diff --git a/test_regress/t/t_func_under.pl b/test_regress/t/t_func_under.pl
new file mode 100755
index 000000000..f91289753
--- /dev/null
+++ b/test_regress/t/t_func_under.pl
@@ -0,0 +1,18 @@
+#!/usr/bin/perl
+if (!$::Driver) { use FindBin; exec("$FindBin::Bin/bootstrap.pl", @ARGV, $0); die; }
+# DESCRIPTION: Verilator: Verilog Test driver/expect definition
+#
+# Copyright 2003 by Wilson Snyder. This program is free software; you can
+# redistribute it and/or modify it under the terms of either the GNU
+# Lesser General Public License Version 3 or the Perl Artistic License
+# Version 2.0.
+
+compile (
+    );
+
+execute (
+    check_finished=>1,
+    );
+
+ok(1);
+1;
diff --git a/test_regress/t/t_func_under.v b/test_regress/t/t_func_under.v
new file mode 100644
index 000000000..ec7d7e67e
--- /dev/null
+++ b/test_regress/t/t_func_under.v
@@ -0,0 +1,26 @@
+// DESCRIPTION: Verilator: Verilog Test module
+//
+// This file ONLY is placed into the Public Domain, for any use,
+// without warranty, 2012 by Wilson Snyder.
+
+module t (/*AUTOARG*/
+   // Inputs
+   clk
+   );
+   input clk;
+
+   reg [3:0] counter = 0;
+   integer   l2;
+   function log2 (input [3:0] x);
+      integer log2 = (x < 2) ? 1 : (x < 4) ? 2 : (x < 8) ? 3 : 4;
+   endfunction
+   always @(posedge clk) begin
+      counter <= counter + 1;
+      l2 <= log2(counter);
+      // bug589: This failed with (%Error: Internal Error: Function not underneath a statement):
+      $display("log2(%d) == %d", counter, log2(counter));
+      //
+      $write("*-* All Finished *-*\n");
+      $finish;
+   end
+endmodule