diff --git a/Cargo.toml b/Cargo.toml
index f389029..2c5b31e 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -5,6 +5,7 @@ members = [
     "examples/esi_example_minimal",
     "examples/esi_example_advanced_error_handling",
     "examples/esi_try_example",
+    "examples/esi_vars_example",
 ]
 
 [workspace.package]
diff --git a/esi/src/lib.rs b/esi/src/lib.rs
index 09d1271..604982d 100644
--- a/esi/src/lib.rs
+++ b/esi/src/lib.rs
@@ -10,7 +10,7 @@ use fastly::http::request::PendingRequest;
 use fastly::http::{header, Method, StatusCode, Url};
 use fastly::{mime, Body, Request, Response};
 use log::{debug, error, trace};
-use std::collections::VecDeque;
+use std::collections::{HashMap, VecDeque};
 use std::io::{BufRead, Write};
 
 pub use crate::document::{Element, Fragment};
@@ -142,6 +142,9 @@ impl Processor {
         // `root_task` is the root task that will be used to fetch tags in recursive manner
         let root_task = &mut Task::new();
 
+        // variables
+        let mut variables = HashMap::new();
+
         let is_escaped = self.configuration.is_escaped_content;
         // Call the library to parse fn `parse_tags` which will call the callback function
         // on each tag / event it finds in the document.
@@ -156,6 +159,7 @@ impl Processor {
                     is_escaped,
                     &original_request_metadata,
                     dispatch_fragment_request,
+                    &mut variables,
                 )
             },
         )?;
@@ -393,6 +397,7 @@ fn event_receiver(
     is_escaped: bool,
     original_request_metadata: &Request,
     dispatch_fragment_request: &FragmentRequestDispatcher,
+    variables: &mut HashMap<String, String>,
 ) -> Result<()> {
     debug!("got {:?}", event);
 
@@ -430,12 +435,14 @@ fn event_receiver(
                 is_escaped,
                 original_request_metadata,
                 dispatch_fragment_request,
+                variables,
             )?;
             let except_task = task_handler(
                 except_events,
                 is_escaped,
                 original_request_metadata,
                 dispatch_fragment_request,
+                variables,
             )?;
 
