diff --git a/java/com/google/turbine/binder/Binder.java b/java/com/google/turbine/binder/Binder.java
index d437eea3..ee2a6745 100644
--- a/java/com/google/turbine/binder/Binder.java
+++ b/java/com/google/turbine/binder/Binder.java
@@ -171,6 +171,8 @@ static BindingResult bind(
             henv,
             CompoundEnv.<ClassSymbol, HeaderBoundClass>of(classPathEnv).append(henv));
 
+    tenv = PermitsBinder.bindPermits(syms, tenv);
+
     tenv =
         constants(
             syms,
diff --git a/java/com/google/turbine/binder/PermitsBinder.java b/java/com/google/turbine/binder/PermitsBinder.java
new file mode 100644
index 00000000..06063d37
--- /dev/null
+++ b/java/com/google/turbine/binder/PermitsBinder.java
@@ -0,0 +1,110 @@
+/*
+ * Copyright 2024 Google Inc. All Rights Reserved.
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+package com.google.turbine.binder;
+
+import com.google.common.collect.ImmutableList;
+import com.google.common.collect.ImmutableSet;
+import com.google.common.collect.ListMultimap;
+import com.google.common.collect.MultimapBuilder;
+import com.google.turbine.binder.bound.SourceTypeBoundClass;
+import com.google.turbine.binder.env.Env;
+import com.google.turbine.binder.env.SimpleEnv;
+import com.google.turbine.binder.sym.ClassSymbol;
+import com.google.turbine.model.TurbineFlag;
+import java.util.HashSet;
+import java.util.List;
+import java.util.Set;
+
+final class PermitsBinder {
+
+  /**
+   * Given the classes in the current compilation, finds implicit permitted subtypes of sealed
+   * classes.
+   *
+   * <p>See JLS §8.1.1.2 for details of implicit permits.
+   *
+   * @param syms the set of classes being compiled in this compilation unit
+   * @param tenv the environment of the current compilation unit only. Dependencies from the
+   *     classpath or bootclasspath are not required by this pass, because any implicitly permitted
+   *     subtypes are required to be in the same compilation unit as their supertype.
+   */
+  static Env<ClassSymbol, SourceTypeBoundClass> bindPermits(
+      ImmutableSet<ClassSymbol> syms, Env<ClassSymbol, SourceTypeBoundClass> tenv) {
+    Set<ClassSymbol> sealedClassesWithoutExplicitPermits = new HashSet<>();
+    for (ClassSymbol sym : syms) {
+      SourceTypeBoundClass info = tenv.getNonNull(sym);
+      if (((info.access() & TurbineFlag.ACC_SEALED) == TurbineFlag.ACC_SEALED)
+          && info.permits().isEmpty()) {
+        sealedClassesWithoutExplicitPermits.add(sym);
+      }
+    }
+    if (sealedClassesWithoutExplicitPermits.isEmpty()) {
+      // fast path if there were no sealed types with an empty 'permits' clause
+      return tenv;
+    }
+    ListMultimap<ClassSymbol, ClassSymbol> permits =
+        MultimapBuilder.hashKeys().arrayListValues().build();
+    for (ClassSymbol sym : syms) {
+      SourceTypeBoundClass info = tenv.getNonNull(sym);
+      // Check if the current class has a direct supertype that is a sealed class with an empty
+      // 'permits' clause.
+      ClassSymbol superclass = info.superclass();
+      if (superclass != null && sealedClassesWithoutExplicitPermits.contains(superclass)) {
+        permits.put(superclass, sym);
+      }
+      for (ClassSymbol i : info.interfaces()) {
+        if (sealedClassesWithoutExplicitPermits.contains(i)) {
+          permits.put(i, sym);
+        }
+      }
+    }
+    SimpleEnv.Builder<ClassSymbol, SourceTypeBoundClass> builder = SimpleEnv.builder();
+    for (ClassSymbol sym : syms) {
+      List<ClassSymbol> thisPermits = permits.get(sym);
+      SourceTypeBoundClass base = tenv.getNonNull(sym);
+      if (thisPermits.isEmpty()) {
+        builder.put(sym, base);
+      } else {
+        builder.put(
+            sym,
+            new SourceTypeBoundClass(
+                /* interfaceTypes= */ base.interfaceTypes(),
+                /* permits= */ ImmutableList.copyOf(thisPermits),
+                /* superClassType= */ base.superClassType(),
+                /* typeParameterTypes= */ base.typeParameterTypes(),
+                /* access= */ base.access(),
+                /* components= */ base.components(),
+                /* methods= */ base.methods(),
+                /* fields= */ base.fields(),
+                /* owner= */ base.owner(),
+                /* kind= */ base.kind(),
+                /* children= */ base.children(),
+                /* typeParameters= */ base.typeParameters(),
+                /* enclosingScope= */ base.enclosingScope(),
+                /* scope= */ base.scope(),
+                /* memberImports= */ base.memberImports(),
+                /* annotationMetadata= */ base.annotationMetadata(),
+                /* annotations= */ base.annotations(),
+                /* source= */ base.source(),
+                /* decl= */ base.decl()));
+      }
+    }
+    return builder.build();
+  }
+
+  private PermitsBinder() {}
+}
diff --git a/javatests/com/google/turbine/lower/LowerIntegrationTest.java b/javatests/com/google/turbine/lower/LowerIntegrationTest.java
index 234cd1c2..bac2b5a3 100644
--- a/javatests/com/google/turbine/lower/LowerIntegrationTest.java
+++ b/javatests/com/google/turbine/lower/LowerIntegrationTest.java
@@ -64,7 +64,8 @@ public class LowerIntegrationTest {
           entry("sealed_nested.test", 17),
           entry("textblock.test", 15),
           entry("textblock2.test", 15),
-          entry("B306423115.test", 15));
+          entry("B306423115.test", 15),
+          entry("permits.test", 17));
 
   private static final ImmutableSet<String> SOURCE_VERSION_PREVIEW = ImmutableSet.of();
 
@@ -273,6 +274,7 @@ public static Iterable<Object[]> parameters() {
       "packagedecl.test",
       "packageprivateprotectedinner.test",
       "param_bound.test",
+      "permits.test",
       "prim_class.test",
       "private_member.test",
       "privateinner.test",
diff --git a/javatests/com/google/turbine/lower/testdata/permits.test b/javatests/com/google/turbine/lower/testdata/permits.test
new file mode 100644
index 00000000..420bc158
--- /dev/null
+++ b/javatests/com/google/turbine/lower/testdata/permits.test
@@ -0,0 +1,5 @@
+=== A.java ===
+sealed interface A {
+  final class B implements A {}
+  record C() implements A {}
+}
\ No newline at end of file