diff --git a/androidmk/parser/make_strings.go b/androidmk/parser/make_strings.go
index e6885a8..4b782a2 100644
--- a/androidmk/parser/make_strings.go
+++ b/androidmk/parser/make_strings.go
@@ -90,10 +90,10 @@
 	if len(ms.Strings) == 0 {
 		return ""
 	} else {
-		ret := ms.Strings[0]
+		ret := unescape(ms.Strings[0])
 		for i := range ms.Strings[1:] {
 			ret += ms.Variables[i].Value(scope)
-			ret += ms.Strings[i+1]
+			ret += unescape(ms.Strings[i+1])
 		}
 		return ret
 	}
@@ -125,6 +125,16 @@
 }
 
 func (ms *MakeString) SplitN(sep string, n int) []*MakeString {
+	return ms.splitNFunc(n, func(s string, n int) []string {
+		return splitAnyN(s, sep, n)
+	})
+}
+
+func (ms *MakeString) Words() []*MakeString {
+	return ms.splitNFunc(-1, splitWords)
+}
+
+func (ms *MakeString) splitNFunc(n int, splitFunc func(s string, n int) []string) []*MakeString {
 	ret := []*MakeString{}
 
 	curMs := SimpleMakeString("", ms.Pos())
@@ -133,7 +143,7 @@
 	var s string
 	for i, s = range ms.Strings {
 		if n != 0 {
-			split := splitAnyN(s, sep, n)
+			split := splitFunc(s, n)
 			if n != -1 {
 				if len(split) > n {
 					panic("oops!")
@@ -156,7 +166,9 @@
 		}
 	}
 
-	ret = append(ret, curMs)
+	if !curMs.Empty() {
+		ret = append(ret, curMs)
+	}
 	return ret
 }
 
@@ -206,3 +218,64 @@
 	ret = append(ret, s)
 	return ret
 }
+
+func splitWords(s string, n int) []string {
+	ret := []string{}
+	preserve := ""
+	for n == -1 || n > 1 {
+		index := strings.IndexAny(s, " \t")
+		if index == 0 && len(preserve) == 0 {
+			s = s[1:]
+		} else if index >= 0 {
+			escapeCount := 0
+			for i := index - 1; i >= 0; i-- {
+				if s[i] != '\\' {
+					break
+				}
+				escapeCount += 1
+			}
+
+			if escapeCount%2 == 1 {
+				preserve += s[0 : index+1]
+				s = s[index+1:]
+				continue
+			}
+
+			ret = append(ret, preserve+s[0:index])
+			s = s[index+1:]
+			preserve = ""
+			if n > 0 {
+				n--
+			}
+		} else {
+			break
+		}
+	}
+	if preserve != "" || s != "" || len(ret) == 0 {
+		ret = append(ret, preserve+s)
+	}
+	return ret
+}
+
+func unescape(s string) string {
+	ret := ""
+	for {
+		index := strings.IndexByte(s, '\\')
+		if index < 0 {
+			break
+		}
+
+		if index+1 == len(s) {
+			break
+		}
+
+		switch s[index+1] {
+		case ' ', '\\', '#', ':', '*', '[', '|', '\t', '\n', '\r':
+			ret += s[:index] + s[index+1:index+2]
+		default:
+			ret += s[:index+2]
+		}
+		s = s[index+2:]
+	}
+	return ret + s
+}
diff --git a/androidmk/parser/make_strings_test.go b/androidmk/parser/make_strings_test.go
index 8ad3d74..6995e89 100644
--- a/androidmk/parser/make_strings_test.go
+++ b/androidmk/parser/make_strings_test.go
@@ -99,6 +99,78 @@
 	}
 }
 
+var valueTestCases = []struct {
+	in       *MakeString
+	expected string
+}{
+	{
+		in:       SimpleMakeString("a b", NoPos),
+		expected: "a b",
+	},
+	{
+		in:       SimpleMakeString("a\\ \\\tb\\\\", NoPos),
+		expected: "a \tb\\",
+	},
+	{
+		in:       SimpleMakeString("a\\b\\", NoPos),
+		expected: "a\\b\\",
+	},
+}
+
+func TestMakeStringValue(t *testing.T) {
+	for _, test := range valueTestCases {
+		got := test.in.Value(nil)
+		if got != test.expected {
+			t.Errorf("\nwith: %q\nwant: %q\n got: %q", test.in.Dump(), test.expected, got)
+		}
+	}
+}
+
+var splitWordsTestCases = []struct {
+	in       *MakeString
+	expected []*MakeString
+}{
+	{
+		in:       SimpleMakeString("", NoPos),
+		expected: []*MakeString{},
+	},
+	{
+		in: SimpleMakeString(" a b\\ c d", NoPos),
+		expected: []*MakeString{
+			SimpleMakeString("a", NoPos),
+			SimpleMakeString("b\\ c", NoPos),
+			SimpleMakeString("d", NoPos),
+		},
+	},
+	{
+		in: SimpleMakeString("  a\tb\\\t\\ c d  ", NoPos),
+		expected: []*MakeString{
+			SimpleMakeString("a", NoPos),
+			SimpleMakeString("b\\\t\\ c", NoPos),
+			SimpleMakeString("d", NoPos),
+		},
+	},
+	{
+		in: SimpleMakeString(`a\\ b\\\ c d`, NoPos),
+		expected: []*MakeString{
+			SimpleMakeString(`a\\`, NoPos),
+			SimpleMakeString(`b\\\ c`, NoPos),
+			SimpleMakeString("d", NoPos),
+		},
+	},
+}
+
+func TestMakeStringWords(t *testing.T) {
+	for _, test := range splitWordsTestCases {
+		got := test.in.Words()
+		gotString := dumpArray(got)
+		expectedString := dumpArray(test.expected)
+		if gotString != expectedString {
+			t.Errorf("with:\n%q\nexpected:\n%s\ngot:\n%s", test.in.Dump(), expectedString, gotString)
+		}
+	}
+}
+
 func dumpArray(a []*MakeString) string {
 	ret := make([]string, len(a))
 
