diff --git a/src/backend/rewrite/rewriteHandler.c b/src/backend/rewrite/rewriteHandler.c
index b7277d99741..9103b35c774 100644
--- a/src/backend/rewrite/rewriteHandler.c
+++ b/src/backend/rewrite/rewriteHandler.c
@@ -348,6 +348,7 @@ rewriteRuleAction(Query *parsetree,
 	Query	   *sub_action;
 	Query	  **sub_action_ptr;
 	acquireLocksOnSubLinks_context context;
+	ListCell   *lc;
 
 	context.for_execute = true;
 
@@ -386,6 +387,23 @@ rewriteRuleAction(Query *parsetree,
 	ChangeVarNodes(rule_qual,
 				   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).
+	 * Those really are lateral references, but we've historically not
+	 * required users to mark such subqueries with LATERAL explicitly.  But
+	 * the planner will complain if such Vars exist in a non-LATERAL subquery,
+	 * so we have to fix things up here.
+	 */
+	foreach(lc, sub_action->rtable)
+	{
+		RangeTblEntry *rte = (RangeTblEntry *) lfirst(lc);
+
+		if (rte->rtekind == RTE_SUBQUERY && !rte->lateral &&
+			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
@@ -427,8 +445,6 @@ rewriteRuleAction(Query *parsetree,
 	 */
 	if (parsetree->hasSubLinks && !sub_action->hasSubLinks)
 	{
-		ListCell   *lc;
-
 		foreach(lc, parsetree->rtable)
 		{
 			RangeTblEntry *rte = (RangeTblEntry *) lfirst(lc);
@@ -526,8 +542,6 @@ 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
index 8e16d045cc9..b87aaf02da7 100644
--- a/src/test/regress/expected/rules.out
+++ b/src/test/regress/expected/rules.out
@@ -3031,6 +3031,31 @@ Rules:
   RETURNING trgt.f1,
     trgt.f2
 
+--
+-- 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
 --
diff --git a/src/test/regress/sql/rules.sql b/src/test/regress/sql/rules.sql
index a195c563c8a..7502307a0a9 100644
--- a/src/test/regress/sql/rules.sql
+++ b/src/test/regress/sql/rules.sql
@@ -1054,6 +1054,23 @@ create rule r7 as on delete to rules_src do instead
 -- check display of all rules added above
 \d+ rules_src
 
+--
+-- 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
 --