diff --git a/src/cc65/compile.c b/src/cc65/compile.c
index 108c80a28..b24751b59 100644
--- a/src/cc65/compile.c
+++ b/src/cc65/compile.c
@@ -121,7 +121,7 @@ static void Parse (void)
         }
 
         /* Read the declaration specifier */
-        ParseDeclSpec (&Spec, TS_DEFAULT_TYPE_INT, SC_NONE);
+        ParseDeclSpec (&Spec, TS_DEFAULT_TYPE_INT | TS_FUNCTION_SPEC, SC_NONE);
 
         /* Don't accept illegal storage classes */
         if ((Spec.StorageClass & SC_STORAGEMASK) == SC_AUTO ||
@@ -560,6 +560,10 @@ void Compile (const char* FileName)
                 if ((Entry->Flags & SC_STORAGEMASK) == SC_STATIC && SymIsRef (Entry)) {
                     Warning ("Static function '%s' used but never defined",
                              Entry->Name);
+                } else if ((Entry->Flags & SC_INLINE) != 0) {
+                    Warning ("Inline function '%s' %s but never defined",
+                             Entry->Name,
+                             SymIsRef (Entry) ? "used" : "declared");
                 }
             }
         }
diff --git a/src/cc65/declare.c b/src/cc65/declare.c
index f93305f01..6173b5460 100644
--- a/src/cc65/declare.c
+++ b/src/cc65/declare.c
@@ -124,9 +124,37 @@ static unsigned ParseOneStorageClass (void)
 
 
 
+static unsigned ParseOneFuncSpec (void)
+/* Parse and return a function specifier */
+{
+    unsigned FuncSpec = 0;
+
+    /* Check the function specifier given */
+    switch (CurTok.Tok) {
+
+        case TOK_INLINE:
+            FuncSpec = SC_INLINE;
+            NextToken ();
+            break;
+
+        case TOK_NORETURN:
+            FuncSpec = SC_NORETURN;
+            NextToken ();
+            break;
+
+        default:
+            break;
+    }
+
+    return FuncSpec;
+}
+
+
+
 static int ParseStorageClass (DeclSpec* Spec)
 /* Parse storage class specifiers. Return true if a specifier is read even if
-** it was duplicated or disallowed. */
+** it was duplicated or disallowed.
+*/
 {
     /* Check the storage class given */
     unsigned StorageClass = ParseOneStorageClass ();
@@ -151,6 +179,31 @@ static int ParseStorageClass (DeclSpec* Spec)
 
 
 
+static int ParseFuncSpecClass (DeclSpec* Spec)
+/* Parse function specifiers. Return true if a specifier is read even if it
+** was duplicated or disallowed.
+*/
+{
+    /* Check the function specifiers given */
+    unsigned FuncSpec = ParseOneFuncSpec ();
+
+    if (FuncSpec == 0) {
+        return 0;
+    }
+
+    while (FuncSpec != 0) {
+        if ((Spec->StorageClass & FuncSpec) != 0) {
+            Warning ("Duplicate function specifier");
+        }
+        Spec->StorageClass |= FuncSpec;
+        FuncSpec = ParseOneFuncSpec ();
+    }
+
+    return 1;
+}
+
+
+
 static void DuplicateQualifier (const char* Name)
 /* Print an error message */
 {
@@ -303,7 +356,8 @@ static void OptionalSpecifiers (DeclSpec* Spec, TypeCode* Qualifiers, typespec_t
 */
 {
     TypeCode Q = T_QUAL_NONE;
-    int Continue;
+    int HasStorageClass;
+    int HasFuncSpec;
 
     do {
         /* There may be type qualifiers *before* any storage class specifiers */
@@ -311,11 +365,17 @@ static void OptionalSpecifiers (DeclSpec* Spec, TypeCode* Qualifiers, typespec_t
         *Qualifiers |= Q;
 
