diff --git a/corpus/literals.txt b/corpus/literals.txt
index 7d13c3301..371433231 100644
--- a/corpus/literals.txt
+++ b/corpus/literals.txt
@@ -42,6 +42,8 @@ works even in multiline strings, ${name}
 val string5 = s"$works${without}$spaces"
 
 val string6 = s"$a$b"
+
+val string7 = s"$$ $a"
 --------------------------------------------------------------------------------
 
 (compilation_unit
@@ -98,7 +100,14 @@ val string6 = s"$a$b"
           (interpolation
             (dollar_identifier))
           (interpolation
-            (dollar_identifier))))))
+            (dollar_identifier)))))
+  (val_definition
+    (identifier)
+    (interpolated_string_expression
+      (identifier)
+      (interpolated_string
+        (interpolation
+          (dollar_identifier))))))
 
 
 ================================================================================
diff --git a/grammar.js b/grammar.js
index 8163d3118..b7b84792e 100644
--- a/grammar.js
+++ b/grammar.js
@@ -1512,18 +1512,20 @@ module.exports = grammar({
 
     _interpolated_multiline_string_start: $ => '"""',
 
+    _dollar_escape: $ => seq('$', '$'),
+
     interpolation: $ => seq("$", choice($.dollar_identifier, $.block)),
 
     interpolated_string: $ =>
       choice(
         seq(
           $._interpolated_string_start,
-          repeat(seq($._interpolated_string_middle, $.interpolation)),
+          repeat(seq($._interpolated_string_middle, choice($._dollar_escape, $.interpolation))),
           $._interpolated_string_end,
         ),
         seq(
           $._interpolated_multiline_string_start,
-          repeat(seq($._interpolated_multiline_string_middle, $.interpolation)),
+          repeat(seq($._interpolated_multiline_string_middle, choice($._dollar_escape, $.interpolation))),
           $._interpolated_multiline_string_end,
         ),
       ),