diff --git a/CHANGES.md b/CHANGES.md
index 2ba018e26e..5570328a49 100644
--- a/CHANGES.md
+++ b/CHANGES.md
@@ -15,6 +15,7 @@
 * Runtime: fix Unix.lstat, Unix.LargeFile.lstat (#1519)
 * Compiler: fix global flow analysis (#1494)
 * Compiler: fix js parser/printer wrt async functions (#1515)
+* Compiler: fix free variables pass wrt parameters' default value (#1521)
 
 # 5.4.0 (2023-07-06) - Lille
 
diff --git a/compiler/lib/js_traverse.ml b/compiler/lib/js_traverse.ml
index 7ee45bf611..8553a4f581 100644
--- a/compiler/lib/js_traverse.ml
+++ b/compiler/lib/js_traverse.ml
@@ -813,6 +813,7 @@ class free =
       let ids = bound_idents_of_params params in
       List.iter ids ~f:tbody#def_var;
       let body = tbody#function_body body in
+      let params = tbody#formal_parameter_list params in
       tbody#record_block (Params params);
       m#merge_info tbody;
       k, params, body, nid
@@ -827,6 +828,7 @@ class free =
           let ids = bound_idents_of_params params in
           List.iter ids ~f:tbody#def_var;
           let body = tbody#function_body body in
+          let params = tbody#formal_parameter_list params in
           let ident =
             match ident with
             | Some i ->
@@ -866,6 +868,7 @@ class free =
           let ids = bound_idents_of_params params in
           List.iter ids ~f:tbody#def_var;
           let body = tbody#function_body body in
+          let params = tbody#formal_parameter_list params in
           tbody#record_block (Params params);
           m#def_var id;
           m#merge_info tbody;
diff --git a/compiler/tests-compiler/minify.ml b/compiler/tests-compiler/minify.ml
index 1fd6f4d9a3..ada53d028f 100644
--- a/compiler/tests-compiler/minify.ml
+++ b/compiler/tests-compiler/minify.ml
@@ -378,3 +378,45 @@ function f () {
           2: f(){const
           3: a=2;return function(){var
           4: a=a+2;return a}} |}])
+
+let%expect_test _ =
+  with_temp_dir ~f:(fun () ->
+      let js_prog =
+        {|
+function test() {
+  var x = {a:1,b:2}
+  function f (a, b = x.b) {
+    return (a + b);
+  }
+  console.log(f(1));
+}
+test()
+|}
+      in
+      let js_file =
+        js_prog |> Filetype.js_text_of_string |> Filetype.write_js ~name:"test.js"
+      in
+      let js_min_file =
+        js_file |> jsoo_minify ~flags:[ "--enable"; "shortvar" ] ~pretty:false
+      in
+      print_file (Filetype.path_of_js_file js_file);
+      print_file (Filetype.path_of_js_file js_min_file);
+      [%expect
+        {|
+        $ cat "test.js"
+          1:
+          2: function test() {
+          3:   var x = {a:1,b:2}
+          4:   function f (a, b = x.b) {
+          5:     return (a + b);
+          6:   }
+          7:   console.log(f(1));
+          8: }
+          9: test()
+        $ cat "test.min.js"
+          1: function
+          2: test(){var
+          3: c={a:1,b:2};function
+          4: a(a,b=c.b){return a+b}console.log(a(1))}test(); |}];
+      print_endline (run_javascript js_min_file);
+      [%expect {| 3 |}])