diff --git a/engine/baml-runtime/src/eval_expr.rs b/engine/baml-runtime/src/eval_expr.rs
index 8733018ba..4a221a187 100644
--- a/engine/baml-runtime/src/eval_expr.rs
+++ b/engine/baml-runtime/src/eval_expr.rs
@@ -3,7 +3,7 @@ use futures::channel::mpsc;
 use futures::stream::{self as stream, StreamExt};
 use internal_baml_core::internal_baml_diagnostics::SerializedSpan;
 use std::collections::HashMap;
-use std::sync::Arc;
+use std::sync::{Arc, Mutex};
 
 use crate::{BamlRuntime, FunctionResult};
 use baml_types::expr::{Expr, ExprMetadata, Name, VarIndex};
@@ -17,6 +17,8 @@ pub struct EvalEnv<'a> {
     pub context: HashMap<Name, Expr<ExprMetadata>>,
     pub runtime: &'a BamlRuntime,
     pub expr_tx: Option<mpsc::UnboundedSender<Vec<SerializedSpan>>>,
+    /// Evaluated top-level expressions.
+    pub evaluated_cache: Arc<Mutex<HashMap<Name, Expr<ExprMetadata>>>>,
 }
 
 impl<'a> EvalEnv<'a> {
@@ -131,18 +133,19 @@ async fn beta_reduce<'a>(
     match expr {
         Expr::Atom(_) => Ok(expr.clone()),
         Expr::Let(name, value, body, meta) => {
-            // Rewrite the let binding as an application.
-            // e.g. (let x = y in f) => (\x y => f)
-            // TODO: Should rewriting be done here in beta_reduce? Or elsewhere?
+            // First evaluate the bound expression
+            let evaluated_value = Box::pin(beta_reduce(env, value)).await?;
+
+            // Then substitute the evaluated value into the body
             let target = VarIndex {
                 de_bruijn: 0,
                 tuple: 0,
             };
             let closed_body = body.close(&target, name);
-            let arity = 1;
-            let lambda = Expr::Lambda(arity, Arc::new(closed_body), meta.clone());
-            let app = Expr::App(Arc::new(lambda), value.clone(), meta.clone());
-            Box::pin(beta_reduce(env, &app)).await
+            let substituted_body = subst2(&closed_body, &target, &evaluated_value, env)?;
+
+            // Finally evaluate the body with the substitution
+            Box::pin(beta_reduce(env, &substituted_body)).await
         }
         Expr::App(f, x, meta) => {
             match (f.as_ref(), x.as_ref()) {
@@ -252,11 +255,25 @@ async fn beta_reduce<'a>(
             }
         }
         Expr::FreeVar(name, _) => {
+            if let Some(cached) = env.evaluated_cache.lock().unwrap().get(name) {
+                return Ok(cached.clone());
+            }
+
             let var_lookup = env
                 .context
                 .get(name)
                 .context(format!("Variable not found: {:?}", name))?;
-            Ok(var_lookup.clone())
+
+            // Evaluate the expression
+            let evaluated = Box::pin(beta_reduce(env, var_lookup)).await?;
+
+            // Cache the result
+            env.evaluated_cache
+                .lock()
+                .unwrap()
+                .insert(name.clone(), evaluated.clone());
+
+            Ok(evaluated)
         }
         Expr::BoundVar(_, _) => Ok(expr.clone()),
         Expr::List(_, _) => Ok(expr.clone()),
diff --git a/engine/baml-runtime/src/lib.rs b/engine/baml-runtime/src/lib.rs
index 38bc0a960..3a9ec2f8a 100644
--- a/engine/baml-runtime/src/lib.rs
+++ b/engine/baml-runtime/src/lib.rs
@@ -560,6 +560,7 @@ impl BamlRuntime {
                         context,
                         runtime: self,
                         expr_tx: expr_tx.clone(),
+                        evaluated_cache: Arc::new(std::sync::Mutex::new(HashMap::new())),
                     };
                     let param_baml_values = params
                         .iter()