diff --git a/compiler/packages/babel-plugin-react-compiler/src/Inference/InferReferenceEffects.ts b/compiler/packages/babel-plugin-react-compiler/src/Inference/InferReferenceEffects.ts
index 8aa82469bdec4..1604f4813967a 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/Inference/InferReferenceEffects.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/Inference/InferReferenceEffects.ts
@@ -1180,18 +1180,6 @@ function inferBlock(
         };
         break;
       }
-      case 'TaggedTemplateExpression': {
-        valueKind = {
-          kind: ValueKind.Mutable,
-          reason: new Set([ValueReason.Other]),
-          context: new Set(),
-        };
-        effect = {
-          kind: Effect.ConditionallyMutate,
-          reason: ValueReason.Other,
-        };
-        break;
-      }
       case 'TemplateLiteral': {
         /*
          * template literal (with no tag function) always produces
@@ -1312,6 +1300,47 @@ function inferBlock(
         instr.lvalue.effect = Effect.Store;
         continue;
       }
+      case 'TaggedTemplateExpression': {
+        const operands = [...eachInstructionValueOperand(instrValue)];
+        if (operands.length !== 1) {
+          // future-proofing to make sure we update this case when we support interpolation
+          CompilerError.throwTodo({
+            reason: 'Support tagged template expressions with interpolations',
+            loc: instrValue.loc,
+          });
+        }
+        const signature = getFunctionCallSignature(
+          env,
+          instrValue.tag.identifier.type,
+        );
+        let calleeEffect =
+          signature?.calleeEffect ?? Effect.ConditionallyMutate;
+        const returnValueKind: AbstractValue =
+          signature !== null
+            ? {
+                kind: signature.returnValueKind,
+                reason: new Set([
+                  signature.returnValueReason ??
+                    ValueReason.KnownReturnSignature,
+                ]),
+                context: new Set(),
+              }
+            : {
+                kind: ValueKind.Mutable,
+                reason: new Set([ValueReason.Other]),
+                context: new Set(),
+              };
+        state.referenceAndRecordEffects(
+          instrValue.tag,
+          calleeEffect,
+          ValueReason.Other,
+          functionEffects,
+        );
+        state.initialize(instrValue, returnValueKind);
+        state.define(instr.lvalue, instrValue);
+        instr.lvalue.effect = Effect.ConditionallyMutate;
+        continue;
+      }
       case 'CallExpression': {
         const signature = getFunctionCallSignature(
           env,
diff --git a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/InferReactiveScopeVariables.ts b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/InferReactiveScopeVariables.ts
index 27aba91af2b1c..126772f591b41 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/InferReactiveScopeVariables.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/InferReactiveScopeVariables.ts
@@ -227,6 +227,7 @@ function mayAllocate(env: Environment, instruction: Instruction): boolean {
     case 'StoreGlobal': {
       return false;
     }
+    case 'TaggedTemplateExpression':
     case 'CallExpression':
     case 'MethodCall': {
       return instruction.lvalue.identifier.type.kind !== 'Primitive';
