You are right that it does not look like what is usually called "tail call", ie. call to 'fact' is not the last evaluated expression. However, this doesn't mean that the compiler can't optimize it, provided that the last expression is simple enough. GCC can probably optimize arithmetic expressions. I have read somewhere (can't find it though) that Erlang bytecode compiler also optimizes prepending to a list and some other primitive operations. This means that in these cases you don't have to explicitly use accumulator variable because the compiler will create it for you.