diff --git a/doc/README.variables b/doc/README.variables
index 90e74ffcdb988c6985079745928237f3cc0b6e06..5bd3dfe3d5da50bfc7752bca1d7d98f82cf2e643 100755
--- a/doc/README.variables
+++ b/doc/README.variables
@@ -66,6 +66,34 @@ value "blabla".
 In fact, everything contained ${here} is just replaced with the value of 
 the variable "here". 
 
+____________________
+VARIABLE INHERITANCE
+--------------------
+
+Variable names which are prefixed by "_" will be inherited to channels 
+that are created in the process of servicing the original channel in 
+which the variable was set.  When the inheritance takes place, the 
+prefix will be removed in the channel inheriting the variable.  If the 
+name is prefixed by "__" in the channel, then the variable is 
+inherited and the "__" will remain intact in the new channel.
+
+In the dialplan, all references to these variables refer to the same 
+variable, regardless of having a prefix or not.  Note that setting any 
+version of the variable removes any other version of the variable, 
+regardless of prefix.
+
+Example:
+
+Set(__FOO=bar) ; Sets an inherited version of "FOO" variable 
+Set(FOO=bar)   ; Removes the inherited version and sets a local 
+               ; variable.
+
+However,
+
+NoOp(${__FOO}) is identical to NoOp(${FOO})
+
+
+
 _______________________________
 REMOVING CHARACTERS FROM STRING
 -------------------------------
diff --git a/pbx.c b/pbx.c
index e1eb1894d1eaa9f005d032f273c5c5df4d8468dd..da7d5be60345a31d5ff86a7a4933bfa0e0617873 100755
--- a/pbx.c
+++ b/pbx.c
@@ -5885,14 +5885,22 @@ void pbx_builtin_setvar_helper(struct ast_channel *chan, const char *name, const
 {
 	struct ast_var_t *newvariable;
 	struct varshead *headp;
+	const char *nametail = name;
 
 	if (name[strlen(name)-1] == ')')
 		return ast_func_write(chan, name, value);
 
 	headp = (chan) ? &chan->varshead : &globals;
 
+	/* For comparison purposes, we have to strip leading underscores */
+	if (*nametail == '_') {
+		nametail++;
+		if (*nametail == '_') 
+			nametail++;
+	}
+
 	AST_LIST_TRAVERSE (headp, newvariable, entries) {
-		if (strcasecmp(ast_var_name(newvariable), name) == 0) {
+		if (strcasecmp(ast_var_name(newvariable), nametail) == 0) {
 			/* there is already such a variable, delete it */
 			AST_LIST_REMOVE(headp, newvariable, entries);
 			ast_var_delete(newvariable);