diff --git a/src/System.Management.Automation/engine/MshCommandRuntime.cs b/src/System.Management.Automation/engine/MshCommandRuntime.cs
index efbdd4d7a74..36b7a484913 100644
--- a/src/System.Management.Automation/engine/MshCommandRuntime.cs
+++ b/src/System.Management.Automation/engine/MshCommandRuntime.cs
@@ -3698,7 +3698,9 @@ internal void RemoveVariableListsInPipe()
             if (this.PipelineVariable != null)
             {
                 this.OutputPipe.RemovePipelineVariable();
-                _state.PSVariable.Remove(this.PipelineVariable);
+                // '_state' could be null when a 'DynamicParam' block runs because the 'DynamicParam' block runs in 'DoPrepare',
+                // before 'PipelineProcessor.SetupParameterVariables' is called, where '_state' is initialized.
+                _state?.PSVariable.Remove(this.PipelineVariable);
             }
         }
     }
diff --git a/test/powershell/engine/ParameterBinding/ParameterBinding.Tests.ps1 b/test/powershell/engine/ParameterBinding/ParameterBinding.Tests.ps1
index 6f660e89151..299060c6275 100644
--- a/test/powershell/engine/ParameterBinding/ParameterBinding.Tests.ps1
+++ b/test/powershell/engine/ParameterBinding/ParameterBinding.Tests.ps1
@@ -283,6 +283,17 @@ Describe "Parameter Binding Tests" -Tags "CI" {
         }
     }
 
+    It "PipelineVariable shouldn't cause a NullRef exception when 'DynamicParam' block is present" {
+        function DynamicParamTest {
+            [CmdletBinding()]
+            param()
+            dynamicparam { }
+            process { 'hi' }
+        }
+
+        DynamicParamTest -PipelineVariable bar | ForEach-Object { $bar } | Should -Be "hi"
+    }
+
     Context "Use automatic variables as default value for parameters" {
         BeforeAll {
             ## Explicit use of 'CmdletBinding' make it a script cmdlet