diff --git a/pkg/dart2wasm/lib/code_generator.dart b/pkg/dart2wasm/lib/code_generator.dart
index 29523f9a14e..d6b1e7409e5 100644
--- a/pkg/dart2wasm/lib/code_generator.dart
+++ b/pkg/dart2wasm/lib/code_generator.dart
@@ -792,24 +792,34 @@ abstract class AstCodeGenerator
   void visitVariableDeclaration(VariableDeclaration node) {
     final w.ValueType type = translator.translateTypeOfLocalVariable(node);
     w.Local? local;
-    Capture? capture = closures.captures[node];
+    final Capture? capture = closures.captures[node];
     if (capture == null || !capture.written) {
+      // Variable is not captured, or never updated after initialization. Keep
+      // the value in a local.
       local = addLocal(type, name: node.name);
       locals[node] = local;
     }
 
-    // Handle variable initialization. Nullable variables have an implicit
-    // initializer.
+    // Handle variable initialization. Nullable variables don't get an
+    // initializer in kernel, but they still need to be initialized as `null`,
+    // to reset the variables in loops to the initial value, intead of reusing
+    // the last value from the previous iteration. This is tested in
+    // `tests/language/local_null_initialization.dart`.
     if (node.initializer != null ||
         node.type.nullability == Nullability.nullable) {
       Expression initializer =
           node.initializer ?? ConstantExpression(NullConstant());
       if (capture != null) {
-        w.ValueType expectedType = capture.written ? capture.type : local!.type;
+        // Type for the variable in context will always be nullable, to be able
+        // to allocate the context without creating dummy values. Nullability of
+        // the local's type will depend on the Dart type.
+        assert(
+            local == null || local.type.withNullability(true) == capture.type);
+        w.ValueType expectedType = local != null ? local.type : capture.type;
         b.local_get(capture.context.currentLocal);
         translateExpression(initializer, expectedType);
-        if (!capture.written) {
-          b.local_tee(local!);
+        if (local != null) {
+          b.local_tee(local);
         }
         b.struct_set(capture.context.struct, capture.fieldIndex);
       } else {
@@ -817,7 +827,8 @@ abstract class AstCodeGenerator
         b.local_set(local);
       }
     } else if (local != null && !local.type.defaultable) {
-      // Uninitialized variable
+      // Uninitialized variable. We don't need to update the context when the
+      // variable is captured as the context is already initialized.
       translator
           .getDummyValuesCollectorForModule(b.moduleBuilder)
           .instantiateDummyValue(b, local.type);
@@ -836,6 +847,8 @@ abstract class AstCodeGenerator
     w.Local? local;
     final Capture? capture = closures.captures[node];
     if (capture == null || !capture.written) {
+      // Variable is not captured, or never updated after initialization. Keep
+      // the value in a local.
       local = addLocal(type, name: node.name);
       locals[node] = local;
     }
@@ -843,8 +856,8 @@ abstract class AstCodeGenerator
     if (capture != null) {
       b.local_get(capture.context.currentLocal);
       pushInitialValue();
-      if (!capture.written) {
-        b.local_tee(local!);
+      if (local != null) {
+        b.local_tee(local);
       }
       b.struct_set(capture.context.struct, capture.fieldIndex);
     } else {
diff --git a/tests/language/local_null_initialization.dart b/tests/language/local_null_initialization.dart
new file mode 100644
index 00000000000..47b009d072a
--- /dev/null
+++ b/tests/language/local_null_initialization.dart
@@ -0,0 +1,34 @@
+// Copyright (c) 2026, the Dart project authors.  Please see the AUTHORS file
+// for details. All rights reserved. Use of this source code is governed by a
+// BSD-style license that can be found in the LICENSE file.
+
+// This test checks that variable declarations in loops are reset in each
+// iteration. (the `replacement` variable below)
+//
+// Before this test, getting this wrong in dart2wasm only caused one test
+// failure in a large `dart:convert` test. This test is smaller and checks the
+// same thing.
+
+import 'package:expect/expect.dart';
+
+const _TEST_INPUT = "<A>";
+
+List<int?> _convert(String text) {
+  List<int?> result = [];
+  for (var i = 0; i < text.length; i++) {
+    var ch = text[i];
+    int? replacement;
+    switch (ch) {
+      case '<':
+        replacement = 1;
+      case '>':
+        replacement = 2;
+    }
+    result.add(replacement);
+  }
+  return result;
+}
+
+void main() {
+  Expect.listEquals(_convert("<A>"), [1, null, 2]);
+}