diff --git a/src/lib/test-var-expand.c b/src/lib/test-var-expand.c
index 370199cb26..d3f248a9ed 100644
--- a/src/lib/test-var-expand.c
+++ b/src/lib/test-var-expand.c
@@ -52,7 +52,10 @@ static void test_var_expand_builtin(void)
 		{ "%50Hv", "1f" },
 		{ "%50Hw", "2e" },
 		{ "%50Nv", "25" },
-		{ "%50Nw", "e" }
+		{ "%50Nw", "e" },
+
+		{ "%{nonexistent}", "UNSUPPORTED_VARIABLE_nonexistent" },
+		{ "%{nonexistent:default}", "UNSUPPORTED_VARIABLE_nonexistent" },
 	};
 	static struct var_expand_table table[] = {
 		{ 'v', "value", NULL },
diff --git a/src/lib/var-expand.c b/src/lib/var-expand.c
index fee44c9c4b..5d06cebee0 100644
--- a/src/lib/var-expand.c
+++ b/src/lib/var-expand.c
@@ -232,6 +232,8 @@ var_expand_long(const struct var_expand_table *table,
 			data = "";
 		value = var_expand_func(func_table, key, data, context);
 	}
+	if (value == NULL)
+		return t_strdup_printf("UNSUPPORTED_VARIABLE_%s", key);
 	return value;
 }
 
@@ -325,8 +327,8 @@ void var_expand_with_funcs(string_t *dest, const char *str,
 				len = end - (str + 1);
 				var = var_expand_long(table, func_table,
 						      str+1, len, context);
-				if (var != NULL)
-					str = end;
+				i_assert(var != NULL);
+				str = end;
 			} else if (table != NULL) {
 				for (t = table; !TABLE_LAST(t); t++) {
 					if (t->key == *str) {