diff --git a/src/compile/render-dom/wrappers/Element/index.ts b/src/compile/render-dom/wrappers/Element/index.ts
index 5f6f94f38b..0c2904695d 100644
--- a/src/compile/render-dom/wrappers/Element/index.ts
+++ b/src/compile/render-dom/wrappers/Element/index.ts
@@ -282,11 +282,6 @@ export default class ElementWrapper extends Wrapper {
 			});
 		}
 
-		const eventHandlerOrBindingUsesComponent = (
-			this.bindings.length > 0 ||
-			this.node.handlers.some(handler => handler.usesComponent)
-		);
-
 		const eventHandlerOrBindingUsesContext = (
 			this.bindings.some(binding => binding.node.usesContext) ||
 			this.node.handlers.some(handler => handler.usesContext) ||
@@ -534,17 +529,46 @@ export default class ElementWrapper extends Wrapper {
 			renderer.component.declarations.push(name);
 			renderer.component.template_references.add(name);
 
-			const { handler, object } = this_binding.munge(block);
+			const munged = this_binding.munge(block);
+			const { handler, object } = munged;
 
-			renderer.component.partly_hoisted.push(deindent`
-				function ${name}($$node) {
-					${handler.mutation}
-					$$invalidate('${object}', ${object});
-				}
-			`);
+			// TODO this really is spectacularly confusing,
+			// the whole mess needs cleaning up
+			const contextual_dependencies = new Set();
+			addToSet(contextual_dependencies, munged.contextual_dependencies);
+			addToSet(contextual_dependencies, handler.contextual_dependencies);
+
+			let fn;
+
+			if (contextual_dependencies.size > 0) {
+				block.builders.init.addBlock(deindent`
+					function ${name}() {
+						ctx.${name}(${this.var}, ctx);
+					}
+				`);
+
+				fn = deindent`
+					function ${name}($$node, { ${[...contextual_dependencies].join(', ')} }) {
+						${handler.mutation}
+						$$invalidate('${object}', ${object});
+					}
+				`;
+
+				block.builders.mount.addLine(`@add_binding_callback(${name});`);
+				block.builders.destroy.addLine(`ctx.${name}(null, ctx);`);
+			} else {
+				fn = deindent`
+					function ${name}($$node) {
+						${handler.mutation}
+						$$invalidate('${object}', ${object});
+					}
+				`;
+
+				block.builders.mount.addLine(`@add_binding_callback(() => ctx.${name}(${this.var}));`);
+				block.builders.destroy.addLine(`ctx.${name}(null);`);
+			}
 
-			block.builders.mount.addLine(`@add_binding_callback(() => ctx.${name}(${this.var}));`);
-			block.builders.destroy.addLine(`ctx.${name}(null);`);
+			renderer.component.partly_hoisted.push(fn);
 		}
 	}
 
diff --git a/test/runtime/samples/binding-this-contextual/_config.js b/test/runtime/samples/binding-this-contextual/_config.js
new file mode 100644
index 0000000000..208cd5e40e
--- /dev/null
+++ b/test/runtime/samples/binding-this-contextual/_config.js
@@ -0,0 +1,42 @@
+export default {
+	props: {
+		items: ['a', 'b', 'c']
+	},
+
+	html: `
+		<div>a</div>
+		<div>b</div>
+		<div>c</div>
+	`,
+
+	test({ assert, component, target }) {
+		let nodes = [...target.querySelectorAll('div')];
+		assert.deepEqual(component.nodes, nodes);
+
+		console.group('setting b, c, d, e');
+		component.items = ['b', 'c', 'd', 'e'];
+		console.groupEnd();
+
+		assert.htmlEqual(target.innerHTML, `
+			<div>b</div>
+			<div>c</div>
+			<div>d</div>
+			<div>e</div>
+		`);
+
+		nodes = [...target.querySelectorAll('div')];
+		assert.deepEqual(component.nodes, nodes);
+
+		console.group('setting c, d');
+		component.items = ['c', 'd'];
+		console.groupEnd();
+
+		assert.htmlEqual(target.innerHTML, `
+			<div>c</div>
+			<div>d</div>
+		`);
+
+		nodes = [...target.querySelectorAll('div')];
+		assert.deepEqual(component.nodes, [...nodes, null, null]);
+	}
+};
diff --git a/test/runtime/samples/binding-this-contextual/main.html b/test/runtime/samples/binding-this-contextual/main.html
new file mode 100644
index 0000000000..9692e8311c
--- /dev/null
+++ b/test/runtime/samples/binding-this-contextual/main.html
@@ -0,0 +1,8 @@
+<script>
+	export let items;
+	export let nodes = [];
+</script>
+
+{#each items as item, i (item)}
+	<div bind:this={nodes[i]}>{item}</div>
+{/each}
\ No newline at end of file