diff --git a/src/buffer.c b/src/buffer.c
index 2983ca9..e2732de 100644
--- a/src/buffer.c
+++ b/src/buffer.c
@@ -2344,6 +2344,7 @@
     clear_string_option(&buf->b_p_tc);
 #ifdef FEAT_EVAL
     clear_string_option(&buf->b_p_tfu);
+    free_callback(&buf->b_tfu_cb);
 #endif
     clear_string_option(&buf->b_p_dict);
     clear_string_option(&buf->b_p_tsr);
diff --git a/src/option.c b/src/option.c
index b807b9b..4422634 100644
--- a/src/option.c
+++ b/src/option.c
@@ -810,6 +810,7 @@
 	    clear_string_option((char_u **)options[i].var);
     }
     free_operatorfunc_option();
+    free_tagfunc_option();
 }
 #endif
 
@@ -5956,6 +5957,7 @@
 #ifdef FEAT_EVAL
 	    buf->b_p_tfu = vim_strsave(p_tfu);
 	    COPY_OPT_SCTX(buf, BV_TFU);
+	    buf_set_tfu_callback(buf);
 #endif
 	    buf->b_p_sts = p_sts;
 	    COPY_OPT_SCTX(buf, BV_STS);
diff --git a/src/optionstr.c b/src/optionstr.c
index 705e860..8948830 100644
--- a/src/optionstr.c
+++ b/src/optionstr.c
@@ -2333,6 +2333,15 @@
     }
 #endif
 
+#ifdef FEAT_EVAL
+    // 'tagfunc'
+    else if (gvarp == &p_tfu)
+    {
+	if (set_tagfunc_option() == FAIL)
+	    errmsg = e_invarg;
+    }
+#endif
+
     // Options that are a list of flags.
     else
     {
diff --git a/src/proto/tag.pro b/src/proto/tag.pro
index 3046406..e9827ea 100644
--- a/src/proto/tag.pro
+++ b/src/proto/tag.pro
@@ -1,4 +1,7 @@
 /* tag.c */
+int set_tagfunc_option(void);
+void free_tagfunc_option(void);
+void buf_set_tfu_callback(buf_T *buf);
 int do_tag(char_u *tag, int type, int count, int forceit, int verbose);
 void tag_freematch(void);
 void do_tags(exarg_T *eap);
diff --git a/src/structs.h b/src/structs.h
index d9d3e30..bef7062 100644
--- a/src/structs.h
+++ b/src/structs.h
@@ -2878,7 +2878,8 @@
     char_u	*b_p_ofu;	// 'omnifunc'
 #endif
 #ifdef FEAT_EVAL
-    char_u	*b_p_tfu;	// 'tagfunc'
+    char_u	*b_p_tfu;	// 'tagfunc' option value
+    callback_T	b_tfu_cb;	// 'tagfunc' callback
 #endif
     int		b_p_eol;	// 'endofline'
     int		b_p_fixeol;	// 'fixendofline'
diff --git a/src/tag.c b/src/tag.c
index 5fd81e3..c0601e8 100644
--- a/src/tag.c
+++ b/src/tag.c
@@ -103,12 +103,61 @@
 
 #ifdef FEAT_EVAL
 static int  tfu_in_use = FALSE;	    // disallow recursive call of tagfunc
+static callback_T tfu_cb;	    // 'tagfunc' callback function
 #endif
 
 // Used instead of NUL to separate tag fields in the growarrays.
 #define TAG_SEP 0x02
 
