diff --git a/compliance/repository/src/test/java/org/eclipse/rdf4j/repository/sparql/federation/RepositoryFederatedServiceIntegrationTest.java b/compliance/repository/src/test/java/org/eclipse/rdf4j/repository/sparql/federation/RepositoryFederatedServiceIntegrationTest.java
index 763d3c2a6d2..3cc47bdc6e9 100644
--- a/compliance/repository/src/test/java/org/eclipse/rdf4j/repository/sparql/federation/RepositoryFederatedServiceIntegrationTest.java
+++ b/compliance/repository/src/test/java/org/eclipse/rdf4j/repository/sparql/federation/RepositoryFederatedServiceIntegrationTest.java
@@ -340,6 +340,16 @@ public void test10_consumePartially() {
 		}
 	}
 
+	@Test
+	public void test_ValuesClause() {
+
+		addData(serviceRepo, Lists.newArrayList(vf.createStatement(iri("s1"), RDFS.LABEL, l("val1"))));
+
+		String query = "SELECT ?var WHERE { SERVICE <urn:dummy> { VALUES ?var { 'val1' 'val2' } ?s ?p ?var  } }";
+
+		assertResultEquals(evaluateQuery(query), "var", Lists.newArrayList(l("val1")));
+	}
+
 	private void addData(Repository repo, Collection<? extends Statement> m) {
 		try (RepositoryConnection conn = repo.getConnection()) {
 			conn.add(m);
diff --git a/compliance/repository/src/test/java/org/eclipse/rdf4j/repository/sparql/federation/SparqlFederatedServiceIntegrationTest.java b/compliance/repository/src/test/java/org/eclipse/rdf4j/repository/sparql/federation/SparqlFederatedServiceIntegrationTest.java
new file mode 100644
index 00000000000..9d72227fc7c
--- /dev/null
+++ b/compliance/repository/src/test/java/org/eclipse/rdf4j/repository/sparql/federation/SparqlFederatedServiceIntegrationTest.java
@@ -0,0 +1,43 @@
+/*******************************************************************************
+ * Copyright (c) 2025 Eclipse RDF4J contributors.
+ *
+ * All rights reserved. This program and the accompanying materials
+ * are made available under the terms of the Eclipse Distribution License v1.0
+ * which accompanies this distribution, and is available at
+ * http://www.eclipse.org/org/documents/edl-v10.php.
+ *
+ * SPDX-License-Identifier: BSD-3-Clause
+ *******************************************************************************/
+package org.eclipse.rdf4j.repository.sparql.federation;
+
+import org.eclipse.rdf4j.repository.Repository;
+import org.eclipse.rdf4j.repository.sail.SailRepository;
+import org.eclipse.rdf4j.sail.memory.MemoryStore;
+import org.junit.jupiter.api.Disabled;
+import org.junit.jupiter.api.Test;
+
+public class SparqlFederatedServiceIntegrationTest {
+
+	@Test
+	@Disabled("manual test to demonstrate the original issue of GH-5358")
+	public void testValues_Wikidata() {
+		Repository repo = new SailRepository(new MemoryStore());
+		try (var conn = repo.getConnection()) {
+
+			var tq = conn.prepareTupleQuery("PREFIX rdf: <http://www.w3.org/1999/02/22-rdf-syntax-ns#>\n"
+					+ "PREFIX sh: <http://www.w3.org/ns/shacl#>\n"
+					+ "SELECT * WHERE {\n"
+					+ "  SERVICE <https://query.wikidata.org/sparql> {\n"
+					+ "   VALUES ?resource {\n"
+					+ "     <http://www.wikidata.org/entity/Q7455975>\n"
+					+ "   }\n"
+					+ "   ?resource <http://www.wikidata.org/prop/direct/P856> ?website\n"
+					+ "  }\n"
+					+ "}");
+
+			try (var tqr = tq.evaluate()) {
+				tqr.stream().forEach(bs -> System.out.println(bs));
+			}
+		}
+	}
+}
diff --git a/core/queryalgebra/evaluation/src/main/java/org/eclipse/rdf4j/query/algebra/evaluation/optimizer/BindingSetAssignmentInlinerOptimizer.java b/core/queryalgebra/evaluation/src/main/java/org/eclipse/rdf4j/query/algebra/evaluation/optimizer/BindingSetAssignmentInlinerOptimizer.java
index 2d6c903d105..f12e91da8cd 100644
--- a/core/queryalgebra/evaluation/src/main/java/org/eclipse/rdf4j/query/algebra/evaluation/optimizer/BindingSetAssignmentInlinerOptimizer.java
+++ b/core/queryalgebra/evaluation/src/main/java/org/eclipse/rdf4j/query/algebra/evaluation/optimizer/BindingSetAssignmentInlinerOptimizer.java
@@ -20,6 +20,7 @@
 import org.eclipse.rdf4j.query.algebra.Filter;
 import org.eclipse.rdf4j.query.algebra.LeftJoin;
 import org.eclipse.rdf4j.query.algebra.QueryModelNode;
+import org.eclipse.rdf4j.query.algebra.Service;
 import org.eclipse.rdf4j.query.algebra.TupleExpr;
 import org.eclipse.rdf4j.query.algebra.Var;
 import org.eclipse.rdf4j.query.algebra.evaluation.QueryOptimizer;
@@ -54,6 +55,11 @@ public void meet(BindingSetAssignment bsa) {
 			super.meet(bsa);
 		}
 
