diff --git a/test/utility.js b/test/utility.js
index 30ba3a940..7bc5cb44b 100644
--- a/test/utility.js
+++ b/test/utility.js
@@ -57,6 +57,9 @@ $(document).ready(function() {
     var backslashTemplate = _.template("<%= thing %> is \\ridanculous");
     equals(backslashTemplate({thing: 'This'}), "This is \\ridanculous");
 
+    var escapeTemplate = _.template('<%= a ? "checked=\\"checked\\"" : "" %>');
+    equals(escapeTemplate({a: true}), 'checked="checked"', 'can handle slash escapes in interpolations.');
+
     var fancyTemplate = _.template("<ul><% \
       for (key in people) { \
     %><li><%= people[key] %></li><% } %></ul>");
@@ -65,7 +68,7 @@ $(document).ready(function() {
 
     var escapedCharsInJavascriptTemplate = _.template("<ul><% _.each(numbers.split('\\n'), function(item) { %><li><%= item %></li><% }) %></ul>");
     result = escapedCharsInJavascriptTemplate({numbers: "one\ntwo\nthree\nfour"});
-    equals(result, "<ul><li>one</li><li>two</li><li>three</li><li>four</li></ul>", 'Can use escaped characters (e.g. \\n) in Javascript')
+    equals(result, "<ul><li>one</li><li>two</li><li>three</li><li>four</li></ul>", 'Can use escaped characters (e.g. \\n) in Javascript');
 
     var namespaceCollisionTemplate = _.template("<%= pageCount %> <%= thumbnails[pageCount] %> <% _.each(thumbnails, function(p) { %><div class=\"thumbnail\" rel=\"<%= p %>\"></div><% }); %>");
     result = namespaceCollisionTemplate({
diff --git a/underscore.js b/underscore.js
index debc3481d..6687ded01 100644
--- a/underscore.js
+++ b/underscore.js
@@ -897,6 +897,12 @@
   // guaranteed not to match.
   var noMatch = /.^/;
 
+  // Within an interpolation, evaluation, or escaping, remove HTML escaping
+  // that had been previously added.
+  var unescape = function(code) {
+    return code.replace(/\\\\/g, '\\').replace(/\\'/g, "'");
+  };
+
   // JavaScript micro-templating, similar to John Resig's implementation.
   // Underscore templating handles arbitrary delimiters, preserves whitespace,
   // and correctly escapes quotes within interpolated code.
@@ -907,15 +913,13 @@
       str.replace(/\\/g, '\\\\')
          .replace(/'/g, "\\'")
          .replace(c.escape || noMatch, function(match, code) {
-           return "',_.escape(" + code.replace(/\\'/g, "'") + "),'";
+           return "',_.escape(" + unescape(code) + "),'";
          })
          .replace(c.interpolate || noMatch, function(match, code) {
-           return "'," + code.replace(/\\'/g, "'") + ",'";
+           return "'," + unescape(code) + ",'";
          })
          .replace(c.evaluate || noMatch, function(match, code) {
-           return "');" + code.replace(/\\'/g, "'")
-                              .replace(/[\r\n\t]/g, ' ')
-                              .replace(/\\\\/g, '\\') + ";__p.push('";
+           return "');" + unescape(code).replace(/[\r\n\t]/g, ' ') + ";__p.push('";
          })
          .replace(/\r/g, '\\r')
          .replace(/\n/g, '\\n')