diff --git a/elab_scope.cc b/elab_scope.cc
index c7d205d1f..c1b8546dd 100644
--- a/elab_scope.cc
+++ b/elab_scope.cc
@@ -623,7 +623,7 @@ static void elaborate_scope_classes(Design*des, NetScope*scope,
       }
 }
 
-static void replace_scope_parameters(NetScope*scope, const LineInfo&loc,
+static void replace_scope_parameters(Design *des, NetScope*scope, const LineInfo&loc,
 				     const Module::replace_t&replacements)
 {
       if (debug_scopes) {
@@ -649,13 +649,7 @@ static void replace_scope_parameters(NetScope*scope, const LineInfo&loc,
 		  cerr << loc.get_fileline() << ":      : "
 		       << "Type=" << val->expr_type() << endl;
 	    }
-	    bool flag = scope->replace_parameter((*cur).first, val,
-                                                 scope->parent());
-	    if (! flag) {
-		  cerr << val->get_fileline() << ": warning: parameter "
-		       << (*cur).first << " not found in "
-		       << scope_path(scope) << "." << endl;
-	    }
+	    scope->replace_parameter(des, (*cur).first, val, scope->parent());
       }
 }
 
@@ -818,7 +812,7 @@ bool Module::elaborate_scope(Design*des, NetScope*scope,
 	// Run parameter replacements that were collected from the
 	// containing scope and meant for me.
 
-      replace_scope_parameters(scope, *this, replacements);
+      replace_scope_parameters(des, scope, *this, replacements);
 
       elaborate_scope_enumerations(des, scope, enum_sets);
 
diff --git a/ivtest/gold/br_gh157.gold b/ivtest/gold/br_gh157.gold
index 46ba98b2f..14dc1f437 100644
--- a/ivtest/gold/br_gh157.gold
+++ b/ivtest/gold/br_gh157.gold
@@ -1,2 +1,2 @@
-./ivltests/br_gh157.v:13: warning: parameter x not found in test.dut.
-2
+./ivltests/br_gh157.v:13: error: Cannot override localparam `x` in `test.dut`.
+1 error(s) during elaboration.
diff --git a/ivtest/gold/pr498b.gold b/ivtest/gold/pr498b.gold
new file mode 100644
index 000000000..815b71411
--- /dev/null
+++ b/ivtest/gold/pr498b.gold
@@ -0,0 +1,2 @@
+./ivltests/pr498b.v:23: error: parameter `foo` not found in `main`.
+1 error(s) during elaboration.
diff --git a/ivtest/ivltests/pr498.v b/ivtest/ivltests/pr498a.v
similarity index 95%
rename from ivtest/ivltests/pr498.v
rename to ivtest/ivltests/pr498a.v
index 6a943a84b..44951133d 100644
--- a/ivtest/ivltests/pr498.v
+++ b/ivtest/ivltests/pr498a.v
@@ -20,7 +20,6 @@
 
 module main;
    test tt();
-   defparam foo = 3; /* This should generate a warning. */
    defparam tt.foo = 4;
 endmodule // main
 
diff --git a/ivtest/ivltests/pr498b.v b/ivtest/ivltests/pr498b.v
new file mode 100644
index 000000000..449dba64e
--- /dev/null
+++ b/ivtest/ivltests/pr498b.v
@@ -0,0 +1,30 @@
+/*
+ * Copyright (c) 2002 Stephen Williams (steve@icarus.com)
+ *
+ *    This source code is free software; you can redistribute it
+ *    and/or modify it in source code form under the terms of the GNU
+ *    General Public License as published by the Free Software
+ *    Foundation; either version 2 of the License, or (at your option)
+ *    any later version.
+ *
+ *    This program is distributed in the hope that it will be useful,
+ *    but WITHOUT ANY WARRANTY; without even the implied warranty of
+ *    MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.  See the
+ *    GNU General Public License for more details.
+ *
+ *    You should have received a copy of the GNU General Public License
+ *    along with this program; if not, write to the Free Software
+ *    Foundation, Inc., 59 Temple Place - Suite 330, Boston, MA 02111-1307, USA
+ */
+
+
+module main;
+   test tt();
+   defparam foo = 3; /* This should generate an error. */
+endmodule // main
+
+module test;
+   parameter foo = 10;
+   reg [foo-1:0] bar;
+
+endmodule // test
diff --git a/ivtest/regress-ivl1.list b/ivtest/regress-ivl1.list
index 97ead6058..bf2394966 100644
--- a/ivtest/regress-ivl1.list
+++ b/ivtest/regress-ivl1.list
@@ -121,7 +121,7 @@ clog2			normal			ivltests
 clog2-signal		normal			ivltests
 param_vec		normal			ivltests
 param_vec2		normal			ivltests
-pr498			normal			ivltests
+pr498a			normal			ivltests
 pr721			normal			ivltests
 pr809			normal			ivltests
 pr809b			normal			ivltests
diff --git a/ivtest/regress-vlg.list b/ivtest/regress-vlg.list
index 1aafa42eb..89075234c 100644
--- a/ivtest/regress-vlg.list
+++ b/ivtest/regress-vlg.list
@@ -308,7 +308,7 @@ br_gh127e		normal			ivltests gold=br_gh127e.gold
 br_gh127f		normal			ivltests gold=br_gh127f.gold
 br_gh142		CE			ivltests
 br_gh152		CE			ivltests
-br_gh157		normal			ivltests gold=br_gh157.gold
+br_gh157		CE			ivltests gold=br_gh157.gold
 br_gh162		normal			ivltests
 br_gh163		CE			ivltests
 br_gh198		normal			ivltests gold=br_gh198.gold
@@ -736,6 +736,7 @@ pr445			normal			ivltests
 pr478			normal			ivltests
 pr487			normal			ivltests gold=pr487.gold
 pr492			normal			ivltests gold=pr492.gold
+pr498b			CE			ivltests gold=pr498b.gold
 pr508			normal			ivltests
 pr509			normal			ivltests
 pr509b			normal			ivltests
diff --git a/net_design.cc b/net_design.cc
index f5d2eddb6..12c8b14c6 100644
--- a/net_design.cc
+++ b/net_design.cc
@@ -433,13 +433,7 @@ void NetScope::run_defparams(Design*des)
 		  continue;
 	    }
 
