diff --git a/ICSharpCode.Decompiler.Tests/ICSharpCode.Decompiler.Tests.csproj b/ICSharpCode.Decompiler.Tests/ICSharpCode.Decompiler.Tests.csproj
index 971979b70..d34cd96d3 100644
--- a/ICSharpCode.Decompiler.Tests/ICSharpCode.Decompiler.Tests.csproj
+++ b/ICSharpCode.Decompiler.Tests/ICSharpCode.Decompiler.Tests.csproj
@@ -154,6 +154,7 @@
     <Compile Include="TestCases\ILPretty\Issue3552.cs" />
     <Compile Include="TestCases\Pretty\ExpandParamsArgumentsDisabled.cs" />
     <Compile Include="TestCases\Pretty\ExtensionProperties.cs" />
+    <Compile Include="TestCases\Pretty\Issue3541.cs" />
     <None Include="TestCases\ILPretty\Issue3504.cs" />
     <Compile Include="TestCases\ILPretty\MonoFixed.cs" />
     <Compile Include="TestCases\Pretty\Comparisons.cs" />
diff --git a/ICSharpCode.Decompiler.Tests/PrettyTestRunner.cs b/ICSharpCode.Decompiler.Tests/PrettyTestRunner.cs
index f34b96b5b..562beb8f2 100644
--- a/ICSharpCode.Decompiler.Tests/PrettyTestRunner.cs
+++ b/ICSharpCode.Decompiler.Tests/PrettyTestRunner.cs
@@ -133,6 +133,14 @@ namespace ICSharpCode.Decompiler.Tests
 			CompilerOptions.Optimize | CompilerOptions.UseRoslynLatest,
 		};
 
+		static readonly CompilerOptions[] roslyn4OrNewerWithNet40Options =
+		{
+			CompilerOptions.UseRoslynLatest | CompilerOptions.TargetNet40,
+			CompilerOptions.Optimize | CompilerOptions.UseRoslynLatest | CompilerOptions.TargetNet40,
+			CompilerOptions.UseRoslynLatest,
+			CompilerOptions.Optimize | CompilerOptions.UseRoslynLatest,
+		};
+
 		static readonly CompilerOptions[] roslyn4OrNewerOptions =
 		{
 			CompilerOptions.UseRoslynLatest,
@@ -664,6 +672,12 @@ namespace ICSharpCode.Decompiler.Tests
 			await RunForLibrary(cscOptions: cscOptions | CompilerOptions.CheckForOverflowUnderflow, configureDecompiler: settings => settings.CheckForOverflowUnderflow = true);
 		}
 
+		[Test]
+		public async Task Issue3541([ValueSource(nameof(roslyn4OrNewerWithNet40Options))] CompilerOptions cscOptions)
+		{
+			await RunForLibrary(cscOptions: cscOptions);
+		}
+
 		[Test]
 		public async Task AssemblyCustomAttributes([ValueSource(nameof(defaultOptions))] CompilerOptions cscOptions)
 		{
diff --git a/ICSharpCode.Decompiler.Tests/TestCases/Pretty/Issue3541.cs b/ICSharpCode.Decompiler.Tests/TestCases/Pretty/Issue3541.cs
new file mode 100644
index 000000000..c1df03b60
--- /dev/null
+++ b/ICSharpCode.Decompiler.Tests/TestCases/Pretty/Issue3541.cs
@@ -0,0 +1,15 @@
+namespace ICSharpCode.Decompiler.Tests.TestCases.Pretty
+{
+	internal class Issue3541
+	{
+		private void Test(string format)
+		{
+			TestLocal();
+
+			void TestLocal(int a = 0)
+			{
+				a.ToString(format);
+			}
+		}
+	}
+}
diff --git a/ICSharpCode.Decompiler/IL/Transforms/LocalFunctionDecompiler.cs b/ICSharpCode.Decompiler/IL/Transforms/LocalFunctionDecompiler.cs
index a5d01d8f0..1d93b677a 100644
--- a/ICSharpCode.Decompiler/IL/Transforms/LocalFunctionDecompiler.cs
+++ b/ICSharpCode.Decompiler/IL/Transforms/LocalFunctionDecompiler.cs
@@ -566,13 +566,18 @@ namespace ICSharpCode.Decompiler.IL.Transforms
 		}
 
 		internal static bool IsClosureParameter(IParameter parameter, ITypeResolveContext context)
+		{
+			return IsClosureParameter(parameter, context.CurrentTypeDefinition);
+		}
+
+		internal static bool IsClosureParameter(IParameter parameter, ITypeDefinition currentTypeDefinition)
 		{
 			if (parameter.Type is not ByReferenceType brt)
 				return false;
 			var type = brt.ElementType.GetDefinition();
 			return type != null
 				&& type.Kind == TypeKind.Struct
-				&& TransformDisplayClassUsage.IsPotentialClosure(context.CurrentTypeDefinition, type);
+				&& TransformDisplayClassUsage.IsPotentialClosure(currentTypeDefinition, type);
 		}
 
 		LocalFunctionMethod ReduceToLocalFunction(IMethod method, int typeParametersToRemove)
diff --git a/ICSharpCode.Decompiler/TypeSystem/TypeSystemExtensions.cs b/ICSharpCode.Decompiler/TypeSystem/TypeSystemExtensions.cs
index 1a4b11501..b89e2d10b 100644
--- a/ICSharpCode.Decompiler/TypeSystem/TypeSystemExtensions.cs
+++ b/ICSharpCode.Decompiler/TypeSystem/TypeSystemExtensions.cs
@@ -21,6 +21,7 @@ using System.Collections.Generic;
 using System.Linq;
 using System.Reflection.Metadata;
 
+using ICSharpCode.Decompiler.IL.Transforms;
 using ICSharpCode.Decompiler.Metadata;
 using ICSharpCode.Decompiler.Semantics;
 using ICSharpCode.Decompiler.TypeSystem.Implementation;
@@ -681,6 +682,9 @@ namespace ICSharpCode.Decompiler.TypeSystem
 				if (otherParameter == parameter)
 					break;
 
+				if (LocalFunctionDecompiler.IsClosureParameter(otherParameter, otherParameter.Owner.DeclaringTypeDefinition))
+					continue;
+
 				if (DefaultValueAssignmentAllowedIndividual(otherParameter) || otherParameter.IsParams)
 					continue;