diff --git a/lib/ContextModule.js b/lib/ContextModule.js
index e9c167217..145a7018e 100644
--- a/lib/ContextModule.js
+++ b/lib/ContextModule.js
@@ -144,7 +144,9 @@ class ContextModule extends Module {
 	prettyRegExp(regexString) {
 		// remove the "/" at the front and the beginning
 		// "/foo/" -> "foo"
-		return regexString.substring(1, regexString.length - 1);
+		return regexString
+			.substring(1, regexString.length - 1)
+			.replace(/!/g, "%21");
 	}
 
 	_createIdentifier() {
diff --git a/test/cases/context/issue-10969/folder/file1.js b/test/cases/context/issue-10969/folder/file1.js
new file mode 100644
index 000000000..e69de29bb
diff --git a/test/cases/context/issue-10969/index.js b/test/cases/context/issue-10969/index.js
new file mode 100644
index 000000000..b0403cb8c
--- /dev/null
+++ b/test/cases/context/issue-10969/index.js
@@ -0,0 +1,21 @@
+expect.extend({
+	toBeValidModuleId(received, moduleIdString) {
+		const pass = typeof received === "number" || received === moduleIdString;
+		if (pass) {
+			return {
+				message: () => `expected ${received} not to be a valid module id`,
+				pass: true
+			};
+		} else {
+			return {
+				message: () => `expected ${received} to be a valid module id`,
+				pass: false
+			};
+		}
+	}
+});
+
+it("should replace ! with %21 in the module id string of the context module", function () {
+	const moduleId = require.context("./folder", true, /^(?!file1\.js$).*$/i, "lazy").id;
+	expect(moduleId).toBeValidModuleId("./context/issue-10969/folder lazy recursive ^(?%21file1\\.js$).*$/");
+});