diff --git a/packages/babel-plugin-transform-parameters/src/params.ts b/packages/babel-plugin-transform-parameters/src/params.ts
index 0eb544cbcef6..b93351baf100 100644
--- a/packages/babel-plugin-transform-parameters/src/params.ts
+++ b/packages/babel-plugin-transform-parameters/src/params.ts
@@ -47,11 +47,6 @@ export default function convertFunctionParams(
 
   const { node, scope } = path;
 
-  const state = {
-    needsOuterBinding: false,
-    scope,
-  };
-
   const body = [];
   const shadowedParams = new Set<string>();
 
@@ -59,6 +54,10 @@ export default function convertFunctionParams(
     collectShadowedParamsNames(param, scope, shadowedParams);
   }
 
+  const state = {
+    needsOuterBinding: false,
+    scope,
+  };
   if (shadowedParams.size === 0) {
     for (const param of params) {
       if (!param.isIdentifier()) param.traverse(iifeVisitor, state);
@@ -156,12 +155,7 @@ export default function convertFunctionParams(
   path.ensureBlock();
 
   if (state.needsOuterBinding || shadowedParams.size > 0) {
-    body.push(
-      buildScopeIIFE(
-        shadowedParams,
-        (path.get("body") as NodePath<t.BlockStatement>).node,
-      ),
-    );
+    body.push(buildScopeIIFE(shadowedParams, path.node.body));
 
     path.set("body", t.blockStatement(body as t.Statement[]));
 
diff --git a/packages/babel-plugin-transform-parameters/src/rest.ts b/packages/babel-plugin-transform-parameters/src/rest.ts
index 70a6cffeaebb..6abd1abc4c7c 100644
--- a/packages/babel-plugin-transform-parameters/src/rest.ts
+++ b/packages/babel-plugin-transform-parameters/src/rest.ts
@@ -1,6 +1,12 @@
 import { template, types as t } from "@babel/core";
 import type { NodePath, Visitor } from "@babel/traverse";
 
+import {
+  iifeVisitor,
+  collectShadowedParamsNames,
+  buildScopeIIFE,
+} from "./shadow-utils";
+
 const buildRest = template.statement(`
   for (var LEN = ARGUMENTS.length,
            ARRAY = new Array(ARRAY_LEN),
@@ -292,6 +298,33 @@ export default function convertFunctionRest(path: NodePath<t.Function>) {
   const { node, scope } = path;
   if (!hasRest(node)) return false;
 
+  const restPath = path.get(
+    `params.${node.params.length - 1}.argument`,
+  ) as NodePath<t.Pattern | t.Identifier>;
+
+  if (!restPath.isIdentifier()) {
+    const shadowedParams = new Set<string>();
+    collectShadowedParamsNames(restPath, path.scope, shadowedParams);
+
+    let needsIIFE = shadowedParams.size > 0;
+    if (!needsIIFE) {
+      const state = {
+        needsOuterBinding: false,
+        scope,
+      };
+      restPath.traverse(iifeVisitor, state);
+      needsIIFE = state.needsOuterBinding;
+    }
+
+    if (needsIIFE) {
+      path.ensureBlock();
+      path.set(
+        "body",
+        t.blockStatement([buildScopeIIFE(shadowedParams, path.node.body)]),
+      );
+    }
+  }
+
   let rest = (node.params.pop() as t.RestElement).argument as
     | t.Pattern
     | t.Identifier;
diff --git a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/.var-same-name-as-nested-in-rest-param-2/input.js b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/.var-same-name-as-nested-in-rest-param-2/input.js
deleted file mode 100644
index 8c1179a8a914..000000000000
--- a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/.var-same-name-as-nested-in-rest-param-2/input.js
+++ /dev/null
@@ -1,9 +0,0 @@
-function f(...{ length: x = 0 }) {
-  var x;
-  return x;
-}
-
-function g(...{ length: x = 0 }) {
-  var x = 1;
-  return x;
-}
diff --git a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/.var-same-name-as-nested-in-rest-param/input.js b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/.var-same-name-as-nested-in-rest-param/input.js
deleted file mode 100644
index 578486d8f368..000000000000
--- a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/.var-same-name-as-nested-in-rest-param/input.js
+++ /dev/null
@@ -1,9 +0,0 @@
-function f(...[x]) {
-  var x;
-  return x;
-}
-
-function g(...[x]) {
-  var x = 1;
-  return x;
-}
diff --git a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param-2/input.js b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param-2/input.js
new file mode 100644
index 000000000000..bc58981bda4d
--- /dev/null
+++ b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param-2/input.js
@@ -0,0 +1,9 @@
+function f(...{ length: x = 0, y = x }) {
+  var x;
+  return x;
+}
+
+function g(...{ length: x = 0, y = x }) {
+  var x = 1;
+  return x;
+}
diff --git a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param-2/output.js b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param-2/output.js
new file mode 100644
index 000000000000..eae5090a3040
--- /dev/null
+++ b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param-2/output.js
@@ -0,0 +1,26 @@
+function f() {
+  for (var _len = arguments.length, _ref = new Array(_len), _key = 0; _key < _len; _key++) {
+    _ref[_key] = arguments[_key];
+  }
+
+  var _ref$length = _ref.length,
+      x = _ref$length === void 0 ? 0 : _ref$length,
+      _ref$y = _ref.y,
+      y = _ref$y === void 0 ? x : _ref$y;
+  return x;
+}
+
+function g() {
+  for (var _len2 = arguments.length, _ref2 = new Array(_len2), _key2 = 0; _key2 < _len2; _key2++) {
+    _ref2[_key2] = arguments[_key2];
+  }
+
+  var _ref2$length = _ref2.length,
+      x = _ref2$length === void 0 ? 0 : _ref2$length,
+      _ref2$y = _ref2.y,
+      y = _ref2$y === void 0 ? x : _ref2$y;
+  return function (x) {
+    var x = 1;
+    return x;
+  }(x);
+}
diff --git a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param/input.js b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param/input.js
new file mode 100644
index 000000000000..fbecdb6dc1c4
--- /dev/null
+++ b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param/input.js
@@ -0,0 +1,9 @@
+function f(...[x, y = x]) {
+  var x;
+  return x;
+}
+
+function g(...[x, y = x]) {
+  var x = 1;
+  return x;
+}
diff --git a/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param/output.js b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param/output.js
new file mode 100644
index 000000000000..92ade92006ac
--- /dev/null
+++ b/packages/babel-plugin-transform-parameters/test/fixtures/parameters/var-same-name-as-nested-in-rest-param/output.js
@@ -0,0 +1,24 @@
+function f() {
+  for (var _len = arguments.length, _ref = new Array(_len), _key = 0; _key < _len; _key++) {
+    _ref[_key] = arguments[_key];
+  }
+
+  var x = _ref[0],
+      _ref$ = _ref[1],
+      y = _ref$ === void 0 ? x : _ref$;
+  return x;
+}
+
+function g() {
+  for (var _len2 = arguments.length, _ref2 = new Array(_len2), _key2 = 0; _key2 < _len2; _key2++) {
+    _ref2[_key2] = arguments[_key2];
+  }
+
+  var x = _ref2[0],
+      _ref2$ = _ref2[1],
+      y = _ref2$ === void 0 ? x : _ref2$;
+  return function (x) {
+    var x = 1;
+    return x;
+  }(x);
+}