Abstract The observation that adjacent function words are typically contracted has been made for a number of languages including German. The problems this phenomenon poses for phonology still need to be treated, however, and the extent to which function word contractions set the stage for the evolution of inflected function words from simple cliticization remains to be explored. This paper first addresses issues with regard to the prosodic representation of function word sequences preceding lexical words (i.e., [Fnc Fnc Lex]). Investigating such contractions in a number of German dialects, it will be shown that a sequence of Fnc Fnc constitutes a special phonological unit of its own, which is arguably a trochaic foot that adjoins to the neighboring prosodic word. It will be argued that this analysis accounts for several phonological processes that are peculiar to function word contractions, and also predicts phonological fusion in which the second function word is reduced. Second, the paper suggests that the phonological fusion of function words sets the stage for a number of diachronic processes such as reanalysis and analogical extension, which arguably lead to the evolution of paradigms of inflected function words.