diff --git a/CHANGELOG.md b/CHANGELOG.md
index 38e6742a9da8..3d40c96cf3eb 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -23,6 +23,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 - Move `important` selector to the front when `@apply`-ing selector-modifying variants in custom utilities ([#8313](https://github.com/tailwindlabs/tailwindcss/pull/8313))
 - Error when registering an invalid custom variant ([#8345](https://github.com/tailwindlabs/tailwindcss/pull/8345))
 - Create tailwind.config.cjs file in ESM package when running init ([#8363](https://github.com/tailwindlabs/tailwindcss/pull/8363))
+- Fix `matchVariants` that use at-rules and placeholders ([#8392](https://github.com/tailwindlabs/tailwindcss/pull/8392))
 
 ### Changed
 
diff --git a/src/lib/setupContextUtils.js b/src/lib/setupContextUtils.js
index 731ab022d513..f044a70d827b 100644
--- a/src/lib/setupContextUtils.js
+++ b/src/lib/setupContextUtils.js
@@ -439,7 +439,8 @@ function buildPluginApi(tailwindConfig, context, { variantList, variantMap, offs
       variantFunctions = [].concat(variantFunctions).map((variantFunction) => {
         if (typeof variantFunction !== 'string') {
           // Safelist public API functions
-          return ({ args, modifySelectors, container, separator, wrap, format }) => {
+          return (api) => {
+            let { args, modifySelectors, container, separator, wrap, format } = api
             let result = variantFunction(
               Object.assign(
                 { modifySelectors, container, separator },
@@ -453,7 +454,8 @@ function buildPluginApi(tailwindConfig, context, { variantList, variantMap, offs
               )
             }
 
-            return result
+            // result may be undefined with legacy variants that use APIs like `modifySelectors`
+            return result && parseVariant(result)(api)
           }
         }
 
@@ -477,20 +479,7 @@ function buildPluginApi(tailwindConfig, context, { variantList, variantMap, offs
 
         api.addVariant(
           variant,
-          Object.assign(
-            ({ args, wrap }) => {
-              let formatString = variants[variant](args)
-              if (!formatString) return null
-
-              if (!formatString.startsWith('@')) {
-                return formatString
-              }
-
-              let [, name, params] = /@(.*?)( .+|[({].*)/g.exec(formatString)
-              return wrap(postcss.atRule({ name, params: params.trim() }))
-            },
-            { [MATCH_VARIANT]: true }
-          ),
+          Object.assign(({ args }) => variants[variant](args), { [MATCH_VARIANT]: true }),
           options
         )
       }
diff --git a/tests/match-variants.test.js b/tests/match-variants.test.js
index 269edff522e9..1f0252ce8178 100644
--- a/tests/match-variants.test.js
+++ b/tests/match-variants.test.js
@@ -35,6 +35,82 @@ test('partial arbitrary variants', () => {
   })
 })
 
+test('partial arbitrary variants with at-rules', () => {
+  let config = {
+    content: [
+      {
+        raw: html`<div class="potato-[yellow]:bg-yellow-200 potato-[baked]:w-3"></div> `,
+      },
+    ],
+    corePlugins: { preflight: false },
+    plugins: [
+      ({ matchVariant }) => {
+        matchVariant({
+          potato: (flavor) => `@media (potato: ${flavor})`,
+        })
+      },
+    ],
+  }
+
+  let input = css`
+    @tailwind utilities;
+  `
+
+  return run(input, config).then((result) => {
+    expect(result.css).toMatchFormattedCss(css`
+      @media (potato: baked) {
+        .potato-\[baked\]\:w-3 {
+          width: 0.75rem;
+        }
+      }
+      @media (potato: yellow) {
+        .potato-\[yellow\]\:bg-yellow-200 {
+          --tw-bg-opacity: 1;
+          background-color: rgb(254 240 138 / var(--tw-bg-opacity));
+        }
+      }
+    `)
+  })
+})
+
+test('partial arbitrary variants with at-rules and placeholder', () => {
+  let config = {
+    content: [
+      {
+        raw: html`<div class="potato-[yellow]:bg-yellow-200 potato-[baked]:w-3"></div> `,
+      },
+    ],
+    corePlugins: { preflight: false },
+    plugins: [
+      ({ matchVariant }) => {
+        matchVariant({
+          potato: (flavor) => `@media (potato: ${flavor}) { &:potato }`,
+        })
+      },
+    ],
+  }
+
+  let input = css`
+    @tailwind utilities;
+  `
+
+  return run(input, config).then((result) => {
+    expect(result.css).toMatchFormattedCss(css`
+      @media (potato: baked) {
+        .potato-\[baked\]\:w-3:potato {
+          width: 0.75rem;
+        }
+      }
+      @media (potato: yellow) {
+        .potato-\[yellow\]\:bg-yellow-200:potato {
+          --tw-bg-opacity: 1;
+          background-color: rgb(254 240 138 / var(--tw-bg-opacity));
+        }
+      }
+    `)
+  })
+})
+
 test('partial arbitrary variants with default values', () => {
   let config = {
     content: [