diff --git a/reflex/istate/dynamic.py b/reflex/istate/dynamic.py
new file mode 100644
index 000000000..e5da36c26
--- /dev/null
+++ b/reflex/istate/dynamic.py
@@ -0,0 +1,3 @@
+"""A container for dynamically generated states."""
+
+# This page intentionally left blank.
diff --git a/reflex/state.py b/reflex/state.py
index 5d1d51b91..935535ace 100644
--- a/reflex/state.py
+++ b/reflex/state.py
@@ -60,6 +60,7 @@ import wrapt
 from redis.asyncio import Redis
 from redis.exceptions import ResponseError
 
+import reflex.istate.dynamic
 from reflex import constants
 from reflex.base import Base
 from reflex.event import (
@@ -424,6 +425,10 @@ class BaseState(Base, ABC, extra=pydantic.Extra.allow):
         if mixin:
             return
 
+        # Handle locally-defined states for pickling.
+        if "<locals>" in cls.__qualname__:
+            cls._handle_local_def()
+
         # Validate the module name.
         cls._validate_module_name()
 
@@ -646,6 +651,19 @@ class BaseState(Base, ABC, extra=pydantic.Extra.allow):
             )
         ]
 
+    @classmethod
+    def _handle_local_def(cls):
+        """Handle locally-defined states for pickling."""
+        known_names = dir(reflex.istate.dynamic)
+        proposed_name = cls.__name__
+        for ix in range(len(known_names)):
+            if proposed_name not in known_names:
+                break
+            proposed_name = f"{cls.__name__}_{ix}"
+        setattr(reflex.istate.dynamic, proposed_name, cls)
+        cls.__name__ = cls.__qualname__ = proposed_name
+        cls.__module__ = reflex.istate.dynamic.__name__
+
     @classmethod
     def _init_var_dependency_dicts(cls):
         """Initialize the var dependency tracking dicts.
@@ -2203,10 +2221,13 @@ class ComponentState(State, mixin=True):
         cls._per_component_state_instance_count += 1
         state_cls_name = f"{cls.__name__}_n{cls._per_component_state_instance_count}"
         component_state = type(
-            state_cls_name, (cls, State), {"__module__": __name__}, mixin=False
+            state_cls_name,
+            (cls, State),
+            {"__module__": reflex.istate.dynamic.__name__},
+            mixin=False,
         )
         # Save a reference to the dynamic state for pickle/unpickle.
-        globals()[state_cls_name] = component_state
+        setattr(reflex.istate.dynamic, state_cls_name, component_state)
         component = component_state.get_component(*children, **props)
         component.State = component_state
         return component
diff --git a/tests/integration/test_component_state.py b/tests/integration/test_component_state.py
index 7b35f8116..1555577d1 100644
--- a/tests/integration/test_component_state.py
+++ b/tests/integration/test_component_state.py
@@ -20,6 +20,8 @@ def ComponentStateApp():
     E = TypeVar("E")
 
     class MultiCounter(rx.ComponentState, Generic[E]):
+        """ComponentState style."""
+
         count: int = 0
         _be: E
         _be_int: int
@@ -42,16 +44,47 @@ def ComponentStateApp():
                 **props,
             )
 
+    def multi_counter_func(id: str = "default") -> rx.Component:
+        """Local-substate style.
+
+        Args:
+            id: identifier for this instance
+
+        Returns:
+            A new instance of the component with its own state.
+        """
+
+        class _Counter(rx.State):
+            count: int = 0
+
+            def increment(self):
+                self.count += 1
+
+        return rx.vstack(
+            rx.heading(_Counter.count, id=f"count-{id}"),
+            rx.button(
+                "Increment",
+                on_click=_Counter.increment,
+                id=f"button-{id}",
+            ),
+            State=_Counter,
+        )
+
     app = rx.App(state=rx.State)  # noqa
 
     @rx.page()
     def index():
         mc_a = MultiCounter.create(id="a")
         mc_b = MultiCounter.create(id="b")
+        mc_c = multi_counter_func(id="c")
+        mc_d = multi_counter_func(id="d")
         assert mc_a.State != mc_b.State
+        assert mc_c.State != mc_d.State
         return rx.vstack(
             mc_a,
             mc_b,
+            mc_c,
+            mc_d,
             rx.button(
                 "Inc A",
                 on_click=mc_a.State.increment,  # type: ignore
@@ -149,3 +182,21 @@ async def test_component_state_app(component_state_app: AppHarness):
     b_state = root_state.substates[b_state_name]
     assert b_state._backend_vars != b_state.backend_vars
     assert b_state._be == b_state._backend_vars["_be"] == 2
+
+    # Check locally-defined substate style
+    count_c = driver.find_element(By.ID, "count-c")
+    count_d = driver.find_element(By.ID, "count-d")
+    button_c = driver.find_element(By.ID, "button-c")
+    button_d = driver.find_element(By.ID, "button-d")
+
+    assert component_state_app.poll_for_content(count_c, exp_not_equal="") == "0"
+    assert component_state_app.poll_for_content(count_d, exp_not_equal="") == "0"
+    button_c.click()
+    assert component_state_app.poll_for_content(count_c, exp_not_equal="0") == "1"
+    assert component_state_app.poll_for_content(count_d, exp_not_equal="") == "0"
+    button_c.click()
+    assert component_state_app.poll_for_content(count_c, exp_not_equal="1") == "2"
+    assert component_state_app.poll_for_content(count_d, exp_not_equal="") == "0"
+    button_d.click()
+    assert component_state_app.poll_for_content(count_c, exp_not_equal="1") == "2"
+    assert component_state_app.poll_for_content(count_d, exp_not_equal="0") == "1"