diff --git a/CHANGELOG.md b/CHANGELOG.md
index 023024ed..9cf72fcf 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -83,6 +83,7 @@ Developers may need to change their code
 
 ### Corrected Bugs
 
+* Fixed: [locally scoped YANG typedef in grouping does not work #394](https://github.com/clicon/clixon/issues/394)
 * Fixed: [leafref in new type no work in union type](https://github.com/clicon/clixon/issues/388)
 * Fixed: [must statement check int value failed](https://github.com/clicon/clixon/issues/386)
 * Fixed: [Defaults in choice does not work properly](https://github.com/clicon/clixon/issues/390)
diff --git a/lib/src/clixon_yang_type.c b/lib/src/clixon_yang_type.c
index 60c596f2..47e2da93 100644
--- a/lib/src/clixon_yang_type.c
+++ b/lib/src/clixon_yang_type.c
@@ -1105,7 +1105,9 @@ static inline int
 ys_typedef(yang_stmt *ys)
 {
     return yang_keyword_get(ys) == Y_MODULE || yang_keyword_get(ys) == Y_SUBMODULE ||
-        yang_keyword_get(ys) == Y_CONTAINER || yang_keyword_get(ys) == Y_LIST;
+        yang_keyword_get(ys) == Y_CONTAINER || yang_keyword_get(ys) == Y_LIST ||
+        yang_keyword_get(ys) == Y_GROUPING
+        ;
 }
 
 /* find next ys up which can contain a typedef */
diff --git a/test/test_type.sh b/test/test_type.sh
index 2a495639..1e44983f 100755
--- a/test/test_type.sh
+++ b/test/test_type.sh
@@ -68,6 +68,19 @@ module example{
    namespace "urn:example:clixon";
    prefix ex;
    import example2 { prefix ex2; }
+
+   grouping gt{
+     description "test of local scoped type as defined in RFC7950 Section 5.5";
+     typedef ag {
+         type string {
+           pattern
+             '(([c-g])\.){3}[c-g]';
+         }
+      }
+     leaf gr{
+       type ag;
+     }
+   }
    typedef ab {
        type string {
          pattern
@@ -206,6 +219,7 @@ module example{
       mandatory true;
     }
   }
+  uses gt;
 }
 EOF
 
@@ -624,6 +638,22 @@ EOF
     new "netconf discard-changes"
     expecteof_netconf "$clixon_netconf -qf $cfg" 0 "$DEFAULTHELLO" "<rpc $DEFAULTNS><discard-changes/></rpc>" "" "<rpc-reply $DEFAULTNS><ok/></rpc-reply>"
 
+    #------ typedef scoped in grouping
+    new "type in grouping"
+    expecteof_netconf "$clixon_netconf -qf $cfg" 0 "$DEFAULTHELLO" "<rpc $DEFAULTNS><edit-config><target><candidate/></target><config><gr xmlns=\"urn:example:clixon\">c.d.e.f</gr></config></edit-config></rpc>" "" "<rpc-reply $DEFAULTNS><ok/></rpc-reply>"
+
+    new "validate grouping ok"
+    expecteof_netconf "$clixon_netconf -qf $cfg" 0 "$DEFAULTHELLO" "<rpc $DEFAULTNS><validate><source><candidate/></source></validate></rpc>" "" "<rpc-reply $DEFAULTNS><ok/></rpc-reply>"
+
+    new "type in grouping negatoive"
+    expecteof_netconf "$clixon_netconf -qf $cfg" 0 "$DEFAULTHELLO" "<rpc $DEFAULTNS><edit-config><target><candidate/></target><config><gr xmlns=\"urn:example:clixon\">a.d.e.f</gr></config></edit-config></rpc>" "" "<rpc-reply $DEFAULTNS><ok/></rpc-reply>"
+
+    new "validate grouping expect fail"
+    expecteof_netconf "$clixon_netconf -qf $cfg" 0 "$DEFAULTHELLO" "<rpc $DEFAULTNS><validate><source><candidate/></source></validate></rpc>" "<rpc-reply $DEFAULTNS><rpc-error><error-type>application</error-type><error-tag>bad-element</error-tag>" 
+
+        new "netconf discard-changes"
+    expecteof_netconf "$clixon_netconf -qf $cfg" 0 "$DEFAULTHELLO" "<rpc $DEFAULTNS><discard-changes/></rpc>" "" "<rpc-reply $DEFAULTNS><ok/></rpc-reply>"
+
     #------ minus
 
     new "type with minus"