diff --git a/ChangeLog b/ChangeLog
index 317cc647e..1c93d9fce 100644
--- a/ChangeLog
+++ b/ChangeLog
@@ -14,6 +14,9 @@
 	* Philippe: 53796: Src/params.c, Test/K01nameref.ztst: fix local
 	reference chains and detect self-reference across local scopes
 
+	* Philippe: 53797: Src/params.c, Test/K01nameref.ztst: fix creation
+	of undeclared target variable through reference chain
+
 2025-10-24  Oliver Kiddle  <opk@zsh.org>
 
 	* 54002: Src/parse.c: silence compiler warning for static function
diff --git a/Src/params.c b/Src/params.c
index 361f173ce..cf6abcf48 100644
--- a/Src/params.c
+++ b/Src/params.c
@@ -1048,7 +1048,7 @@ createparam(char *name, int flags)
 	    (oldpm = upscope(oldpm, oldpm->base))) {
 	    Param lastpm;
 	    struct asgment stop;
-	    stop.flags = PM_NAMEREF | (flags & PM_LOCAL);
+	    stop.flags = PM_NAMEREF;
 	    stop.name = oldpm->node.nam;
 	    stop.value.scalar = GETREFNAME(oldpm);
 	    lastpm = (Param)resolve_nameref(oldpm, &stop);
diff --git a/Test/K01nameref.ztst b/Test/K01nameref.ztst
index 49a9a9d4d..1a41c4756 100644
--- a/Test/K01nameref.ztst
+++ b/Test/K01nameref.ztst
@@ -1179,6 +1179,20 @@ F:previously this could create an infinite recursion and crash
 >typeset PS1=zz
 *?*
 
+ unset var1 var2
+ typeset -n ref1=var1
+ () {
+   typeset -n ref2=ref1
+   typeset -n ref1=var2
+   typeset -i ref2=42
+   typeset -p ref1 ref2 var1 var2
+ }
+1:typeset reference chain to not-yet-defined variable including a hidden reference
+?(anon):typeset:4: no such variable: var2
+>typeset -n ref1=var2
+>typeset -n ref2=ref1
+>typeset -i var1=42
+
  typeset -n ref1
  typeset -n ref2=ref1
  () {