diff --git a/include/grub/script_sh.h b/include/grub/script_sh.h
index df9ddfa00..122d89862 100644
--- a/include/grub/script_sh.h
+++ b/include/grub/script_sh.h
@@ -42,6 +42,10 @@ struct grub_script
   unsigned refcnt;
   struct grub_script_mem *mem;
   struct grub_script_cmd *cmd;
+
+  /* Other grub_script's from block arguments.  */
+  struct grub_script *siblings;
+  struct grub_script *children;
 };
 
 typedef enum
@@ -207,6 +211,9 @@ struct grub_parser_param
   /* The memory that was used while parsing and scanning.  */
   struct grub_script_mem *memused;
 
+  /* The block argument scripts.  */
+  struct grub_script *scripts;
+
   /* The result of the parser.  */
   struct grub_script_cmd *parsed;
 
@@ -331,6 +338,7 @@ grub_script_function_t grub_script_function_create (struct grub_script_arg *func
 						    struct grub_script *cmd);
 void grub_script_function_remove (const char *name);
 grub_script_function_t grub_script_function_find (char *functionname);
+
 grub_err_t grub_script_function_call (grub_script_function_t func,
 				      int argc, char **args);
 
@@ -340,13 +348,17 @@ grub_script_execute_arglist_to_argv (struct grub_script_arglist *arglist, int *c
 static inline struct grub_script *
 grub_script_get (struct grub_script *script)
 {
-  script->refcnt++;
+  if (script)
+    script->refcnt++;
   return script;
 }
 
 static inline void
 grub_script_put (struct grub_script *script)
 {
+  if (! script)
+    return;
+
   if (script->refcnt == 0)
     grub_script_free (script);
   else
diff --git a/script/argv.c b/script/argv.c
index 42d573a0a..a7acbc23e 100644
--- a/script/argv.c
+++ b/script/argv.c
@@ -52,9 +52,12 @@ grub_script_argv_free (struct grub_script_argv *argv)
 
       grub_free (argv->args);
     }
+  if (argv->script)
+    grub_script_put (argv->script);
 
   argv->argc = 0;
   argv->args = 0;
+  argv->script = 0;
 }
 
 /* Prepare for next argc.  */
diff --git a/script/execute.c b/script/execute.c
index d8d2a258a..4b906b06f 100644
--- a/script/execute.c
+++ b/script/execute.c
@@ -201,7 +201,7 @@ grub_script_arglist_to_argv (struct grub_script_arglist *arglist,
 		  grub_script_argv_append (&result, arg->str) ||
 		  grub_script_argv_append (&result, "}"))
 		goto fail;
-	      result.script = arg->script;
+	      result.script = grub_script_get (arg->script);
 	      break;
 
 	    case GRUB_SCRIPT_ARG_TYPE_TEXT:
diff --git a/script/main.c b/script/main.c
index 752a8cd8a..19ce88c43 100644
--- a/script/main.c
+++ b/script/main.c
@@ -34,7 +34,7 @@ grub_normal_parse_line (char *line, grub_reader_getline_t getline)
       grub_script_execute (parsed_script);
 
       /* The parsed script was executed, throw it away.  */
-      grub_script_free (parsed_script);
+      grub_script_put (parsed_script);
     }
 
   return grub_errno;
diff --git a/script/parser.y b/script/parser.y
index 15764f429..8d0833c8b 100644
--- a/script/parser.y
+++ b/script/parser.y
@@ -38,6 +38,7 @@
   struct {
     unsigned offset;
     struct grub_script_mem *memory;
+    struct grub_script *scripts;
   };
 }
 
@@ -149,16 +150,45 @@ argument : "case"      { $$ = grub_script_add_arglist (state, 0, $1); }
          | word { $$ = $1; }
 ;
 
