diff --git a/org.springframework.web/src/main/java/org/springframework/web/util/UriTemplate.java b/org.springframework.web/src/main/java/org/springframework/web/util/UriTemplate.java
index f005806a85a..b35ab47d00d 100644
--- a/org.springframework.web/src/main/java/org/springframework/web/util/UriTemplate.java
+++ b/org.springframework.web/src/main/java/org/springframework/web/util/UriTemplate.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2002-2009 the original author or authors.
+ * Copyright 2002-2010 the original author or authors.
  *
  * Licensed under the Apache License, Version 2.0 (the "License");
  * you may not use this file except in compliance with the License.
@@ -36,8 +36,8 @@ import org.springframework.util.Assert;
  *
  * @author Arjen Poutsma
  * @author Juergen Hoeller
- * @see <a href="http://bitworking.org/projects/URI-Templates/">URI Templates</a>
  * @since 3.0
+ * @see <a href="http://bitworking.org/projects/URI-Templates/">URI Templates</a>
  */
 public class UriTemplate {
 
@@ -126,7 +126,7 @@ public class UriTemplate {
 		int i = 0;
 		while (matcher.find()) {
 			String uriVariable = uriVariableValues[i++].toString();
-			matcher.appendReplacement(buffer, uriVariable);
+			matcher.appendReplacement(buffer, Matcher.quoteReplacement(uriVariable));
 		}
 		matcher.appendTail(buffer);
 		return encodeUri(buffer.toString());
diff --git a/org.springframework.web/src/test/java/org/springframework/web/util/UriTemplateTests.java b/org.springframework.web/src/test/java/org/springframework/web/util/UriTemplateTests.java
index cbef8ed337d..4dee7a75068 100644
--- a/org.springframework.web/src/test/java/org/springframework/web/util/UriTemplateTests.java
+++ b/org.springframework.web/src/test/java/org/springframework/web/util/UriTemplateTests.java
@@ -1,5 +1,5 @@
 /*
- * Copyright 2002-2009 the original author or authors.
+ * Copyright 2002-2010 the original author or authors.
  *
  * Licensed under the Apache License, Version 2.0 (the "License");
  * you may not use this file except in compliance with the License.
@@ -26,7 +26,10 @@ import java.util.Map;
 import static org.junit.Assert.*;
 import org.junit.Test;
 
-/** @author Arjen Poutsma */
+/**
+ * @author Arjen Poutsma
+ * @author Juergen Hoeller
+ */
 public class UriTemplateTests {
 
 	@Test
@@ -141,4 +144,12 @@ public class UriTemplateTests {
 		template = new UriTemplate("/search?query={query}#{fragment}");
 		assertTrue(template.matches("/search?query=foo#bar"));
 	}
-}
\ No newline at end of file
+
+	@Test
+	public void expandWithDollar() {
+		UriTemplate template = new UriTemplate("/{a}");
+		URI uri = template.expand("$replacement");
+		assertEquals("/$replacement", uri.toString());
+	}
+
+}