diff --git a/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts b/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
index f6872da1117..62e1d2877d7 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/HIR/BuildHIR.ts
@@ -2596,11 +2596,17 @@ function lowerExpression(
 
         // Store the previous value to a temporary
         const previousValuePlace = lowerValueToTemporary(builder, value);
+        const capturedPreviousValue = lowerValueToTemporary(builder, {
+          kind: 'LoadLocal',
+          place: {...previousValuePlace},
+          loc: exprLoc,
+        });
+
         // Store the new value to a temporary
         const updatedValue = lowerValueToTemporary(builder, {
           kind: 'BinaryExpression',
           operator: binaryOperator,
-          left: {...previousValuePlace},
+          left: {...capturedPreviousValue},
           right: lowerValueToTemporary(builder, {
             kind: 'Primitive',
             value: 1,
@@ -2633,7 +2639,7 @@ function lowerExpression(
           kind: 'LoadLocal',
           place: expr.node.prefix
             ? {...newValuePlace}
-            : {...previousValuePlace},
+            : {...capturedPreviousValue},
           loc: exprLoc,
         };
       }
@@ -2646,13 +2652,55 @@ function lowerExpression(
         });
         return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
       } else if (builder.isContextIdentifier(argument)) {
-        builder.errors.push({
-          reason: `(BuildHIR::lowerExpression) Handle UpdateExpression to variables captured within lambdas.`,
-          category: ErrorCategory.Todo,
-          loc: exprPath.node.loc ?? null,
-          suggestions: null,
+        const binaryOperator = expr.node.operator === '++' ? '+' : '-';
+        const lvalue = lowerIdentifierForAssignment(
+          builder,
+          argument.node.loc ?? GeneratedSource,
+          InstructionKind.Reassign,
+          argument,
+        );
+
+        if (lvalue === null) {
+          return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
+        } else if (lvalue.kind === 'Global') {
+          builder.errors.push({
+            reason: `(BuildHIR::lowerExpression) Expected Identifier to be a context variable`,
+            category: ErrorCategory.Invariant,
+            loc: exprLoc,
+            suggestions: null,
+          });
+          return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
+        }
+
+        // Load the current value
+        const previousValue = lowerExpressionToTemporary(builder, argument);
+
+        // Calculate the new value
+        const updatedValue = lowerValueToTemporary(builder, {
+          kind: 'BinaryExpression',
+          operator: binaryOperator,
+          left: {...previousValue},
+          right: lowerValueToTemporary(builder, {
+            kind: 'Primitive',
+            value: 1,
+            loc: GeneratedSource,
+          }),
+          loc: exprLoc,
         });
-        return {kind: 'UnsupportedNode', node: exprNode, loc: exprLoc};
+
+        // Store the new value
+        const newValuePlace = lowerValueToTemporary(builder, {
+          kind: 'StoreContext',
+          lvalue: {place: {...lvalue}, kind: InstructionKind.Reassign},
+          value: {...updatedValue},
+          loc: exprLoc,
+        });
+
+        return {
+          kind: 'LoadLocal',
+          place: expr.node.prefix ? {...newValuePlace} : {...previousValue},
+          loc: exprLoc,
+        };
       }
       const lvalue = lowerIdentifierForAssignment(
         builder,
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/bug-post-increment-assignment.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/bug-post-increment-assignment.expect.md
new file mode 100644
index 00000000000..e69de29bb2d
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/bug-post-increment-assignment.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/bug-post-increment-assignment.js
new file mode 100644
index 00000000000..464d9ceb172
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/bug-post-increment-assignment.js
@@ -0,0 +1,14 @@
+
+function Component(props) {
+  const items = [0, 1, 2];
+  return items.reduce((agg, item) => {
+    const current = agg.count++;
+    agg.res.push(current);
+    return agg;
+  }, {count: 0, res: []});
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [{}],
+};
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/update-expression-captured-variable.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/update-expression-captured-variable.expect.md
new file mode 100644
index 00000000000..35124d5694c
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/update-expression-captured-variable.expect.md
@@ -0,0 +1,50 @@
+
+## Input
+
+```javascript
+function Component() {
+  let x = 0;
+  const inc = () => {
+    x++;
+  };
+  inc();
+  return x;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [],
+};
+
+```
+
+## Code
+
+```javascript
+import { c as _c } from "react/compiler-runtime";
+function Component() {
+  const $ = _c(1);
+  let x;
+  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
+    x = 0;
+    const inc = () => {
+      x = x + 1;
+    };
+
+    inc();
+    $[0] = x;
+  } else {
+    x = $[0];
+  }
+  return x;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [],
+};
+
+```
+      
+### Eval output
+(kind: ok) 1
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/update-expression-captured-variable.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/update-expression-captured-variable.js
new file mode 100644
index 00000000000..628a0657a2d
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/update-expression-captured-variable.js
@@ -0,0 +1,13 @@
+function Component() {
+  let x = 0;
+  const inc = () => {
+    x++;
+  };
+  inc();
+  return x;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [],
+};