+		@Override
+		public void meet(Service node) throws RuntimeException {
+			// do not inject bindings inside service clauses
+		}
+
 		@Override
 		public void meet(Var var) {
 			if (bindingSet != null && bindingSet.hasBinding(var.getName())) {
diff --git a/core/queryalgebra/evaluation/src/test/java/org/eclipse/rdf4j/query/algebra/evaluation/impl/BindingSetAssignmentInlinerTest.java b/core/queryalgebra/evaluation/src/test/java/org/eclipse/rdf4j/query/algebra/evaluation/impl/BindingSetAssignmentInlinerTest.java
index d2de3db28d1..1b8e5f3088f 100644
--- a/core/queryalgebra/evaluation/src/test/java/org/eclipse/rdf4j/query/algebra/evaluation/impl/BindingSetAssignmentInlinerTest.java
+++ b/core/queryalgebra/evaluation/src/test/java/org/eclipse/rdf4j/query/algebra/evaluation/impl/BindingSetAssignmentInlinerTest.java
@@ -26,6 +26,7 @@
 import org.eclipse.rdf4j.query.algebra.Not;
 import org.eclipse.rdf4j.query.algebra.Projection;
 import org.eclipse.rdf4j.query.algebra.QueryRoot;
+import org.eclipse.rdf4j.query.algebra.Service;
 import org.eclipse.rdf4j.query.algebra.StatementPattern;
 import org.eclipse.rdf4j.query.algebra.TupleExpr;
 import org.eclipse.rdf4j.query.algebra.Union;
@@ -311,6 +312,31 @@ public void testOptimize_Minus() {
 		assertThat(sp.getSubjectVar().getValue()).isNull();
 	}
 
+	@Test
+	public void testServiceClause() {
+		String query = "SELECT * WHERE { SERVICE <urn:myService> { VALUES ?s1 { <urn:a> } ?s1 ?p1 ?o1 } }";
+
+		ParsedTupleQuery parsedQuery = QueryParserUtil.parseTupleQuery(QueryLanguage.SPARQL, query, null);
+
+		QueryOptimizer optimizer = getOptimizer();
+		optimizer.optimize(parsedQuery.getTupleExpr(), new SimpleDataset(), EmptyBindingSet.getInstance());
+
+		TupleExpr optimizedTreeRoot = parsedQuery.getTupleExpr();
+		TupleExpr optimizedTree = ((QueryRoot) optimizedTreeRoot).getArg();
+
+		assertThat(optimizedTree).isInstanceOf(Projection.class);
+
+		Projection projection = (Projection) optimizedTree;
+
+		Service service = (Service) projection.getArg();
+
+		Join join = (Join) service.getArg();
+		Var s1 = ((StatementPattern) join.getRightArg()).getSubjectVar();
+		assertThat(s1.getName()).isEqualTo("s1");
+		assertThat(s1.hasValue()).isFalse();
+
+	}
+
 	@Override
 	public QueryOptimizer getOptimizer() {
 		return new BindingSetAssignmentInlinerOptimizer();