diff --git a/mypyc/irbuild/context.py b/mypyc/irbuild/context.py
index a740f0b821d9..8d35c0ce2599 100644
--- a/mypyc/irbuild/context.py
+++ b/mypyc/irbuild/context.py
@@ -95,6 +95,11 @@ def curr_env_reg(self) -> Value:
         assert self._curr_env_reg is not None
         return self._curr_env_reg
 
+    def can_merge_generator_and_env_classes(self) -> bool:
+        # In simple cases we can place the environment into the generator class,
+        # instead of having two separate classes.
+        return self.is_generator and not self.is_nested and not self.contains_nested
+
 
 class ImplicitClass:
     """Contains information regarding implicitly generated classes.
diff --git a/mypyc/irbuild/env_class.py b/mypyc/irbuild/env_class.py
index ab786fe71dda..b0909f86686a 100644
--- a/mypyc/irbuild/env_class.py
+++ b/mypyc/irbuild/env_class.py
@@ -58,7 +58,8 @@ class is generated, the function environment has not yet been
 
 def finalize_env_class(builder: IRBuilder) -> None:
     """Generate, instantiate, and set up the environment of an environment class."""
-    instantiate_env_class(builder)
+    if not builder.fn_info.can_merge_generator_and_env_classes():
+        instantiate_env_class(builder)
 
     # Iterate through the function arguments and replace local definitions (using registers)
     # that were previously added to the environment with references to the function's
diff --git a/mypyc/irbuild/function.py b/mypyc/irbuild/function.py
index cb9a1a3dc4a3..dbebc350bb6c 100644
--- a/mypyc/irbuild/function.py
+++ b/mypyc/irbuild/function.py
@@ -243,7 +243,9 @@ def c() -> None:
     # are free in their nested functions. Generator functions need an environment class to
     # store a variable denoting the next instruction to be executed when the __next__ function
     # is called, along with all the variables inside the function itself.
-    if contains_nested or is_generator:
+    if contains_nested or (
+        is_generator and not builder.fn_info.can_merge_generator_and_env_classes()
+    ):
         setup_env_class(builder)
 
     if is_nested or in_non_ext:
diff --git a/mypyc/irbuild/generator.py b/mypyc/irbuild/generator.py
index 74c8d27a6324..9dea0ee5f7c2 100644
--- a/mypyc/irbuild/generator.py
+++ b/mypyc/irbuild/generator.py
@@ -64,8 +64,14 @@ def gen_generator_func(
     setup_generator_class(builder)
     load_env_registers(builder)
     gen_arg_defaults(builder)
-    finalize_env_class(builder)
-    builder.add(Return(instantiate_generator_class(builder)))
+    if builder.fn_info.can_merge_generator_and_env_classes():
+        gen = instantiate_generator_class(builder)
+        builder.fn_info._curr_env_reg = gen
+        finalize_env_class(builder)
+    else:
+        finalize_env_class(builder)
+        gen = instantiate_generator_class(builder)
+    builder.add(Return(gen))
 
     args, _, blocks, ret_type, fn_info = builder.leave()
     func_ir, func_reg = gen_func_ir(args, blocks, fn_info)
@@ -122,22 +128,27 @@ def instantiate_generator_class(builder: IRBuilder) -> Value:
     fitem = builder.fn_info.fitem
     generator_reg = builder.add(Call(builder.fn_info.generator_class.ir.ctor, [], fitem.line))
 
