diff --git a/src/retasc/models/rule.py b/src/retasc/models/rule.py
index 39a2fb8..7d968dc 100644
--- a/src/retasc/models/rule.py
+++ b/src/retasc/models/rule.py
@@ -1,5 +1,7 @@
 # SPDX-License-Identifier: GPL-3.0-or-later
 
+from copy import deepcopy
+
 import jinja2.exceptions
 from pydantic import BaseModel, ConfigDict, Field
 
@@ -50,20 +52,15 @@ def update_state(self, context) -> ReleaseRuleState:
         - In-progress, if some prerequisites are in In-progress but none are Pending
         - Completed, if all prerequisites are Completed
         """
-        state = context.rules_states.get(self.name)
-        if state is not None:
-            return state
-
-        context.rules_states[self.name] = ReleaseRuleState.Pending
+        params = context.rule_template_params.get(self.name)
+        if params is not None:
+            context.template.params.update(params)
+            return params["state"]
 
         rule_state = ReleaseRuleState.Completed
+        context.template.params["state"] = rule_state
 
         for prereq in self.prerequisites:
-            if rule_state == ReleaseRuleState.Pending:
-                break
-
-            context.template.params["state"] = rule_state
-
             with context.report.section(prereq.section_name(context)):
                 try:
                     state = prereq.update_state(context)
@@ -76,7 +73,13 @@ def update_state(self, context) -> ReleaseRuleState:
 
                 if state != ReleaseRuleState.Completed:
                     context.report.set("state", state.name)
-                rule_state = min(rule_state, state)
 
-        context.rules_states[self.name] = rule_state
+            rule_state = min(rule_state, state)
+            context.template.params["state"] = rule_state
+
+            if rule_state == ReleaseRuleState.Pending:
+                break
+
+        context.rule_template_params[self.name] = deepcopy(context.template.params)
+
         return rule_state
diff --git a/src/retasc/run.py b/src/retasc/run.py
index b45ec71..9da4928 100644
--- a/src/retasc/run.py
+++ b/src/retasc/run.py
@@ -49,7 +49,7 @@ def update_state(rule: Rule, context: RuntimeContext):
 def iterate_rules(context: RuntimeContext) -> Iterator[tuple[dict, list[Rule]]]:
     input_rules = rules_by_input(context)
     for input, values, rules in input_rules:
-        context.rules_states = {}
+        context.rule_template_params = {}
         with context.report.section(input.section_name(values)):
             yield values, rules
 
diff --git a/src/retasc/runtime_context.py b/src/retasc/runtime_context.py
index 2a1d4a5..e56bf8d 100644
--- a/src/retasc/runtime_context.py
+++ b/src/retasc/runtime_context.py
@@ -5,7 +5,6 @@
 
 from retasc.jira_client import JiraClient
 from retasc.models.config import Config
-from retasc.models.release_rule_state import ReleaseRuleState
 from retasc.models.rule import Rule
 from retasc.product_pages_api import ProductPagesApi
 from retasc.report import Report
@@ -22,4 +21,4 @@ class RuntimeContext:
     report: Report
     config: Config
 
-    rules_states: dict[str, ReleaseRuleState] = field(default_factory=dict)
+    rule_template_params: dict[str, dict] = field(default_factory=dict)
diff --git a/tests/test_run.py b/tests/test_run.py
index a986935..be01b7c 100644
--- a/tests/test_run.py
+++ b/tests/test_run.py
@@ -952,3 +952,71 @@ def test_run_rule_prerequsite_variable_string(factory):
             }
         }
     }
+
+
+def test_run_rule_inherit_params(factory):
+    """Template parameters are inherited from dependent rules"""
+    rule_data_list = [
+        {
+            "version": 1,
+            "name": "rule-1",
+            "prerequisites": [
+                {"variable": "test_var", "string": "rule-1"},
+                {"condition": "test_var"},
+            ],
+        },
+        {
+            "version": 1,
+            "name": "rule-2",
+            "prerequisites": [
+                {"rule": "rule-1"},
+                {"condition": "test_var"},
+            ],
+        },
+        {
+            "version": 1,
+            "name": "rule-3",
+            "prerequisites": [
+                {"variable": "test_var", "string": "rule-2"},
+                {"rule": "rule-1"},
+                {"condition": "test_var"},
+            ],
+        },
+        {
+            "version": 1,
+            "name": "rule-4",
+            "prerequisites": [
+                {"condition": "test_var|default"},
+            ],
+        },
+    ]
+    for rule_data in rule_data_list:
+        factory.add_rule(Rule(**rule_data))
+    report = call_run()
+    assert report.data == {
+        INPUT: {
+            "rule-1": {
+                "VariableString('test_var')": {"value": "rule-1"},
+                "Condition('test_var')": {"result": "rule-1"},
+                "state": "Completed",
+            },
+            "rule-2": {
+                "Rule('rule-1')": {},
+                "Condition('test_var')": {"result": "rule-1"},
+                "state": "Completed",
+            },
+            "rule-3": {
+                "VariableString('test_var')": {"value": "rule-2"},
+                "Rule('rule-1')": {},
+                "Condition('test_var')": {"result": "rule-1"},
+                "state": "Completed",
+            },
+            "rule-4": {
+                "Condition('test_var|default')": {
+                    "result": "",
+                    "state": "Pending",
+                },
+                "state": "Pending",
+            },
+        }
+    }