@@ -241,8 +242,7 @@ function mayAllocate(env: Environment, instruction: Instruction): boolean {
     case 'ObjectExpression':
     case 'UnsupportedNode':
     case 'ObjectMethod':
-    case 'FunctionExpression':
-    case 'TaggedTemplateExpression': {
+    case 'FunctionExpression': {
       return true;
     }
     default: {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/PruneNonEscapingScopes.ts b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/PruneNonEscapingScopes.ts
index b2e91fa302728..8033d05e2b3e3 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/PruneNonEscapingScopes.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/ReactiveScopes/PruneNonEscapingScopes.ts
@@ -671,12 +671,37 @@ function computeMemoizationInputs(
         ],
       };
     }
+    case 'TaggedTemplateExpression': {
+      const signature = getFunctionCallSignature(
+        env,
+        value.tag.identifier.type,
+      );
+      let lvalues = [];
+      if (lvalue !== null) {
+        lvalues.push({place: lvalue, level: MemoizationLevel.Memoized});
+      }
+      if (signature?.noAlias === true) {
+        return {
+          lvalues,
+          rvalues: [],
+        };
+      }
+      const operands = [...eachReactiveValueOperand(value)];
+      lvalues.push(
+        ...operands
+          .filter(operand => isMutableEffect(operand.effect, operand.loc))
+          .map(place => ({place, level: MemoizationLevel.Memoized})),
+      );
+      return {
+        lvalues,
+        rvalues: operands,
+      };
+    }
     case 'CallExpression': {
       const signature = getFunctionCallSignature(
         env,
         value.callee.identifier.type,
       );
-      const operands = [...eachReactiveValueOperand(value)];
       let lvalues = [];
       if (lvalue !== null) {
         lvalues.push({place: lvalue, level: MemoizationLevel.Memoized});
@@ -687,6 +712,7 @@ function computeMemoizationInputs(
           rvalues: [],
         };
       }
+      const operands = [...eachReactiveValueOperand(value)];
       lvalues.push(
         ...operands
           .filter(operand => isMutableEffect(operand.effect, operand.loc))
@@ -702,7 +728,6 @@ function computeMemoizationInputs(
         env,
         value.property.identifier.type,
       );
-      const operands = [...eachReactiveValueOperand(value)];
       let lvalues = [];
       if (lvalue !== null) {
         lvalues.push({place: lvalue, level: MemoizationLevel.Memoized});
@@ -713,6 +738,7 @@ function computeMemoizationInputs(
           rvalues: [],
         };
       }
+      const operands = [...eachReactiveValueOperand(value)];
       lvalues.push(
         ...operands
           .filter(operand => isMutableEffect(operand.effect, operand.loc))
@@ -726,7 +752,6 @@ function computeMemoizationInputs(
     case 'RegExpLiteral':
     case 'ObjectMethod':
     case 'FunctionExpression':
-    case 'TaggedTemplateExpression':
     case 'ArrayExpression':
     case 'NewExpression':
     case 'ObjectExpression':
diff --git a/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts b/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts
index d9f7ffd5bf8b8..b460124ec71f3 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/TypeInference/InferTypes.ts
@@ -250,6 +250,7 @@ function* generateInstructionTypes(
     }
 
