diff --git a/src/Language/JavaScript/Parser/Grammar7.y b/src/Language/JavaScript/Parser/Grammar7.y
index f168668..fb8829e 100644
--- a/src/Language/JavaScript/Parser/Grammar7.y
+++ b/src/Language/JavaScript/Parser/Grammar7.y
@@ -9,6 +9,7 @@ module Language.JavaScript.Parser.Grammar7
     ) where
 
 import Data.Char
+import Data.Functor (($>))
 import Language.JavaScript.Parser.Lexer
 import Language.JavaScript.Parser.ParserMonad
 import Language.JavaScript.Parser.SrcLocation
@@ -505,8 +506,16 @@ TemplateLiteral : 'tmplnosub'              { JSUntaggedTemplate (mkJSAnnot $1) (
                 | 'tmplhead' TemplateParts { JSUntaggedTemplate (mkJSAnnot $1) (tokenLiteral $1) $2 }
 
 TemplateParts :: { [AST.JSTemplatePart] }
-TemplateParts : Expression 'tmplmiddle' TemplateParts { AST.JSTemplatePart $1 (mkJSAnnot $2) (tokenLiteral $2) : $3 }
-              | Expression 'tmpltail'                 { AST.JSTemplatePart $1 (mkJSAnnot $2) (tokenLiteral $2) : [] }
+TemplateParts : TemplateExpression RBrace 'tmplmiddle' TemplateParts { AST.JSTemplatePart $1 $2 ('}' : tokenLiteral $3) : $4 }
+              | TemplateExpression RBrace 'tmpltail'                 { AST.JSTemplatePart $1 $2 ('}' : tokenLiteral $3) : [] }
+
+-- This production only exists to ensure that inTemplate is set to True before
+-- a tmplmiddle or tmpltail token is lexed. Since the lexer is always one token
+-- ahead of the parser, setInTemplate needs to be called during a reduction
+-- that is *two* tokens behind tmplmiddle/tmpltail. Accordingly,
+-- TemplateExpression is always followed by an RBrace, which is lexed normally.
+TemplateExpression :: { AST.JSExpression }
+TemplateExpression : Expression {% setInTemplate True \$> $1 }
 
 -- ArrayLiteral :                                                        See 11.1.4
 --        [ Elisionopt ]
diff --git a/src/Language/JavaScript/Parser/Lexer.x b/src/Language/JavaScript/Parser/Lexer.x
index 69393e7..31da6f0 100644
--- a/src/Language/JavaScript/Parser/Lexer.x
+++ b/src/Language/JavaScript/Parser/Lexer.x
@@ -15,6 +15,7 @@ module Language.JavaScript.Parser.Lexer
     , alexError
     , runAlex
     , alexTestTokeniser
+    , setInTemplate
     ) where
 
 import Language.JavaScript.Parser.LexerUtils
@@ -199,8 +200,9 @@ $ZWJ  = [\x200d]
 tokens :-
 
 -- State: 0 is regex allowed, 1 is / or /= allowed
+-- 2 is a special state for parsing characters inside templates
 
-<0> () ; -- { registerStates lexToken reg divide }
+<0> () ; -- { registerStates lexToken reg divide template }
 
 -- Skip Whitespace
 <reg,divide> $white_char+   { adapt (mkString wsToken) }
@@ -256,8 +258,8 @@ tokens :-
 
 <reg,divide> "`" @TemplateCharacters "`" { adapt (mkString' NoSubstitutionTemplateToken) }
 <reg,divide> "`" @TemplateCharacters "${" { adapt (mkString' TemplateHeadToken) }
-<reg,divide> "}" @TemplateCharacters "${" { adapt (mkString' TemplateMiddleToken) }
-<reg,divide> "}" @TemplateCharacters "`" { adapt (mkString' TemplateTailToken) }
+<template>   @TemplateCharacters "${" { adapt (mkString' TemplateMiddleToken) }
+<template>   @TemplateCharacters "`" { adapt (mkString' TemplateTailToken) }
 
 
 
@@ -387,8 +389,11 @@ lexToken = do
     lt  <- getLastToken
     case lt of
         TailToken {} -> alexEOF
-        _other ->
-            case alexScan inp (classifyToken lt) of
+        _other -> do
+            isInTmpl <- getInTemplate
+            let state = if isInTmpl then template else classifyToken lt
+            setInTemplate False -- the inTemplate condition only needs to last for one token
+            case alexScan inp state of
                 AlexEOF        -> do
                     tok <- tailToken
                     setLastToken tok
@@ -491,6 +496,12 @@ addComment c = Alex $ \s ->  Right (s{alex_ust=(alex_ust s){comment=c:(  comment
 setComment :: [Token] -> Alex ()
 setComment cs = Alex $ \s -> Right (s{alex_ust=(alex_ust s){comment=cs }}, ())
 
+getInTemplate :: Alex Bool
+getInTemplate = Alex $ \s@AlexState{alex_ust=ust} -> Right (s, inTemplate ust)
+
+setInTemplate :: Bool -> Alex ()
+setInTemplate it = Alex $ \s -> Right (s{alex_ust=(alex_ust s){inTemplate=it}}, ())
+
 alexEOF :: Alex Token
 alexEOF = return (EOFToken tokenPosnEmpty [])
 
diff --git a/src/Language/JavaScript/Parser/ParserMonad.hs b/src/Language/JavaScript/Parser/ParserMonad.hs
index 42458d4..3cb9649 100644
--- a/src/Language/JavaScript/Parser/ParserMonad.hs
+++ b/src/Language/JavaScript/Parser/ParserMonad.hs
@@ -21,12 +21,14 @@ import Language.JavaScript.Parser.SrcLocation
 data AlexUserState = AlexUserState
     { previousToken :: !Token   -- ^the previous token
     , comment :: [Token]        -- ^the previous comment, if any
+    , inTemplate :: Bool        -- ^whether the parser is expecting template characters
     }
 
 alexInitUserState :: AlexUserState
 alexInitUserState = AlexUserState
     { previousToken = initToken
     , comment = []
+    , inTemplate = False
     }
 
 initToken :: Token
diff --git a/test/Test/Language/Javascript/RoundTrip.hs b/test/Test/Language/Javascript/RoundTrip.hs
index 426a803..8f1d961 100644
--- a/test/Test/Language/Javascript/RoundTrip.hs
+++ b/test/Test/Language/Javascript/RoundTrip.hs
@@ -85,6 +85,8 @@ testRoundTrip = describe "Roundtrip:" $ do
         testRT "/*a*/`<${/*b*/x/*c*/}>`/*d*/"
         testRT "`\\${}`"
         testRT "`\n\n`"
+        testRT "{}+``"
+        -- ^ https://github.com/erikd/language-javascript/issues/104
 
 
     it "statement" $ do