diff --git a/builder.go b/builder.go
index 51ce5dfd..0fd07efd 100644
--- a/builder.go
+++ b/builder.go
@@ -317,6 +317,18 @@ func NewStages(node *parser.Node, b *Builder) (Stages, error) {
 		}
 		inheritedArgs := argInstructionsInStages[from]
 		thisStageArgs := slices.Clone(inheritedArgs)
+		filteredUserArgs := make(map[string]string)
+		for k, v := range b.UserArgs {
+			for _, a := range b.GlobalAllowedArgs {
+				if a == k {
+					filteredUserArgs[k] = v
+				}
+			}
+		}
+		userArgs := envMapAsSlice(filteredUserArgs)
+		userArgs = mergeEnv(envMapAsSlice(b.BuiltinArgDefaults), userArgs)
+		userArgs = mergeEnv(envMapAsSlice(builtinArgDefaults), userArgs)
+		userArgs = mergeEnv(envMapAsSlice(b.HeadingArgs), userArgs)
 		for _, child := range s.Node.Children {
 			if !strings.EqualFold(child.Value, command.Arg) {
 				continue
@@ -329,7 +341,12 @@ func NewStages(node *parser.Node, b *Builder) (Stages, error) {
 			}
 			next := child.Next
 			for next != nil {
-				thisStageArgs = append(thisStageArgs, next.Value)
+				processedValue, err := ProcessWord(next.Value, userArgs)
+				if err != nil {
+					return fmt.Errorf("processing ARG %q", next.Value)
+				}
+				thisStageArgs = append(thisStageArgs, processedValue)
+				userArgs = mergeEnv(userArgs, []string{processedValue})
 				next = next.Next
 			}
 		}
diff --git a/builder_test.go b/builder_test.go
index 8b770ac0..f7bfcc71 100644
--- a/builder_test.go
+++ b/builder_test.go
@@ -546,6 +546,12 @@ func TestMultiStageArgScope(t *testing.T) {
 	if !builderHasArgument(stages[0].Builder, "SECRET=secretthings") {
 		t.Fatalf("expected SECRET=secretthings to be contained in first stage arguments list: %v", stages[0].Builder.Arguments())
 	}
+	if !builderHasArgument(stages[0].Builder, "QUOTED=words with quotes") {
+		t.Fatalf(`expected QUOTED="words with quotes" to be present in first stage arguments list: %v`, stages[0].Builder.Arguments())
+	}
+	if !builderHasArgument(stages[0].Builder, "REQUOTED=words with quotes") {
+		t.Fatalf(`expected REQUOTED="words with quotes" to be present in first stage arguments list: %v`, stages[0].Builder.Arguments())
+	}
 
 	secondStageArguments := stages[1].Builder.Arguments()
 	secretInSecondStage := false
@@ -591,6 +597,12 @@ func TestMultiStageArgScope(t *testing.T) {
 	if !unusedInThirdStage {
 		t.Fatalf("expected UNUSED to be present in third stage")
 	}
+	if !builderHasArgument(stages[2].Builder, "QUOTED=words with quotes") {
+		t.Fatalf(`expected QUOTED=words with quotes to be present in third stage arguments list: %v`, thirdStageArguments)
+	}
+	if !builderHasArgument(stages[2].Builder, "REQUOTED=words with quotes") {
+		t.Fatalf(`expected REQUOTED=words with quotes to be present in third stage arguments list: %v`, thirdStageArguments)
+	}
 }
 
 func TestRun(t *testing.T) {
diff --git a/dockerclient/testdata/multistage/Dockerfile.arg-scope b/dockerclient/testdata/multistage/Dockerfile.arg-scope
index 2e39f8bd..ad031e23 100644
--- a/dockerclient/testdata/multistage/Dockerfile.arg-scope
+++ b/dockerclient/testdata/multistage/Dockerfile.arg-scope
@@ -2,6 +2,8 @@ FROM mirror.gcr.io/alpine
 ARG SECRET
 ARG UNUSED
 ARG INHERITED=set
+ARG QUOTED="words with quotes"
+ARG REQUOTED=$QUOTED
 RUN echo "$SECRET"
 
 FROM mirror.gcr.io/alpine
@@ -12,3 +14,5 @@ RUN echo "$SECRET"
 
 FROM 0
 RUN echo "$SECRET"
+ARG QUOTED
+ARG REQUOTED