     case 'CallExpression': {
+      const returnType = makeType();
       /*
        * TODO: callee could be a hook or a function, so this type equation isn't correct.
        * We should change Hook to a subtype of Function or change unifier logic.
@@ -258,8 +259,25 @@ function* generateInstructionTypes(
       yield equation(value.callee.identifier.type, {
         kind: 'Function',
         shapeId: null,
-        return: left,
+        return: returnType,
       });
+      yield equation(left, returnType);
+      break;
+    }
+
+    case 'TaggedTemplateExpression': {
+      const returnType = makeType();
+      /*
+       * TODO: callee could be a hook or a function, so this type equation isn't correct.
+       * We should change Hook to a subtype of Function or change unifier logic.
+       * (see https://github.com/facebook/react-forget/pull/1427)
+       */
+      yield equation(value.tag.identifier.type, {
+        kind: 'Function',
+        shapeId: null,
+        return: returnType,
+      });
+      yield equation(left, returnType);
       break;
     }
 
@@ -392,7 +410,6 @@ function* generateInstructionTypes(
     case 'MetaProperty':
     case 'ComputedStore':
     case 'ComputedLoad':
-    case 'TaggedTemplateExpression':
     case 'Await':
     case 'GetIterator':
     case 'IteratorNext':
diff --git a/compiler/packages/babel-plugin-react-compiler/src/Validation/ValidateLocalsNotReassignedAfterRender.ts b/compiler/packages/babel-plugin-react-compiler/src/Validation/ValidateLocalsNotReassignedAfterRender.ts
index 0ea1814349f7f..9c41ebcae19f6 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/Validation/ValidateLocalsNotReassignedAfterRender.ts
+++ b/compiler/packages/babel-plugin-react-compiler/src/Validation/ValidateLocalsNotReassignedAfterRender.ts
@@ -161,6 +161,14 @@ function getContextReassignment(
             if (signature?.noAlias) {
               operands = [value.receiver, value.property];
             }
+          } else if (value.kind === 'TaggedTemplateExpression') {
+            const signature = getFunctionCallSignature(
+              fn.env,
+              value.tag.identifier.type,
+            );
+            if (signature?.noAlias) {
+              operands = [value.tag];
+            }
           }
           for (const operand of operands) {
             CompilerError.invariant(operand.effect !== Effect.Unknown, {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/destructuring-mixed-scope-and-local-variables-with-default.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/destructuring-mixed-scope-and-local-variables-with-default.expect.md
index 5e8f199206f58..17dd0f835942d 100644
--- a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/destructuring-mixed-scope-and-local-variables-with-default.expect.md
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/destructuring-mixed-scope-and-local-variables-with-default.expect.md
@@ -63,67 +63,63 @@ function useFragment(_arg1, _arg2) {
 }
 
 function Component(props) {
-  const $ = _c(9);
-  let t0;
-  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
-    t0 = graphql`
+  const $ = _c(8);
+  const post = useFragment(
+    graphql`
       fragment F on T {
         id
       }
-    `;
-    $[0] = t0;
-  } else {
-    t0 = $[0];
-  }
-  const post = useFragment(t0, props.post);
-  let t1;
-  if ($[1] !== post) {
+    `,
+    props.post,
+  );
+  let t0;
+  if ($[0] !== post) {
     const allUrls = [];
 
-    const { media: t2, comments: t3, urls: t4 } = post;
-    const media = t2 === undefined ? null : t2;
+    const { media: t1, comments: t2, urls: t3 } = post;
+    const media = t1 === undefined ? null : t1;
+    let t4;
+    if ($[2] !== t2) {
+      t4 = t2 === undefined ? [] : t2;
+      $[2] = t2;
+      $[3] = t4;
+    } else {
+      t4 = $[3];
+    }
+    const comments = t4;
     let t5;
-    if ($[3] !== t3) {
+    if ($[4] !== t3) {
       t5 = t3 === undefined ? [] : t3;
-      $[3] = t3;
-      $[4] = t5;
+      $[4] = t3;
+      $[5] = t5;
     } else {
-      t5 = $[4];
+      t5 = $[5];
     }
-    const comments = t5;
+    const urls = t5;
     let t6;
-    if ($[5] !== t4) {
-      t6 = t4 === undefined ? [] : t4;
-      $[5] = t4;
-      $[6] = t6;
-    } else {
-      t6 = $[6];
-    }
-    const urls = t6;
-    let t7;
-    if ($[7] !== comments.length) {
-      t7 = (e) => {
+    if ($[6] !== comments.length) {
+      t6 = (e) => {
         if (!comments.length) {
           return;
         }
 
         console.log(comments.length);
       };
-      $[7] = comments.length;
-      $[8] = t7;
+      $[6] = comments.length;
+      $[7] = t6;
     } else {
-      t7 = $[8];
+      t6 = $[7];
     }
-    const onClick = t7;
+    const onClick = t6;
 
     allUrls.push(...urls);
-    t1 = <Stringify media={media} allUrls={allUrls} onClick={onClick} />;
-    $[1] = post;
-    $[2] = t1;
+    t0 = <Stringify media={media} allUrls={allUrls} onClick={onClick} />;
+    $[0] = post;
+    $[1] = t0;
   } else {
-    t1 = $[2];
+    t0 = $[1];
   }
-  return t1;
+  return t0;
 }
 
