Index: pym/portage_util.py
===================================================================
--- pym/portage_util.py	(revision 10293)
+++ pym/portage_util.py	(revision 10298)
@@ -306,7 +306,14 @@
 			return (newfile, StringIO.StringIO())
 
 def getconfig(mycfg, tolerant=0, allow_sourcing=False, expand=True):
-	mykeys={}
+	if isinstance(expand, dict):
+		# Some existing variable definitions have been
+		# passed in, for use in substitutions.
+		expand_map = expand
+		expand = True
+	else:
+		expand_map = {}
+	mykeys = {}
 	try:
 		f=open(mycfg,'r')
 	except IOError, e:
@@ -365,7 +372,8 @@
 				else:
 					return mykeys
 			if expand:
-				mykeys[key] = varexpand(val, mykeys)
+				mykeys[key] = varexpand(val, expand_map)
+				expand_map[key] = mykeys[key]
 			else:
 				mykeys[key] = val
 	except SystemExit, e:
Index: pym/portage.py
===================================================================
--- pym/portage.py	(revision 10293)
+++ pym/portage.py	(revision 10298)
@@ -1440,8 +1440,10 @@
 			self.make_defaults_use = []
 			self.mygcfg = {}
 			if self.profiles:
-				mygcfg_dlists = [getconfig(os.path.join(x, "make.defaults")) \
-					for x in self.profiles]
+				expand_map = {}
+				mygcfg_dlists = [getconfig(os.path.join(x, "make.defaults"),
+					expand=expand_map) for x in self.profiles]
+
 				for cfg in mygcfg_dlists:
 					if cfg:
 						self.make_defaults_use.append(cfg.get("USE", ""))