+/*
+  Block parameter is passed to commands in two forms: as unparsed
+  string and as pre-parsed grub_script object.  Passing as grub_script
+  object makes memory management difficult, because:
+
+  (1) Command may want to keep a reference to grub_script objects for
+      later use, so script framework may not free the grub_script
+      object after command completes.
+
+  (2) Command may get called multiple times with same grub_script
+      object under loops, so we should not let command implementation
+      to free the grub_script object.
+
+  To solve above problems, we rely on reference counting for
+  grub_script objects.  Commands that want to keep the grub_script
+  object must take a reference to it.
+
+  Other complexity comes with arbitrary nesting of grub_script
+  objects: a grub_script object may have commands with several block
+  parameters, and each block parameter may further contain multiple
+  block parameters nested.  We use temporary variable, state->scripts
+  to collect nested child scripts (that are linked by siblings and
+  children members), and will build grub_scripts tree from bottom.
+ */
 block: "{"
        {
          grub_script_lexer_ref (state->lexerstate);
          $<offset>$ = grub_script_lexer_record_start (state);
 	 $<memory>$ = grub_script_mem_record (state);
+
+	 /* save currently known scripts.  */
+	 $<scripts>$ = state->scripts;
+	 state->scripts = 0;
        }
        commands1 delimiters0 "}"
        {
          char *p;
 	 struct grub_script_mem *memory;
+	 struct grub_script *s = $<scripts>2;
 
 	 memory = grub_script_mem_record_stop (state, $<memory>2);
          if ((p = grub_script_lexer_record_stop (state, $<offset>2)))
@@ -168,6 +198,19 @@ block: "{"
 	 if (! $$ || ! ($$->script = grub_script_create ($3, memory)))
 	   grub_script_mem_free (memory);
 
+	 else {
+	   /* attach nested scripts to $$->script as children */
+	   $$->script->children = state->scripts;
+
+	   /* restore old scripts; append $$->script to siblings. */
+	   state->scripts = $<scripts>2 ?: $$->script;
+	   if (s) {
+	     while (s->siblings)
+	       s = s->siblings;
+	     s->siblings = $$->script;
+	   }
+	 }
+
          grub_script_lexer_deref (state->lexerstate);
        }
 ;
@@ -240,10 +283,13 @@ commands1: newlines0 command
            }
 ;
 
-function: "function" "name" 
+function: "function" "name"
           {
             grub_script_lexer_ref (state->lexerstate);
             state->func_mem = grub_script_mem_record (state);
+
+	    $<scripts>$ = state->scripts;
+	    state->scripts = 0;
           }
           delimiters0 "{" commands1 delimiters1 "}"
           {
@@ -253,9 +299,12 @@ function: "function" "name"
             script = grub_script_create ($6, state->func_mem);
             if (! script)
 	      grub_script_mem_free (state->func_mem);
-	    else
+	    else {
+	      script->children = state->scripts;
 	      grub_script_function_create ($2, script);
+	    }
 
+	    state->scripts = $<scripts>3;
             grub_script_lexer_deref (state->lexerstate);
           }
 ;
diff --git a/script/script.c b/script/script.c
index 53075a43c..bcefd81d8 100644
--- a/script/script.c
+++ b/script/script.c
@@ -94,12 +94,19 @@ grub_script_mem_record_stop (struct grub_parser_param *state,
 void
 grub_script_free (struct grub_script *script)
 {
+  struct grub_script *s;
+
   if (!script)
     return;
 
   if (script->mem)
     grub_script_mem_free (script->mem);
 
+  s = script->children;
+  while (s) {
+    grub_script_put (s);
+    s = s->siblings;
+  }
   grub_free (script);
 }
 
@@ -322,6 +329,8 @@ grub_script_create (struct grub_script_cmd *cmd, struct grub_script_mem *mem)
   parsed->mem = mem;
   parsed->cmd = cmd;
   parsed->refcnt = 0;
+  parsed->siblings = 0;
+  parsed->children = 0;
 
   return parsed;
 }
@@ -370,6 +379,7 @@ grub_script_parse (char *script, grub_reader_getline_t getline)
 
   parsed->mem = grub_script_mem_record_stop (parsestate, membackup);
   parsed->cmd = parsestate->parsed;
+  parsed->children = parsestate->scripts;
 
   grub_script_lexer_fini (lexstate);
   grub_free (parsestate);