diff --git a/ChangeLog b/ChangeLog
index 5bee6dbcf94895..595b5d6b8edff2 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -1,3 +1,8 @@
+Wed Dec 19 21:15:29 2012  Nobuyoshi Nakada  <nobu@ruby-lang.org>
+
+	* parse.y (parser_yylex): fix false usage of local variable, it cannot
+	  appear in fname state [ruby-core:49659] [Bug #7408]
+
 Wed Dec 19 21:14:28 2012  Narihiro Nakamura  <authornari@gmail.com>
 
 	* gc.c: return true or false. Patch by Dirkjan Bussink. [Bug #6821]
diff --git a/parse.y b/parse.y
index a006b563578ace..dbb10fd6981af0 100644
--- a/parse.y
+++ b/parse.y
@@ -7923,7 +7923,8 @@ parser_yylex(struct parser_params *parser)
             ID ident = TOK_INTERN(!ENC_SINGLE(mb));
 
             set_yylval_name(ident);
-            if (last_state != EXPR_DOT && is_local_id(ident) && lvar_defined(ident)) {
+            if (last_state != EXPR_DOT && last_state != EXPR_FNAME &&
+		is_local_id(ident) && lvar_defined(ident)) {
                 lex_state = EXPR_END;
             }
         }
diff --git a/test/ruby/test_rubyoptions.rb b/test/ruby/test_rubyoptions.rb
index 0f883420d7cbef..5533ac2c8ebaa9 100644
--- a/test/ruby/test_rubyoptions.rb
+++ b/test/ruby/test_rubyoptions.rb
@@ -489,6 +489,8 @@ def test_unused_variable
     assert_in_out_err(["-we", "1.times do\n  a=1\nend"], "", [], [], feature3446)
     assert_in_out_err(["-we", "def foo\n  1.times do\n    a=1\n  end\nend"], "", [], ["-e:3: warning: assigned but unused variable - a"], feature3446)
     assert_in_out_err(["-we", "def foo\n""  1.times do |a| end\n""end"], "", [], [])
+    bug7408 = '[ruby-core:49659]'
+    assert_in_out_err(["-we", "def foo\n  a=1\n :a\nend"], "", [], ["-e:2: warning: assigned but unused variable - a"], bug7408)
   end
 
   def test_shadowing_variable
diff --git a/version.h b/version.h
index b803415eb78252..dfd25f48240228 100644
--- a/version.h
+++ b/version.h
@@ -1,5 +1,5 @@
 #define RUBY_VERSION "1.9.3"
-#define RUBY_PATCHLEVEL 343
+#define RUBY_PATCHLEVEL 344
 
 #define RUBY_RELEASE_DATE "2012-12-19"
 #define RUBY_RELEASE_YEAR 2012