         /* Parse storage class specifiers anyway then check */
-        Continue = ParseStorageClass (Spec);
-        if (Continue && (TSFlags & (TS_STORAGE_CLASS_SPEC | TS_FUNCTION_SPEC)) == 0) {
+        HasStorageClass = ParseStorageClass (Spec);
+        if (HasStorageClass && (TSFlags & TS_STORAGE_CLASS_SPEC) == 0) {
             Error ("Unexpected storage class specified");
         }
-    } while (Continue || Q != T_QUAL_NONE);
+
+        /* Parse function specifiers anyway then check */
+        HasFuncSpec = ParseFuncSpecClass (Spec);
+        if (HasFuncSpec && (TSFlags & TS_FUNCTION_SPEC) == 0) {
+            Error ("Unexpected function specifiers");
+        }
+    } while (Q != T_QUAL_NONE || HasStorageClass || HasFuncSpec);
 }
 
 
@@ -2375,6 +2435,14 @@ int ParseDecl (DeclSpec* Spec, Declarator* D, declmode_t Mode)
     /* Parse attributes for this declarator */
     ParseAttribute (D);
 
+    /* 'inline' is only allowed on functions */
+    if (Mode != DM_ACCEPT_PARAM_IDENT               &&
+        (D->StorageClass & SC_TYPEMASK) != SC_FUNC  &&
+        (D->StorageClass & SC_INLINE) == SC_INLINE) {
+        Error ("'inline' on non-function declaration");
+        D->StorageClass &= ~SC_INLINE;
+    }
+
     /* Check a few pre-C99 things */
     if (D->Ident[0] != '\0' && (Spec->Flags & DS_TYPE_MASK) == DS_DEF_TYPE) {
         /* Check and warn about an implicit int return in the function */
@@ -2478,7 +2546,7 @@ void ParseDeclSpec (DeclSpec* Spec, typespec_t TSFlags, unsigned DefStorage)
     Spec->Flags &= ~DS_DEF_STORAGE;
 
     /* Parse the type specifiers */
-    ParseTypeSpec (Spec, TSFlags | TS_STORAGE_CLASS_SPEC | TS_FUNCTION_SPEC);
+    ParseTypeSpec (Spec, TSFlags | TS_STORAGE_CLASS_SPEC);
 
     /* If no explicit storage class is given, use the default */
     if ((Spec->StorageClass & SC_STORAGEMASK) == 0) {
@@ -2495,7 +2563,9 @@ void CheckEmptyDecl (const DeclSpec* Spec)
 ** warning if not.
 */
 {
-    if ((Spec->Flags & DS_TYPE_MASK) == DS_NONE) {
+    if ((Spec->StorageClass & SC_INLINE) == SC_INLINE) {
+        Error ("'inline' on empty declaration");
+    } else if ((Spec->Flags & DS_TYPE_MASK) == DS_NONE) {
         /* No declaration at all */
     } else if ((Spec->Flags & DS_EXTRA_TYPE) == 0) {
         Warning ("Declaration does not declare anything");
diff --git a/src/cc65/expr.c b/src/cc65/expr.c
index e5e5cc62e..a855e5b3c 100644
--- a/src/cc65/expr.c
+++ b/src/cc65/expr.c
@@ -1407,7 +1407,7 @@ static void Primary (ExprDesc* E)
             } else {
                 /* Let's see if this is a C99-style declaration */
                 DeclSpec Spec;
-                ParseDeclSpec (&Spec, TS_DEFAULT_TYPE_NONE, SC_AUTO);
+                ParseDeclSpec (&Spec, TS_DEFAULT_TYPE_NONE | TS_FUNCTION_SPEC, SC_AUTO);
 
                 if ((Spec.Flags & DS_TYPE_MASK) != DS_NONE) {
                     Error ("Mixed declarations and code are not supported in cc65");
diff --git a/src/cc65/function.c b/src/cc65/function.c
index d570c2dde..596f9b617 100644
--- a/src/cc65/function.c
+++ b/src/cc65/function.c
@@ -518,6 +518,12 @@ void NewFunc (SymEntry* Func, FuncDesc* D)
             Error ("'main' cannot be declared as __fastcall__");
         }
 
+        /* main() cannot be an inline function */
+        if ((Func->Flags & SC_INLINE) == SC_INLINE) {
+            Error ("'main' cannot be declared inline");
+            Func->Flags &= ~SC_INLINE;
+        }
+
         /* Check return type */
         if (GetUnqualRawTypeCode (ReturnType) == T_INT) {
             /* Determine if this is a main function in a C99 environment that
diff --git a/src/cc65/locals.c b/src/cc65/locals.c
index 28e263bb8..777f6b8b9 100644
--- a/src/cc65/locals.c
+++ b/src/cc65/locals.c
@@ -563,7 +563,7 @@ void DeclareLocals (void)
         }
 