 export const FIXTURE_ENTRYPOINT = {
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/type-provider-tagged-template-expression.expect.md b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/type-provider-tagged-template-expression.expect.md
new file mode 100644
index 0000000000000..03bfef9fb2eff
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/type-provider-tagged-template-expression.expect.md
@@ -0,0 +1,106 @@
+
+## Input
+
+```javascript
+import {graphql} from 'shared-runtime';
+
+export function Component({a, b}) {
+  const fragment = graphql`
+    fragment Foo on User {
+      name
+    }
+  `;
+  return <div>{fragment}</div>;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [{a: 0, b: 0}],
+  sequentialRenders: [
+    {a: 0, b: 0},
+    {a: 1, b: 0},
+    {a: 1, b: 1},
+    {a: 1, b: 2},
+    {a: 2, b: 2},
+    {a: 3, b: 2},
+    {a: 0, b: 0},
+  ],
+};
+
+```
+
+## Code
+
+```javascript
+import { c as _c } from "react/compiler-runtime";
+import { graphql } from "shared-runtime";
+
+export function Component(t0) {
+  const $ = _c(1);
+  const fragment = graphql`
+    fragment Foo on User {
+      name
+    }
+  `;
+  let t1;
+  if ($[0] === Symbol.for("react.memo_cache_sentinel")) {
+    t1 = <div>{fragment}</div>;
+    $[0] = t1;
+  } else {
+    t1 = $[0];
+  }
+  return t1;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [{ a: 0, b: 0 }],
+  sequentialRenders: [
+    { a: 0, b: 0 },
+    { a: 1, b: 0 },
+    { a: 1, b: 1 },
+    { a: 1, b: 2 },
+    { a: 2, b: 2 },
+    { a: 3, b: 2 },
+    { a: 0, b: 0 },
+  ],
+};
+
+```
+      
+### Eval output
+(kind: ok) <div>
+    fragment Foo on User {
+      name
+    }
+  </div>
+<div>
+    fragment Foo on User {
+      name
+    }
+  </div>
+<div>
+    fragment Foo on User {
+      name
+    }
+  </div>
+<div>
+    fragment Foo on User {
+      name
+    }
+  </div>
+<div>
+    fragment Foo on User {
+      name
+    }
+  </div>
+<div>
+    fragment Foo on User {
+      name
+    }
+  </div>
+<div>
+    fragment Foo on User {
+      name
+    }
+  </div>
\ No newline at end of file
diff --git a/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/type-provider-tagged-template-expression.js b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/type-provider-tagged-template-expression.js
new file mode 100644
index 0000000000000..872d6b8f6fda9
--- /dev/null
+++ b/compiler/packages/babel-plugin-react-compiler/src/__tests__/fixtures/compiler/type-provider-tagged-template-expression.js
@@ -0,0 +1,24 @@
+import {graphql} from 'shared-runtime';
+
+export function Component({a, b}) {
+  const fragment = graphql`
+    fragment Foo on User {
+      name
+    }
+  `;
+  return <div>{fragment}</div>;
+}
+
+export const FIXTURE_ENTRYPOINT = {
+  fn: Component,
+  params: [{a: 0, b: 0}],
+  sequentialRenders: [
+    {a: 0, b: 0},
+    {a: 1, b: 0},
+    {a: 1, b: 1},
+    {a: 1, b: 2},
+    {a: 2, b: 2},
+    {a: 3, b: 2},
+    {a: 0, b: 0},
+  ],
+};
diff --git a/compiler/packages/snap/src/sprout/shared-runtime-type-provider.ts b/compiler/packages/snap/src/sprout/shared-runtime-type-provider.ts
index fb0877d11474f..10aa87c32b39e 100644
--- a/compiler/packages/snap/src/sprout/shared-runtime-type-provider.ts
+++ b/compiler/packages/snap/src/sprout/shared-runtime-type-provider.ts
@@ -32,6 +32,14 @@ export function makeSharedRuntimeTypeProvider({
           returnType: {kind: 'type', name: 'Primitive'},
           returnValueKind: ValueKindEnum.Primitive,
         },
+        graphql: {
+          kind: 'function',
+          calleeEffect: EffectEnum.Read,
+          positionalParams: [],
+          restParam: EffectEnum.Read,
+          returnType: {kind: 'type', name: 'Primitive'},
+          returnValueKind: ValueKindEnum.Primitive,
+        },
         typedArrayPush: {
           kind: 'function',
           calleeEffect: EffectEnum.Read,