diff --git a/pkgs/racket-test-core/tests/racket/basic.rktl b/pkgs/racket-test-core/tests/racket/basic.rktl
index 1e49626a45..49502be398 100644
--- a/pkgs/racket-test-core/tests/racket/basic.rktl
+++ b/pkgs/racket-test-core/tests/racket/basic.rktl
@@ -1121,6 +1121,8 @@
 (test "x&cy&z" regexp-replace* #rx"a(.)" "xabcyawz" "\\&")
 (test "x\\cy\\z" regexp-replace* #rx"a(.)" "xabcyawz" "\\\\")
 
+(test "ap0p0le" regexp-replace* #rx"p" "apple" "\\0\\$0")
+
 ;; Test sub-matches with procedure replace (second example by synx)
 (test "myCERVEZA myMI Mi"
       regexp-replace* "([Mm])i ([a-zA-Z]*)" "mi cerveza Mi Mi Mi"
diff --git a/racket/collects/racket/private/string.rkt b/racket/collects/racket/private/string.rkt
index b4a7c9847c..298a873e4a 100644
--- a/racket/collects/racket/private/string.rkt
+++ b/racket/collects/racket/private/string.rkt
@@ -410,7 +410,9 @@
                                       (or (and (equal? (char->integer #\&) next)
                                                #"&")
                                           (and (equal? (char->integer #\\) next)
-                                               #"\\")))
+                                               #"\\")
+                                          (and (equal? (char->integer #\$) next)
+                                               #"")))
                                     => (lambda (s)
                                          (cons s (loop (add1 (cdar m)))))]
                                    [else