available, then look-up global-scope variables.
+	 */
+	n = strtoul(in, &endptr, 10);
+	if (!*endptr && n > 0 && n <= argc)
+		return xstrdup(argv[n - 1]);
+
 	tmp = xstrdup(in);
 
 	prev = p = tmp;
@@ -248,6 +337,11 @@ static char *eval_clause(const char *in, int argc, char *argv[])
 	if (res)
 		goto out;
 
+	/* Search for variable or user-defined function */
+	res = variable_expand(name, new_argc, new_argv);
+	if (res)
+		goto out;
+
 	/* Last, try environment variable */
 	if (new_argc == 0) {
 		res = env_expand(name);
diff --git a/scripts/kconfig/zconf.l b/scripts/kconfig/zconf.l
index 5e53348..19e5ebf 100644
--- a/scripts/kconfig/zconf.l
+++ b/scripts/kconfig/zconf.l
@@ -1,12 +1,13 @@
 %option nostdinit noyywrap never-interactive full ecs
 %option 8bit nodefault yylineno
-%x COMMAND HELP STRING PARAM
+%x COMMAND HELP STRING PARAM ASSIGN_VAL
 %{
 /*
  * Copyright (C) 2002 Roman Zippel <zippel@linux-m68k.org>
  * Released under the terms of the GNU GPL v2.0.
  */
 
+#include <assert.h>
 #include <limits.h>
 #include <stdio.h>
 #include <stdlib.h>
@@ -111,8 +112,10 @@ n	[A-Za-z0-9_-]
 		}
 		alloc_string(yytext, yyleng);
 		yylval.string = text;
-		return T_WORD;
+		return T_VARIABLE;
 	}
+	"="	{ BEGIN(ASSIGN_VAL); return T_ASSIGN; }
+	[[:blank:]]+
 	.	warn_ignored_character(*yytext);
 	\n	{
 		BEGIN(INITIAL);
@@ -120,6 +123,16 @@ n	[A-Za-z0-9_-]
 	}
 }
 
+<ASSIGN_VAL>{
+	[^[:blank:]\n]+.*	{
+		alloc_string(yytext, yyleng);
+		yylval.string = text;
+		return T_ASSIGN_VAL;
+	}
+	\n	{ BEGIN(INITIAL); return T_EOL; }
+	.
+}
+
 <PARAM>{
 	"&&"	return T_AND;
 	"||"	return T_OR;
diff --git a/scripts/kconfig/zconf.y b/scripts/kconfig/zconf.y
index 22e318c..493388c 100644
--- a/scripts/kconfig/zconf.y
+++ b/scripts/kconfig/zconf.y
@@ -77,6 +77,9 @@ static struct menu *current_menu, *current_entry;
 %token T_CLOSE_PAREN
 %token T_OPEN_PAREN
 %token T_EOL
+%token <string> T_VARIABLE
+%token T_ASSIGN
+%token <string> T_ASSIGN_VAL
 
 %left T_OR
 %left T_AND
@@ -92,7 +95,7 @@ static struct menu *current_menu, *current_entry;
 %type <id> end
 %type <id> option_name
 %type <menu> if_entry menu_entry choice_entry
-%type <string> symbol_option_arg word_opt
+%type <string> symbol_option_arg word_opt assign_val
 
 %destructor {
 	fprintf(stderr, "%s:%d: missing end statement for this entry\n",
@@ -143,6 +146,7 @@ common_stmt:
 	| config_stmt
 	| menuconfig_stmt
 	| source_stmt
+	| assignment_stmt
 ;
 
 option_error:
@@ -511,6 +515,15 @@ symbol:	  nonconst_symbol
 word_opt: /* empty */			{ $$ = NULL; }
 	| T_WORD
 
+/* assignment statement */
+
+assignment_stmt:  T_VARIABLE T_ASSIGN assign_val T_EOL	{ variable_add($1, $3); free($1); free($3); }
+
+assign_val:
+	/* empty */		{ $$ = xstrdup(""); };
+	| T_ASSIGN_VAL
+;
+
 %%
 
 void conf_parse(const char *name)
@@ -525,6 +538,12 @@ void conf_parse(const char *name)
 	if (getenv("ZCONF_DEBUG"))
 		yydebug = 1;
 	yyparse();
+
+	/*
+	 * Variables are expanded in the parse phase.  We can free them here.
+	 */
+	variable_all_del();
+
 	if (yynerrs)
 		exit(1);
 	if (!modules_sym)
