diff --git a/lib/handlebars/compiler.js b/lib/handlebars/compiler.js
index 5e5e37e2..35bac4bd 100644
--- a/lib/handlebars/compiler.js
+++ b/lib/handlebars/compiler.js
@@ -91,7 +91,8 @@ Handlebars.registerHelper('each', function(context, fn, inverse) {
 });
 
 Handlebars.registerHelper('if', function(context, fn, inverse) {
-  if(context === false || context == null) {
+  var condition = typeof context === "function" ? context.call(this) : context;
+  if(condition === false || condition == null) {
     return inverse(this);
   } else {
     return fn(this);
diff --git a/spec/qunit_spec.js b/spec/qunit_spec.js
index 44b5ea4b..7b3f9426 100644
--- a/spec/qunit_spec.js
+++ b/spec/qunit_spec.js
@@ -495,3 +495,27 @@ test("with", function() {
 
   shouldCompileTo(string, {person: {first: "Alan", last: "Johnson"}}, "Alan Johnson");
 });
+
+test("if with non-function argument", function() {
+  var string   = "{{#if goodbye}}GOODBYE {{/if}}cruel {{world}}!";
+  shouldCompileTo(string, {goodbye: true, world: "world"}, "GOODBYE cruel world!",
+                  "if with boolean argument shows the contents when true");
+  shouldCompileTo(string, {goodbye: "dummy", world: "world"}, "GOODBYE cruel world!",
+                  "if with string argument shows the contents");
+  shouldCompileTo(string, {goodbye: false, world: "world"}, "cruel world!",
+                  "if with boolean argument does not show the contents when false");
+  shouldCompileTo(string, {world: "world"}, "cruel world!",
+                  "if with undefined does not show the contents");
+});
+
+test("if with function argument", function() {
+  var string   = "{{#if goodbye}}GOODBYE {{/if}}cruel {{world}}!";
+  shouldCompileTo(string, {goodbye: function() {return true}, world: "world"}, "GOODBYE cruel world!",
+                  "if with function shows the contents when function returns true");
+  shouldCompileTo(string, {goodbye: function() {return this.world}, world: "world"}, "GOODBYE cruel world!",
+                  "if with function shows the contents when function returns string");
+  shouldCompileTo(string, {goodbye: function() {return false}, world: "world"}, "cruel world!",
+                  "if with function does not show the contents when returns false");
+  shouldCompileTo(string, {goodbye: function() {return this.foo}, world: "world"}, "cruel world!",
+                  "if with function does not show the contents when returns undefined");
+});