diff --git a/lib/preprocessor.cpp b/lib/preprocessor.cpp
index e2648f01f..3fccc9d62 100644
--- a/lib/preprocessor.cpp
+++ b/lib/preprocessor.cpp
@@ -1001,20 +1001,29 @@ static void simplifyVarMap(std::map<std::string, std::string> &variables)
     for (std::map<std::string, std::string>::iterator i = variables.begin(); i != variables.end(); ++i) {
         std::string& varValue = i->second;
 
-        // TODO: 1. tokenize the value, replace each token like this.
-        // TODO: 2. handle function-macros too.
+        // TODO: handle function-macros too.
 
+        // Bailout if variable A depends on variable B which depends on A..
         std::set<std::string> seenVariables;
-        std::map<std::string, std::string>::iterator it = variables.find(varValue);
-        while (it != variables.end() && it->first != it->second) {
-            if (seenVariables.find(it->first) != seenVariables.end()) {
-                // We have already seen this variable. there is a cycle of #define that we can't process at
-                // this time. Stop trying to simplify the current variable and leave it as is.
-                break;
-            } else {
-                seenVariables.insert(it->first);
-                varValue = it->second;
-                it = variables.find(varValue);
+
+        TokenList tokenList(NULL);
+        std::istringstream istr(i->second);
+        if (tokenList.createTokens(istr)) {
+            for (Token *tok = tokenList.front(); tok; tok = tok->next()) {
+                if (tok->isName()) {
+                    std::map<std::string, std::string>::iterator it = variables.find(tok->str());
+                    while (it != variables.end() && it->first != it->second) {
+                        if (seenVariables.find(it->first) != seenVariables.end()) {
+                            // We have already seen this variable. there is a cycle of #define that we can't process at
+                            // this time. Stop trying to simplify the current variable and leave it as is.
+                            break;
+                        } else {
+                            seenVariables.insert(it->first);
+                            varValue = it->second;
+                            it = variables.find(varValue);
+                        }
+                    }
+                }
             }
         }
     }
diff --git a/test/testpreprocessor.cpp b/test/testpreprocessor.cpp
index 9083cd7ef..9f4f33b72 100644
--- a/test/testpreprocessor.cpp
+++ b/test/testpreprocessor.cpp
@@ -226,6 +226,7 @@ private:
         TEST_CASE(define_if2);
         TEST_CASE(define_if3);
         TEST_CASE(define_if4); // #4079 - #define X +123
+        TEST_CASE(define_if5); // #4516 - #define B (A & 0x00f0)
         TEST_CASE(define_ifdef);
         TEST_CASE(define_ifndef1);
         TEST_CASE(define_ifndef2);
@@ -2738,6 +2739,16 @@ private:
         ASSERT_EQUALS("\n\nFOO\n\n", preprocessor.getcode(filedata,"",""));
     }
 
+    void define_if5() { // #4516 - #define B (A & 0x00f0)
+        const char filedata[] = "#define A 0x0010\n"
+                                "#define B (A & 0x00f0)\n"
+                                "#if B==0x0010\n"
+                                "FOO\n"
+                                "#endif";
+        Preprocessor preprocessor(NULL, this);
+        ASSERT_EQUALS("\n\n\nFOO\n\n", preprocessor.getcode(filedata,"",""));
+    }
+
     void define_ifdef() {
         {
             const char filedata[] = "#define ABC\n"