diff --git a/src/runner/child_env.rs b/src/runner/child_env.rs
index 31383d5d..e216f72d 100644
--- a/src/runner/child_env.rs
+++ b/src/runner/child_env.rs
@@ -24,6 +24,7 @@ pub fn post_run_exit_if_oob_strict_triggered() -> ! {
 /// - Disables plugins to avoid host-side side effects
 /// - Disables file-based using resolution (namespace-first policy)
 /// - Skips nyash.toml env injection to reduce drift
+/// - Propagates Stage-3 parser flags to ensure 'local' keyword support in nested compilations
 pub fn apply_core_wrapper_env(cmd: &mut std::process::Command) {
     // Remove noisy or recursive toggles
     cmd.env_remove("NYASH_USE_NY_COMPILER");
@@ -36,4 +37,18 @@ pub fn apply_core_wrapper_env(cmd: &mut std::process::Command) {
     cmd.env("NYASH_USING_AST", "0");
     cmd.env("NYASH_ALLOW_USING_FILE", "0");
     cmd.env("HAKO_ALLOW_USING_FILE", "0");
+
+    // Phase 25.1b fix: Propagate Stage-3 parser flags to child processes
+    // When selfhost builder uses `using` to load modules, the inline compiler
+    // needs Stage-3 support for `local` keyword. Without this, we get:
+    // "Undefined variable: local" in nested compilation.
+    if let Ok(val) = std::env::var("NYASH_PARSER_STAGE3") {
+        cmd.env("NYASH_PARSER_STAGE3", val);
+    }
+    if let Ok(val) = std::env::var("HAKO_PARSER_STAGE3") {
+        cmd.env("HAKO_PARSER_STAGE3", val);
+    }
+    if let Ok(val) = std::env::var("NYASH_PARSER_ALLOW_SEMICOLON") {
+        cmd.env("NYASH_PARSER_ALLOW_SEMICOLON", val);
+    }
 }