diff --git a/shellwords.go b/shellwords.go
index 576b792..fc29fa4 100644
--- a/shellwords.go
+++ b/shellwords.go
@@ -1,10 +1,12 @@
 package shellwords
 
 import (
+	"bytes"
 	"errors"
 	"os"
 	"regexp"
 	"strings"
+	"unicode"
 )
 
 var (
@@ -27,13 +29,72 @@ func replaceEnv(getenv func(string) string, s string) string {
 		getenv = os.Getenv
 	}
 
-	return envRe.ReplaceAllStringFunc(s, func(s string) string {
-		s = s[1:]
-		if s[0] == '{' {
-			s = s[1 : len(s)-1]
+	var buf bytes.Buffer
+	rs := []rune(s)
+	for i := 0; i < len(rs); i++ {
+		r := rs[i]
+		if r == '\\' {
+			i++
+			if i == len(rs) {
+				break
+			}
+			buf.WriteRune(rs[i])
+			continue
+		} else if r == '$' {
+			i++
+			if i == len(rs) {
+				buf.WriteRune(r)
+				break
+			}
+			if rs[i] == 0x7b {
+				i++
+				p := i
+				for ; i < len(rs); i++ {
+					r = rs[i]
+					if r == '\\' {
+						i++
+						if i == len(rs) {
+							return s
+						}
+						continue
+					}
+					if r == 0x7d || (!unicode.IsLetter(r) && r != '_' && !unicode.IsDigit(r)) {
+						break
+					}
+				}
+				if r != 0x7d {
+					return s
+				}
+				if i > p {
+					buf.WriteString(getenv(s[p:i]))
+				}
+			} else {
+				p := i
+				for ; i < len(rs); i++ {
+					r := rs[i]
+					if r == '\\' {
+						i++
+						if i == len(rs) {
+							return s
+						}
+						continue
+					}
+					if !unicode.IsLetter(r) && r != '_' && !unicode.IsDigit(r) {
+						break
+					}
+				}
+				if i > p {
+					buf.WriteString(getenv(s[p:i]))
+					i--
+				} else {
+					buf.WriteString(s[p:])
+				}
+			}
+		} else {
+			buf.WriteRune(r)
 		}
-		return getenv(s)
-	})
+	}
+	return buf.String()
 }
 
 type Parser struct {
@@ -56,6 +117,14 @@ func NewParser() *Parser {
 	}
 }
 
+type argType int
+
+const (
+	argNo argType = iota
+	argSingle
+	argQuoted
+)
+
 func (p *Parser) Parse(line string) ([]string, error) {
 	args := []string{}
 	buf := ""
@@ -63,7 +132,7 @@ func (p *Parser) Parse(line string) ([]string, error) {
 	backtick := ""
 
 	pos := -1
-	got := false
+	got := argNo
 
 	i := -1
 loop:
@@ -72,7 +141,7 @@ loop:
 		if escaped {
 			buf += string(r)
 			escaped = false
-			got = true
+			got = argSingle
 			continue
 		}
 
@@ -89,21 +158,25 @@ loop:
 			if singleQuoted || doubleQuoted || backQuote || dollarQuote {
 				buf += string(r)
 				backtick += string(r)
-			} else if got {
+			} else if got != argNo {
 				if p.ParseEnv {
-					parser := &Parser{ParseEnv: false, ParseBacktick: false, Position: 0, Dir: p.Dir}
-					strs, err := parser.Parse(replaceEnv(p.Getenv, buf))
-					if err != nil {
-						return nil, err
-					}
-					for _, str := range strs {
-						args = append(args, str)
+					if got == argSingle {
+						parser := &Parser{ParseEnv: false, ParseBacktick: false, Position: 0, Dir: p.Dir}
+						strs, err := parser.Parse(replaceEnv(p.Getenv, buf))
+						if err != nil {
+							return nil, err
+						}
+						for _, str := range strs {
+							args = append(args, str)
+						}
+					} else {
+						args = append(args, replaceEnv(p.Getenv, buf))
 					}
 				} else {
 					args = append(args, buf)
 				}
 				buf = ""
-				got = false
+				got = argNo
 			}
 			continue
 		}
@@ -156,7 +229,7 @@ loop:
 		case '"':
 			if !singleQuoted && !dollarQuote {
 				if doubleQuoted {
-					got = true
+					got = argQuoted
 				}
 				doubleQuoted = !doubleQuoted
 				continue
@@ -164,7 +237,7 @@ loop:
 		case '\'':
 			if !doubleQuoted && !dollarQuote {
 				if singleQuoted {
-					got = true
+					got = argSingle
 				}
 				singleQuoted = !singleQuoted
 				continue
@@ -174,7 +247,7 @@ loop:
 				if r == '>' && len(buf) > 0 {
 					if c := buf[0]; '0' <= c && c <= '9' {
 						i -= 1
-						got = false
+						got = argNo
 					}
 				}
 				pos = i
@@ -182,22 +255,26 @@ loop:
 			}
 		}
 
