diff --git a/packages/language-core/lib/codegen/template/index.ts b/packages/language-core/lib/codegen/template/index.ts
index 1dc04b2076..c78716c3b3 100644
--- a/packages/language-core/lib/codegen/template/index.ts
+++ b/packages/language-core/lib/codegen/template/index.ts
@@ -99,12 +99,9 @@ export function* generateTemplate(options: TemplateCodegenOptions): Generator<Co
 				ctx.codeFeatures.navigationWithoutRename,
 			];
 			yield `'`;
-			yield [
-				className,
-				'template',
-				offset,
-				ctx.codeFeatures.navigationAndAdditionalCompletion,
-			];
+
+			// fix https://github.com/vuejs/language-tools/issues/4537
+			yield* escapeString(className, offset, ['\\', '\'']);
 			yield `'`;
 			yield [
 				'',
@@ -136,6 +133,45 @@ export function* generateTemplate(options: TemplateCodegenOptions): Generator<Co
 		}
 		yield endOfLine;
 	}
+
+	function* escapeString(className: string, offset: number, escapeTargets: string[]): Generator<Code> {
+		let count = 0;
+
+		const currentEscapeTargets = [...escapeTargets];
+		const firstEscapeTarget = currentEscapeTargets.shift()!;
+		const splitted = className.split(firstEscapeTarget);
+
+		for (let i = 0; i < splitted.length; i++) {
+			const part = splitted[i];
+			const partLength = part.length;
+
+			if (escapeTargets.length > 0) {
+				yield* escapeString(part, offset + count, [...currentEscapeTargets]);
+			} else {
+				yield [
+					part,
+					'template',
+					offset + count,
+					ctx.codeFeatures.navigationAndAdditionalCompletion,
+				];
+			}
+
+			if (i !== splitted.length - 1) {
+				yield '\\';
+
+				yield [
+					firstEscapeTarget,
+					'template',
+					offset + count + partLength,
+					ctx.codeFeatures.navigationAndAdditionalCompletion,
+				];
+
+				count += partLength + 1;
+			} else {
+				count += partLength;
+			}
+		}
+	}
 }
 
 export function* forEachElementNode(node: CompilerDOM.RootNode | CompilerDOM.TemplateChildNode): Generator<CompilerDOM.ElementNode> {
diff --git a/test-workspace/tsc/vue3/#4537/main.vue b/test-workspace/tsc/vue3/#4537/main.vue
new file mode 100644
index 0000000000..2dbb097a3c
--- /dev/null
+++ b/test-workspace/tsc/vue3/#4537/main.vue
@@ -0,0 +1,17 @@
+<script setup lang="ts" generic="T">
+defineProps<{
+	type: T;
+}>();
+
+defineModel<boolean>({ required: true });
+</script>
+
+<template>
+	<div class="['radio']"></div>
+</template>
+
+<style>
+.\[\'radio\'\] {
+	color: red
+}
+</style>