-	    bool flag = targ_scope->replace_parameter(perm_name, val, this);
-	    if (! flag) {
-		  cerr << val->get_fileline() << ": warning: parameter "
-		       << perm_name << " not found in "
-		       << scope_path(targ_scope) << "." << endl;
-	    }
-
+	    targ_scope->replace_parameter(des, perm_name, val, this);
       }
 
 	// If some of the defparams didn't find a scope in the name,
@@ -474,12 +468,7 @@ void NetScope::run_defparams_later(Design*des)
 		  continue;
 	    }
 
-	    bool flag = targ_scope->replace_parameter(name, val, this);
-	    if (! flag) {
-		  cerr << val->get_fileline() << ": warning: parameter "
-		       << name << " not found in "
-		       << scope_path(targ_scope) << "." << endl;
-	    }
+	    targ_scope->replace_parameter(des, name, val, this);
 
 	      // We'll need to re-evaluate parameters in this scope
 	    target_scopes.insert(targ_scope);
diff --git a/net_scope.cc b/net_scope.cc
index 1a4216069..5abdf0b77 100644
--- a/net_scope.cc
+++ b/net_scope.cc
@@ -25,6 +25,7 @@
 # include  "netclass.h"
 # include  "netenum.h"
 # include  "netvector.h"
+# include  "PExpr.h"
 # include  "PPackage.h"
 # include  <cstring>
 # include  <cstdlib>
@@ -381,18 +382,27 @@ bool NetScope::auto_name(const char*prefix, char pad, const char* suffix)
  * Return false if the parameter does not already exist.
  * A parameter is not automatically created.
  */
-bool NetScope::replace_parameter(perm_string key, PExpr*val, NetScope*scope)
+void NetScope::replace_parameter(Design *des, perm_string key, PExpr*val, NetScope*scope)
 {
-      if (parameters.find(key) == parameters.end())
-	    return false;
+      if (parameters.find(key) == parameters.end()) {
+	    cerr << val->get_fileline() << ": error: parameter `"
+	         << key << "` not found in `"
+	         << scope_path(this) << "`." << endl;
+	    des->errors++;
+	    return;
+      }
 
       param_expr_t&ref = parameters[key];
-      if (ref.local_flag)
-	    return false;
+      if (ref.local_flag) {
+	    cerr << val->get_fileline() << ": error: "
+	         << "Cannot override localparam `" << key << "` in `"
+	         << scope_path(this) << "`." << endl;
+	    des->errors++;
+	    return;
+      }
 
       ref.val_expr = val;
       ref.val_scope = scope;
-      return true;
 }
 
 bool NetScope::make_parameter_unannotatable(perm_string key)
diff --git a/netlist.h b/netlist.h
index 85dc8ce8b..a5babeb4e 100644
--- a/netlist.h
+++ b/netlist.h
@@ -983,7 +983,7 @@ class NetScope : public Definitions, public Attrib {
 	   expression with a new expression, without affecting the
 	   range or signed_flag. Return false if the name does not
 	   exist. */
-      bool replace_parameter(perm_string name, PExpr*val, NetScope*scope);
+      void replace_parameter(Design *des, perm_string name, PExpr*val, NetScope*scope);
 
 	/* This is used to ensure the value of a parameter cannot be
 	   changed at run-time. This is required if a specparam is used