             trace!(
@@ -450,10 +457,17 @@ fn event_receiver(
             });
         }
         Event::ESI(Tag::Assign { name, value }) => {
-            // process assignment
+            variables.insert(name, value);
         }
         Event::ESI(Tag::Vars { name }) => {
-            // process vars
+            if let Some(name) = name {
+                if let Some(value) = variables.get(&name) {
+                    let value = value.to_owned();
+                    queue.push_back(Element::Raw(value.into_bytes()));
+                }
+            } else {
+                // TODO: long form
+            }
         }
         Event::XML(event) => {
             debug!("pushing content to buffer, len: {}", queue.len());
@@ -473,6 +487,7 @@ fn task_handler(
     is_escaped: bool,
     original_request_metadata: &Request,
     dispatch_fragment_request: &FragmentRequestDispatcher,
+    variables: &mut HashMap<String, String>,
 ) -> Result<Task> {
     let mut task = Task::new();
     for event in events {
@@ -482,6 +497,7 @@ fn task_handler(
             is_escaped,
             original_request_metadata,
             dispatch_fragment_request,
+            variables,
         )?;
     }
     Ok(task)
diff --git a/examples/esi_vars_example/.cargo/config.toml b/examples/esi_vars_example/.cargo/config.toml
new file mode 100644
index 0000000..0787801
--- /dev/null
+++ b/examples/esi_vars_example/.cargo/config.toml
@@ -0,0 +1,6 @@
+[target.wasm32-wasi]
+rustflags = ["-C", "debuginfo=2"]
+runner = "viceroy run -C fastly.toml -- "
+
+[build]
+target = "wasm32-wasi"
diff --git a/examples/esi_vars_example/Cargo.toml b/examples/esi_vars_example/Cargo.toml
new file mode 100644
index 0000000..b3d99b1
--- /dev/null
+++ b/examples/esi_vars_example/Cargo.toml
@@ -0,0 +1,13 @@
+[package]
+name = "esi_vars_example"
+version.workspace = true
+authors.workspace = true
+license.workspace = true
+edition.workspace = true
+publish = false
+
+[dependencies]
+fastly = "^0.11"
+esi = { path = "../../esi" }
+log = "^0.4"
+env_logger = "^0.11"
diff --git a/examples/esi_vars_example/fastly.toml b/examples/esi_vars_example/fastly.toml
new file mode 100644
index 0000000..01d2f07
--- /dev/null
+++ b/examples/esi_vars_example/fastly.toml
@@ -0,0 +1,28 @@
+# This file describes a Fastly Compute package. To learn more visit:
+# https://developer.fastly.com/reference/fastly-toml/
+
+authors = ["kailan@enviark.com"]
+description = ""
+language = "rust"
+manifest_version = 2
+name = "esi_example_minimal"
+service_id = ""
+
+[local_server]
+
+  [local_server.backends]
+
+    [local_server.backends.mock-s3]
+      url = "https://mock-s3.edgecompute.app"
+      override_host = "mock-s3.edgecompute.app"
+
+[scripts]
+  build = "cargo build --bin esi_example_minimal --release --target wasm32-wasi --color always"
+
+[setup]
+
+  [setup.backends]
+
+    [setup.backends.mock-s3]
+      address = "mock-s3.edgecompute.app"
+      port = 443
diff --git a/examples/esi_vars_example/src/index.html b/examples/esi_vars_example/src/index.html
new file mode 100644
index 0000000..86b459c
--- /dev/null
+++ b/examples/esi_vars_example/src/index.html
@@ -0,0 +1,22 @@
+<!DOCTYPE html>
+<html>
+  <head>
+    <title>My Variable Website</title>
+  </head>
+  <body>
+    <header style="background: #f1f1f1; padding: 16px">
+      <h1>My Variable Website</h1>
+    </header>
+    <div class="layout" style="display: flex">
+      Assigning "YES" to variable...<br>
+      
+      Check (short form): YES=<br>
+      Check (long form): YES=$(test)<br>
+
+      Updating variable to "PERHAPS"...<br>
+      
+      Check (short form): PERHAPS=<br>
+      Check (long form): PERHAPS=$(test)<br>
+    </div>
+  </body>
+</html>
diff --git a/examples/esi_vars_example/src/main.rs b/examples/esi_vars_example/src/main.rs
new file mode 100644
index 0000000..a6f29be
--- /dev/null
+++ b/examples/esi_vars_example/src/main.rs
@@ -0,0 +1,62 @@
+use fastly::{http::StatusCode, mime, Error, Request, Response};
+use log::info;
+
+fn main() {
+    env_logger::builder()
+        .filter(None, log::LevelFilter::Trace)
+        .init();
+
+    if let Err(err) = handle_request(Request::from_client()) {
+        println!("returning error response");
+
+        Response::from_status(StatusCode::INTERNAL_SERVER_ERROR)
+            .with_body(err.to_string())
+            .send_to_client();
+    }
+}
+
+fn handle_request(req: Request) -> Result<(), Error> {
+    if req.get_path() != "/" {
+        Response::from_status(StatusCode::NOT_FOUND).send_to_client();
+        return Ok(());
+    }
+
+    // Generate synthetic test response from "index.html" file.
+    // You probably want replace this with a backend call, e.g. `req.clone_without_body().send("origin_0")`
+    let mut beresp =
+        Response::from_body(include_str!("index.html")).with_content_type(mime::TEXT_HTML);
+
+    // If the response is HTML, we can parse it for ESI tags.
+    if beresp
+        .get_content_type()
+        .is_some_and(|c| c.subtype() == mime::HTML)
+    {
+        let processor = esi::Processor::new(Some(req), esi::Configuration::default());
+
+        processor.process_response(
+            &mut beresp,
+            None,
+            Some(&|req| {
+                info!("Sending request {} {}", req.get_method(), req.get_path());
+                Ok(req.with_ttl(120).send_async("mock-s3")?.into())
+            }),
+            Some(&|req, mut resp| {
+                info!(
+                    "Received response for {} {}",
+                    req.get_method(),
+                    req.get_path()
+                );
+                if !resp.get_status().is_success() {
+                    // Override status so we still insert errors.
+                    resp.set_status(StatusCode::OK);
+                }
+                Ok(resp)
+            }),
+        )?;
+    } else {
+        // Otherwise, we can just return the response.
+        beresp.send_to_client();
+    }
+
+    Ok(())
+}