We argue that verb/affix hybrids in Hiaki (Yaqui) are subject to the same conditions on clause fusion (Rude 1996) as ‘pure’ affixal verbs in spite of their different distributional behavior. We show that all verbs involved in V-V affixation under clause fusion undergo VP embedding, rather than TP embedding, whether they also have a morphologically free use or are obligatorily bound. This results in one case domain, but two binding domains, which shows clause binding sensitivity to VP and nominative case assignment at TP. The ability of these hybrids to occur in affixal ‘clause fusion’ structures, as well as to appear as free main verbs embedding an independent clause, is unusual, and enables us to investigate the conditions on V-V incorporation. As Guerrero Valenzuela (2004) points out, such verbs may show incipient grammaticalization.