-    # Get the current environment register. If the current function is nested, then the
-    # generator class gets instantiated from the callable class' '__call__' method, and hence
-    # we use the callable class' environment register. Otherwise, we use the original
-    # function's environment register.
-    if builder.fn_info.is_nested:
-        curr_env_reg = builder.fn_info.callable_class.curr_env_reg
+    if builder.fn_info.can_merge_generator_and_env_classes():
+        # Set the generator instance to the initial state (zero).
+        zero = Integer(0)
+        builder.add(SetAttr(generator_reg, NEXT_LABEL_ATTR_NAME, zero, fitem.line))
     else:
-        curr_env_reg = builder.fn_info.curr_env_reg
-
-    # Set the generator class' environment attribute to point at the environment class
-    # defined in the current scope.
-    builder.add(SetAttr(generator_reg, ENV_ATTR_NAME, curr_env_reg, fitem.line))
-
-    # Set the generator class' environment class' NEXT_LABEL_ATTR_NAME attribute to 0.
-    zero = Integer(0)
-    builder.add(SetAttr(curr_env_reg, NEXT_LABEL_ATTR_NAME, zero, fitem.line))
+        # Get the current environment register. If the current function is nested, then the
+        # generator class gets instantiated from the callable class' '__call__' method, and hence
+        # we use the callable class' environment register. Otherwise, we use the original
+        # function's environment register.
+        if builder.fn_info.is_nested:
+            curr_env_reg = builder.fn_info.callable_class.curr_env_reg
+        else:
+            curr_env_reg = builder.fn_info.curr_env_reg
+
+        # Set the generator class' environment attribute to point at the environment class
+        # defined in the current scope.
+        builder.add(SetAttr(generator_reg, ENV_ATTR_NAME, curr_env_reg, fitem.line))
+
+        # Set the generator instance's environment to the initial state (zero).
+        zero = Integer(0)
+        builder.add(SetAttr(curr_env_reg, NEXT_LABEL_ATTR_NAME, zero, fitem.line))
     return generator_reg
 
 
@@ -145,7 +156,10 @@ def setup_generator_class(builder: IRBuilder) -> ClassIR:
     name = f"{builder.fn_info.namespaced_name()}_gen"
 
     generator_class_ir = ClassIR(name, builder.module_name, is_generated=True)
-    generator_class_ir.attributes[ENV_ATTR_NAME] = RInstance(builder.fn_info.env_class)
+    if builder.fn_info.can_merge_generator_and_env_classes():
+        builder.fn_info.env_class = generator_class_ir
+    else:
+        generator_class_ir.attributes[ENV_ATTR_NAME] = RInstance(builder.fn_info.env_class)
     generator_class_ir.mro = [generator_class_ir]
 
     builder.classes.append(generator_class_ir)
@@ -392,7 +406,10 @@ def setup_env_for_generator_class(builder: IRBuilder) -> None:
     cls.send_arg_reg = exc_arg
 
     cls.self_reg = builder.read(self_target, fitem.line)
-    cls.curr_env_reg = load_outer_env(builder, cls.self_reg, builder.symtables[-1])
+    if builder.fn_info.can_merge_generator_and_env_classes():
+        cls.curr_env_reg = cls.self_reg
+    else:
+        cls.curr_env_reg = load_outer_env(builder, cls.self_reg, builder.symtables[-1])
 
     # Define a variable representing the label to go to the next time
     # the '__next__' function of the generator is called, and add it
diff --git a/mypyc/transform/spill.py b/mypyc/transform/spill.py
index 3c014ca2c0da..d92dd661e7eb 100644
--- a/mypyc/transform/spill.py
+++ b/mypyc/transform/spill.py
@@ -28,18 +28,24 @@ def insert_spills(ir: FuncIR, env: ClassIR) -> None:
     # TODO: Actually for now, no Registers at all -- we keep the manual spills
     entry_live = {op for op in entry_live if not isinstance(op, Register)}
 
-    ir.blocks = spill_regs(ir.blocks, env, entry_live, live)
+    ir.blocks = spill_regs(ir.blocks, env, entry_live, live, ir.arg_regs[0])
 
 
 def spill_regs(
-    blocks: list[BasicBlock], env: ClassIR, to_spill: set[Value], live: AnalysisResult[Value]
+    blocks: list[BasicBlock],
+    env: ClassIR,
+    to_spill: set[Value],
+    live: AnalysisResult[Value],
+    self_reg: Register,
 ) -> list[BasicBlock]:
+    env_reg: Value
     for op in blocks[0].ops:
         if isinstance(op, GetAttr) and op.attr == "__mypyc_env__":
             env_reg = op
             break
     else:
-        raise AssertionError("could not find __mypyc_env__")
+        # Environment has been merged into generator object
+        env_reg = self_reg
 
     spill_locs = {}
     for i, val in enumerate(to_spill):