-		got = true
+		got = argSingle
 		buf += string(r)
 		if backQuote || dollarQuote {
 			backtick += string(r)
 		}
 	}
 
-	if got {
+	if got != argNo {
 		if p.ParseEnv {
-			parser := &Parser{ParseEnv: false, ParseBacktick: false, Position: 0, Dir: p.Dir}
-			strs, err := parser.Parse(replaceEnv(p.Getenv, buf))
-			if err != nil {
-				return nil, err
-			}
-			for _, str := range strs {
-				args = append(args, str)
+			if got == argSingle {
+				parser := &Parser{ParseEnv: false, ParseBacktick: false, Position: 0, Dir: p.Dir}
+				strs, err := parser.Parse(replaceEnv(p.Getenv, buf))
+				if err != nil {
+					return nil, err
+				}
+				for _, str := range strs {
+					args = append(args, str)
+				}
+			} else {
+				args = append(args, replaceEnv(p.Getenv, buf))
 			}
 		} else {
 			args = append(args, buf)
diff --git a/shellwords_test.go b/shellwords_test.go
index cfe818c..b32a493 100644
--- a/shellwords_test.go
+++ b/shellwords_test.go
@@ -288,9 +288,9 @@ func TestEnvArgumentsFail(t *testing.T) {
 		t.Fatal("Should be an error")
 	}
 	os.Setenv("FOO", "bar `")
-	_, err = parser.Parse("$FOO ")
+	result, err := parser.Parse("$FOO ")
 	if err == nil {
-		t.Fatal("Should be an error")
+		t.Fatal("Should be an error: ", result)
 	}
 }
 
@@ -300,20 +300,20 @@ func TestDupEnv(t *testing.T) {
 
 	parser := NewParser()
 	parser.ParseEnv = true
-	args, err := parser.Parse("echo $$FOO$")
+	args, err := parser.Parse("echo $FOO$")
 	if err != nil {
 		t.Fatal(err)
 	}
-	expected := []string{"echo", "$bar$"}
+	expected := []string{"echo", "bar$"}
 	if !reflect.DeepEqual(args, expected) {
 		t.Fatalf("Expected %#v, but %#v:", expected, args)
 	}
 
-	args, err = parser.Parse("echo $${FOO_BAR}$")
+	args, err = parser.Parse("echo ${FOO_BAR}$")
 	if err != nil {
 		t.Fatal(err)
 	}
-	expected = []string{"echo", "$baz$"}
+	expected = []string{"echo", "baz$"}
 	if !reflect.DeepEqual(args, expected) {
 		t.Fatalf("Expected %#v, but %#v:", expected, args)
 	}
@@ -383,3 +383,27 @@ func TestBackquoteInFlag(t *testing.T) {
 		t.Fatalf("Expected %#v, but %#v:", expected, args)
 	}
 }
+
+func TestEnvInQuoted(t *testing.T) {
+	os.Setenv("FOO", "bar")
+
+	parser := NewParser()
+	parser.ParseEnv = true
+	args, err := parser.Parse(`ssh 127.0.0.1 "echo $FOO"`)
+	if err != nil {
+		panic(err)
+	}
+	expected := []string{"ssh", "127.0.0.1", "echo bar"}
+	if !reflect.DeepEqual(args, expected) {
+		t.Fatalf("Expected %#v, but %#v:", expected, args)
+	}
+
+	args, err = parser.Parse(`ssh 127.0.0.1 "echo \\$FOO"`)
+	if err != nil {
+		panic(err)
+	}
+	expected = []string{"ssh", "127.0.0.1", "echo $FOO"}
+	if !reflect.DeepEqual(args, expected) {
+		t.Fatalf("Expected %#v, but %#v:", expected, args)
+	}
+}