         /* Read the declaration specifier */
-        ParseDeclSpec (&Spec, TS_DEFAULT_TYPE_INT, SC_AUTO);
+        ParseDeclSpec (&Spec, TS_DEFAULT_TYPE_INT | TS_FUNCTION_SPEC, SC_AUTO);
 
         /* Check variable declarations. We need distinguish between a default
         ** int type and the end of variable declarations. So we will do the
diff --git a/src/cc65/scanner.h b/src/cc65/scanner.h
index ccf3a8805..6fc3e5370 100644
--- a/src/cc65/scanner.h
+++ b/src/cc65/scanner.h
@@ -76,6 +76,7 @@ typedef enum token_t {
 
     /* Function specifiers */
     TOK_INLINE,
+    TOK_NORETURN,
     TOK_FASTCALL,
     TOK_CDECL,
 
diff --git a/src/cc65/symentry.h b/src/cc65/symentry.h
index 7bfc18ea4..7871b9ade 100644
--- a/src/cc65/symentry.h
+++ b/src/cc65/symentry.h
@@ -151,6 +151,10 @@ struct CodeEntry;
 #define SC_THREAD       0x08000000U     /* UNSUPPORTED: Thread-local storage class */
 #define SC_STORAGEMASK  0x0F000000U     /* Storage type mask */
 
+/* Function specifiers */
+#define SC_INLINE       0x10000000U     /* Inline function */
+#define SC_NORETURN     0x20000000U     /* Noreturn function */
+
 
 
 /* Label definition or reference */
diff --git a/src/cc65/symtab.c b/src/cc65/symtab.c
index a76e60450..f5ef2a15c 100644
--- a/src/cc65/symtab.c
+++ b/src/cc65/symtab.c
@@ -1439,6 +1439,16 @@ SymEntry* AddGlobalSym (const char* Name, const Type* T, unsigned Flags)
             Entry->V.F.WrappedCall = WrappedCall;
             Entry->V.F.WrappedCallData = WrappedCallData;
         }
+
+        /* A files cope function declaration with the 'extern' storage
+        ** class or without the 'inline' specifier ensures that the
+        ** function definition (if any) is a non-inline definition.
+        */
+        if (SymTab == SymTab0 &&
+            ((Flags & SC_STORAGEMASK) == SC_EXTERN ||
+             (Flags & SC_INLINE) == 0)) {
+            Entry->Flags |= SC_NOINLINEDEF;
+        }
     }
 
     /* Add an alias of the global symbol to the local symbol table */
@@ -1575,7 +1585,7 @@ void EmitExternals (void)
             if (SymIsRef (Entry) && !SymIsDef (Entry)) {
                 /* An import */
                 g_defimport (Entry->Name, Flags & SC_ZEROPAGE);
-            } else if (SymIsDef (Entry)) {
+            } else if (SymIsDef (Entry) && ((Flags & SC_NOINLINEDEF) || (Flags & SC_INLINE) == 0)) {
                 /* An export */
                 g_defexport (Entry->Name, Flags & SC_ZEROPAGE);
             }
diff --git a/test/ref/Makefile b/test/ref/Makefile
index 9ecb33c00..5c189c6cb 100644
--- a/test/ref/Makefile
+++ b/test/ref/Makefile
@@ -63,6 +63,7 @@ CUSTOMSOURCES = \
 # exact error output is required
 ERRORSOURCES = \
 	custom-reference-error.c \
+	inline-error.c \
 	bug1889-missing-identifier.c \
 	bug2312-preprocessor-error.c
 