diff --git a/androidmk/parser/parser.go b/androidmk/parser/parser.go
index 89ee308..89c1af9 100644
--- a/androidmk/parser/parser.go
+++ b/androidmk/parser/parser.go
@@ -35,6 +35,10 @@
 	return fmt.Sprintf("%s: %s", e.Pos, e.Err)
 }
 
+const builtinDollar = "__builtin_dollar"
+
+var builtinDollarName = SimpleMakeString(builtinDollar, NoPos)
+
 func (p *parser) Parse() ([]Node, []error) {
 	defer func() {
 		if r := recover(); r != nil {
@@ -326,7 +330,11 @@
 		case '$':
 			var variable Variable
 			variable = p.parseVariable()
-			value.appendVariable(variable)
+			if variable.Name == builtinDollarName {
+				value.appendString("$")
+			} else {
+				value.appendVariable(variable)
+			}
 		case scanner.EOF:
 			break loop
 		case '(':
@@ -357,7 +365,8 @@
 	case '{':
 		return p.parseBracketedVariable('{', '}', pos)
 	case '$':
-		name = SimpleMakeString("__builtin_dollar", NoPos)
+		name = builtinDollarName
+		p.accept(p.tok)
 	case scanner.EOF:
 		p.errorf("expected variable name, found %s",
 			scanner.TokenString(p.tok))
@@ -457,6 +466,8 @@
 	case '=':
 		p.parseAssignment("=", target, prerequisites)
 		return nil, true
+	case scanner.EOF:
+		// do nothing
 	default:
 		p.errorf("unexpected token %s after rule prerequisites", scanner.TokenString(p.tok))
 	}
diff --git a/androidmk/parser/parser_test.go b/androidmk/parser/parser_test.go
new file mode 100644
index 0000000..f562c29
--- /dev/null
+++ b/androidmk/parser/parser_test.go
@@ -0,0 +1,61 @@
+// Copyright 2018 Google Inc. All rights reserved.
+//
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at
+//
+//     http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
+
+package parser
+
+import (
+	"bytes"
+	"testing"
+)
+
+var parserTestCases = []struct {
+	name string
+	in   string
+	out  []Node
+}{
+	{
+		name: "Escaped $",
+		in:   `a$$ b: c`,
+		out: []Node{
+			&Rule{
+				Target:        SimpleMakeString("a$ b", NoPos),
+				Prerequisites: SimpleMakeString("c", NoPos),
+			},
+		},
+	},
+}
+
+func TestParse(t *testing.T) {
+	for _, test := range parserTestCases {
+		t.Run(test.name, func(t *testing.T) {
+			p := NewParser(test.name, bytes.NewBufferString(test.in))
+			got, errs := p.Parse()
+
+			if len(errs) != 0 {
+				t.Fatalf("Unexpected errors while parsing: %v", errs)
+			}
+
+			if len(got) != len(test.out) {
+				t.Fatalf("length mismatch, expected %d nodes, got %d", len(test.out), len(got))
+			}
+
+			for i := range got {
+				if got[i].Dump() != test.out[i].Dump() {
+					t.Errorf("incorrect node %d:\nexpected: %#v (%s)\n     got: %#v (%s)",
+						i, test.out[i], test.out[i].Dump(), got[i], got[i].Dump())
+				}
+			}
+		})
+	}
+}
diff --git a/androidmk/parser/scope.go b/androidmk/parser/scope.go
index 7a514fa..167e470 100644
--- a/androidmk/parser/scope.go
+++ b/androidmk/parser/scope.go
@@ -71,7 +71,7 @@
 
 func init() {
 	builtinScope := make(map[string]string)
-	builtinScope["__builtin_dollar"] = "$"
+	builtinScope[builtinDollar] = "$"
 }
 
 func (v Variable) EvalFunction(scope Scope) (string, bool) {