diff --git a/src/env.cpp b/src/env.cpp
index c11a60ba4..0d2625007 100644
--- a/src/env.cpp
+++ b/src/env.cpp
@@ -1251,6 +1251,13 @@ mod_result_t env_stack_impl_t::remove(const wcstring &key, int mode) {
             result.global_modified = true;
         } else if (query.local) {
             result.status = remove_from_chain(locals_, key) ? ENV_OK : ENV_NOT_FOUND;
+        } else if (query.function) {
+            auto node = locals_;
+            while (node->next) {
+                node = node->next;
+                if (node->new_scope) break;
+            }
+            result.status = remove_from_chain(node, key) ? ENV_OK : ENV_NOT_FOUND;
         } else {
             DIE("Unknown scope");
         }
diff --git a/tests/checks/set.fish b/tests/checks/set.fish
index 2ebf91896..2d448519f 100644
--- a/tests/checks/set.fish
+++ b/tests/checks/set.fish
@@ -806,3 +806,17 @@ end
 test-function-scope
 echo $funcvar $funcvar2
 # CHECK:
+
+function erase-funcvar
+    set -l banana 1
+    begin
+        set -l banana 2
+        set -ef banana
+        echo $banana
+        # CHECK: 2
+    end
+    echo $banana
+    # CHECK:
+end
+
+erase-funcvar