diff --git a/test/ref/bug1889-missing-identifier.cref b/test/ref/bug1889-missing-identifier.cref
index 6317657d1..e77c1a7a1 100644
--- a/test/ref/bug1889-missing-identifier.cref
+++ b/test/ref/bug1889-missing-identifier.cref
@@ -1,4 +1,4 @@
 bug1889-missing-identifier.c:3: Error: Identifier or ';' expected after declaration specifiers
 bug1889-missing-identifier.c:3: Warning: Implicit 'int' is an obsolete feature
-bug1889-missing-identifier.c:4: Error: Declaration specifier or identifier expected
+bug1889-missing-identifier.c:4: Error: 'inline' on empty declaration
 bug1889-missing-identifier.c:6: Error: Expression expected
diff --git a/test/ref/inline-error.c b/test/ref/inline-error.c
new file mode 100644
index 000000000..d8191025a
--- /dev/null
+++ b/test/ref/inline-error.c
@@ -0,0 +1,36 @@
+/* C99 inline in declarations */
+
+inline typedef int;                 /* Error */
+static inline int;                  /* Error */
+inline static int a1;               /* Error */
+int inline (*fp1)(void);            /* Error */
+typedef inline int f1_t(void);      /* Error */
+inline int f1a(void);               /* OK here warning later */
+inline extern int f1b(void);        /* OK here warning later */
+extern inline int f1b(void);        /* Same as above */
+inline static int f1c(void);        /* OK here warning later */
+static inline int f1c(void);        /* Same as above */
+
+void foo(inline int x);             /* Error */
+int a = sizeof (inline int);        /* TODO: better error message */
+int b = sizeof (inline int (int));  /* TODO: better error message */
+
+inline int main(void)               /* Error */
+{
+    inline typedef int;             /* Error */
+    static inline int;              /* Error */
+    extern inline int a2;           /* Error */
+    int inline (*fp2)(void);        /* Error */
+    typedef inline int f2_t(void);  /* Error */
+    inline int f2a(void);           /* OK here warning later */
+    inline extern int f2b(void);    /* OK here warning later */
+    extern inline int f2b(void);    /* Same as above */
+
+    f1a();                          /* Still imported */
+    f1b();                          /* Still imported */
+    f1c();                          /* Not imported */
+    f2a();                          /* Still imported */
+    f2b();                          /* Still imported */
+}
+
+/* Warning: non-external inline functions declared but undefined in TU */
diff --git a/test/ref/inline-error.cref b/test/ref/inline-error.cref
new file mode 100644
index 000000000..abfdcdddd
--- /dev/null
+++ b/test/ref/inline-error.cref
@@ -0,0 +1,20 @@
+inline-error.c:3: Error: 'inline' on empty declaration
+inline-error.c:4: Error: 'inline' on empty declaration
+inline-error.c:5: Error: 'inline' on non-function declaration
+inline-error.c:6: Error: 'inline' on non-function declaration
+inline-error.c:7: Error: 'inline' on non-function declaration
+inline-error.c:14: Error: Unexpected function specifiers
+inline-error.c:15: Error: Mixed declarations and code are not supported in cc65
+inline-error.c:16: Error: Mixed declarations and code are not supported in cc65
+inline-error.c:19: Error: 'main' cannot be declared inline
+inline-error.c:20: Error: 'inline' on empty declaration
+inline-error.c:21: Error: 'inline' on empty declaration
+inline-error.c:22: Error: 'inline' on non-function declaration
+inline-error.c:23: Error: 'inline' on non-function declaration
+inline-error.c:24: Error: 'inline' on non-function declaration
+inline-error.c:34: Warning: Variable 'fp2' is defined but never used
+inline-error.c:37: Warning: Inline function 'f1a' used but never defined
+inline-error.c:37: Warning: Inline function 'f1b' used but never defined
+inline-error.c:37: Warning: Static function 'f1c' used but never defined
+inline-error.c:37: Warning: Inline function 'f2a' used but never defined
+inline-error.c:37: Warning: Inline function 'f2b' used but never defined
diff --git a/test/val/inline-func.c b/test/val/inline-func.c
new file mode 100644
index 000000000..b9e127aae
--- /dev/null
+++ b/test/val/inline-func.c
@@ -0,0 +1,20 @@
+/* C99 inline */
+
+#include <stdlib.h>
+
+inline static int f(int x, ...)
+{
+    return x * 2;
+}
+
+extern inline int g(int x);
+
+int main(void)
+{
+    return f(g(7)) == 42 ? EXIT_SUCCESS : EXIT_FAILURE;
+}
+
+int g(int x)
+{
+    return x * 3;
+}