diff --git a/doc/changes.md b/doc/changes.md
index d6b7569e57..8e5342d20d 100644
--- a/doc/changes.md
+++ b/doc/changes.md
@@ -62,6 +62,8 @@ def list.append : list α → list α → list α
 
 * leanpkg now stores the intended Lean version in the `leanpkg.toml` file and reports a warning if the version does not match the installed Lean version.
 
+* `simp` and `dsimp` can now unfold let-bindings in the local context.  Use `dsimp [x]` or `simp [x]` to unfold the let-binding `x : nat := 3`.
+
 *Changes*
 
 * We now have two type classes for converting to string: `has_to_string` and `has_repr`.
diff --git a/library/init/meta/simp_tactic.lean b/library/init/meta/simp_tactic.lean
index 93617be5a4..de49e14e52 100644
--- a/library/init/meta/simp_tactic.lean
+++ b/library/init/meta/simp_tactic.lean
@@ -271,19 +271,8 @@ private meta def is_equation : expr → bool
 | (expr.pi n bi d b) := is_equation b
 | e                  := match (expr.is_eq e) with (some a) := tt | none := ff end
 
-private meta def collect_simps : list expr → tactic (list expr)
-| []        := return []
-| (h :: hs) := do
-  result ← collect_simps hs,
-  htype  ← infer_type h >>= whnf,
-  if is_equation htype
-  then return (h :: result)
-  else do
-    pr ← is_prop htype,
-    return $ if pr then (h :: result) else result
-
 meta def collect_ctx_simps : tactic (list expr) :=
-local_context >>= collect_simps
+local_context
 
 section simp_intros
 
diff --git a/src/library/tactic/simp_lemmas.cpp b/src/library/tactic/simp_lemmas.cpp
index fe8a9e155d..6d63c6aa82 100644
--- a/src/library/tactic/simp_lemmas.cpp
+++ b/src/library/tactic/simp_lemmas.cpp
@@ -17,6 +17,7 @@ Author: Leonardo de Moura
 #include "library/idx_metavar.h"
 #include "library/attribute_manager.h"
 #include "library/relation_manager.h"
+#include "library/app_builder.h"
 #include "library/vm/vm_expr.h"
 #include "library/vm/vm_list.h"
 #include "library/vm/vm_option.h"
@@ -526,12 +527,25 @@ class to_ceqvs_fn {
         }
     }
 
+    list<expr_pair> get_zeta(expr const & H) {
+        if (!is_local_decl_ref(H)) return list<expr_pair>();
+        if (auto decl = m_ctx.lctx().find_local_decl(H)) {
+            if (auto val = decl->get_value()) {
+                auto ty = mk_app(m_ctx, get_eq_name(), H, *val);
+                auto pr = mk_app(m_ctx, get_eq_refl_name(), H);
+                return mk_singleton(ty, pr);
+            }
+        }
+        return list<expr_pair>();
+    }
+
 public:
     to_ceqvs_fn(type_context & ctx):m_env(ctx.env()), m_ctx(ctx) {}
 
     list<expr_pair> operator()(name const & id, expr const & e, expr const & H) {
         bool restricted = false;
         list<expr_pair> lst = apply(e, H, restricted);
+        lst = append(get_zeta(H), lst);
         return filter(lst, [&](expr_pair const & p) { return is_ceqv(m_ctx, id, p.first); });
     }
 };
@@ -673,6 +687,11 @@ static void report_failure(sstream const & strm) {
     }
 }
 
+static bool is_refl_app(expr const & pr) {
+    auto & fn = get_app_fn(pr);
+    return is_constant(fn) && const_name(fn) == get_eq_refl_name();
+}
+
 static simp_lemmas add_core(type_context & ctx, simp_lemmas const & s, name const & id,
                             levels const & univ_metas, buffer<expr> const & _emetas,
                             expr const & e, expr const & h, unsigned priority) {
@@ -699,9 +718,16 @@ static simp_lemmas add_core(type_context & ctx, simp_lemmas const & s, name cons
         }
         expr rel, lhs, rhs;
         if (is_simp_relation(env, rule, rel, lhs, rhs) && is_constant(rel)) {
-            new_s.insert(const_name(rel), mk_simp_lemma(id, univ_metas, reverse_to_list(emetas),
-                                                        reverse_to_list(instances), lhs, rhs,
-                                                        proof, is_perm, priority));
+            if (is_refl_app(proof)) {
+                // This case is for zeta-reduction, regular rfl-lemmas are already handled in add_core(name, ...)
+                new_s.insert(const_name(rel), mk_rfl_lemma(id, univ_metas, reverse_to_list(emetas),
+                                                           reverse_to_list(instances), lhs, rhs,
+                                                           proof, priority));
+            } else {
+                new_s.insert(const_name(rel), mk_simp_lemma(id, univ_metas, reverse_to_list(emetas),
+                                                            reverse_to_list(instances), lhs, rhs,
+                                                            proof, is_perm, priority));
+            }
         }
     }
     return new_s;
diff --git a/tests/lean/run/simp_zeta.lean b/tests/lean/run/simp_zeta.lean
new file mode 100644
index 0000000000..e3ebedb8db
--- /dev/null
+++ b/tests/lean/run/simp_zeta.lean
@@ -0,0 +1,12 @@
+example (n : ℕ) : let m := 0 + n in m = n :=
+begin
+intro,
+dsimp [m],
+simp,
+end
+
+example (n : ℕ) : let m := 0 + n in m = n :=
+begin
+intro,
+simp *,
+end
\ No newline at end of file