 /*
+ * Reads the 'tagfunc' option value and convert that to a callback value.
+ * Invoked when the 'tagfunc' option is set. The option value can be a name of
+ * a function (string), or function(<name>) or funcref(<name>) or a lambda.
+ */
+    int
+set_tagfunc_option()
+{
+#ifdef FEAT_EVAL
+    free_callback(&tfu_cb);
+    free_callback(&curbuf->b_tfu_cb);
+
+    if (*curbuf->b_p_tfu == NUL)
+	return OK;
+
+    if (option_set_callback_func(curbuf->b_p_tfu, &tfu_cb) == FAIL)
+	return FAIL;
+
+    copy_callback(&curbuf->b_tfu_cb, &tfu_cb);
+#endif
+
+    return OK;
+}
+
+# if defined(EXITFREE) || defined(PROTO)
+    void
+free_tagfunc_option(void)
+{
+#  ifdef FEAT_EVAL
+    free_callback(&tfu_cb);
+#  endif
+}
+# endif
+
+/*
+ * Copy the global 'tagfunc' callback function to the buffer-local 'tagfunc'
+ * callback for 'buf'.
+ */
+    void
+buf_set_tfu_callback(buf_T *buf UNUSED)
+{
+#ifdef FEAT_EVAL
+    free_callback(&buf->b_tfu_cb);
+    if (tfu_cb.cb_name != NULL && *tfu_cb.cb_name != NUL)
+	copy_callback(&buf->b_tfu_cb, &tfu_cb);
+#endif
+}
+
+/*
  * Jump to tag; handling of tag commands and tag stack
  *
  * *tag != NUL: ":tag {tag}", jump to new tag, add to tag stack
@@ -1341,7 +1390,7 @@
 		 flags & TAG_REGEXP   ? "r": "");
 
     save_pos = curwin->w_cursor;
-    result = call_vim_function(curbuf->b_p_tfu, 3, args, &rettv);
+    result = call_callback(&curbuf->b_tfu_cb, 0, &rettv, 3, args);
     curwin->w_cursor = save_pos;	// restore the cursor position
     --d->dv_refcount;
 
diff --git a/src/testdir/test_tagfunc.vim b/src/testdir/test_tagfunc.vim
index 3eb3904..a972016 100644
--- a/src/testdir/test_tagfunc.vim
+++ b/src/testdir/test_tagfunc.vim
@@ -117,4 +117,54 @@
   delfunc Mytagfunc2
 endfunc
 
+" Test for different ways of setting the 'tagfunc' option
+func Test_tagfunc_callback()
+  " Test for using a function()
+  func MytagFunc1(pat, flags, info)
+    let g:MytagFunc1_args = [a:pat, a:flags, a:info]
+    return v:null
+  endfunc
+  let g:MytagFunc1_args = []
+  set tagfunc=function('MytagFunc1')
+  call assert_fails('tag abc', 'E433:')
+  call assert_equal(['abc', '', {}], g:MytagFunc1_args)
+
+  " Test for using a funcref()
+  new
+  func MytagFunc2(pat, flags, info)
+    let g:MytagFunc2_args = [a:pat, a:flags, a:info]
+    return v:null
+  endfunc
+  let g:MytagFunc2_args = []
+  set tagfunc=funcref('MytagFunc2')
+  call assert_fails('tag def', 'E433:')
+  call assert_equal(['def', '', {}], g:MytagFunc2_args)
+
+  " Test for using a lambda function
+  new
+  func MytagFunc3(pat, flags, info)
+    let g:MytagFunc3_args = [a:pat, a:flags, a:info]
+    return v:null
+  endfunc
+  let g:MytagFunc3_args = []
+  let &tagfunc= '{a, b, c -> MytagFunc3(a, b, c)}'
+  call assert_fails('tag ghi', 'E433:')
+  call assert_equal(['ghi', '', {}], g:MytagFunc3_args)
+
+  " Test for clearing the 'tagfunc' option
+  set tagfunc=''
+  set tagfunc&
+
+  call assert_fails("set tagfunc=function('abc')", "E700:")
+  call assert_fails("set tagfunc=funcref('abc')", "E700:")
+  let &tagfunc = "{a -> 'abc'}"
+  call assert_fails("echo taglist('a')", "E987:")
+
+  " cleanup
+  delfunc MytagFunc1
+  delfunc MytagFunc2
+  delfunc MytagFunc3
+  %bw!
+endfunc
+
 " vim: shiftwidth=2 sts=2 expandtab
diff --git a/src/version.c b/src/version.c
index 4356be1..7a29e4e 100644
--- a/src/version.c
+++ b/src/version.c
@@ -758,6 +758,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    3665,
+/**/
     3664,
 /**/
     3663,