diff --git a/src/MagicString.js b/src/MagicString.js
index 5cf6717..9543c94 100644
--- a/src/MagicString.js
+++ b/src/MagicString.js
@@ -860,7 +860,12 @@ export default class MagicString {
 		const index = original.indexOf(string);
 
 		if (index !== -1) {
-			this.overwrite(index, index + string.length, replacement);
+			if (typeof replacement === 'function') {
+				replacement = replacement(string, index, original);
+			}
+			if (string !== replacement) {
+				this.overwrite(index, index + string.length, replacement);
+			}
 		}
 
 		return this;
@@ -883,7 +888,11 @@ export default class MagicString {
 			index = original.indexOf(string, index + stringLength)
 		) {
 			const previous = original.slice(index, index + stringLength);
-			if (previous !== replacement) this.overwrite(index, index + stringLength, replacement);
+			let _replacement = replacement;
+			if (typeof replacement === 'function') {
+				_replacement = replacement(previous, index, original);
+			}
+			if (previous !== _replacement) this.overwrite(index, index + stringLength, _replacement);
 		}
 
 		return this;
diff --git a/test/MagicString.test.js b/test/MagicString.test.js
index e54a392..371bda4 100644
--- a/test/MagicString.test.js
+++ b/test/MagicString.test.js
@@ -1804,6 +1804,23 @@ describe('MagicString', () => {
 			assert.strictEqual(s.toString(), '1 3 1 2');
 		});
 
+		it('works with string replace and function replacer', () => {
+			const code = '1 2 1 2';
+			const s = new MagicString(code);
+			let index = -1;
+			let _str = '';
+
+			s.replace('2', (match, i, str) =>  {
+				index = i;
+				_str = str;
+				return match + '-3';
+			});
+
+			assert.strictEqual(s.toString(), '1 2-3 1 2');
+			assert.strictEqual(index, 2);
+			assert.strictEqual(_str, code);
+		});
+
 		it('Should not treat string as regexp', () => {
 			assert.strictEqual(new MagicString('1234').replace('.', '*').toString(), '1234');
 		});
@@ -1879,6 +1896,22 @@ describe('MagicString', () => {
 		it('works with string replace', () => {
 			assert.strictEqual(new MagicString('1212').replaceAll('2', '3').toString(), '1313');
 		});
+		it('works with string replace and function replacer', () => {
+			const code = '1 2 1 2';
+			const s = new MagicString(code);
+			const indexs = [];
+			const _strs = [];
+
+			s.replaceAll('2', (match, i, str) =>  {
+				indexs.push(i);
+				_strs.push(str);
+				return match + '-3';
+			});
+
+			assert.strictEqual(s.toString(), '1 2-3 1 2-3');
+			assert.deepStrictEqual(indexs, [2, 6]);
+			assert.deepStrictEqual(_strs, [code, code]);
+		});
 
 		it('Should not treat string as regexp', () => {
 			assert.strictEqual(new MagicString('1234').replaceAll('.', '*').toString(), '1234');