diff --git a/omegaconf/grammar/OmegaConfGrammarLexer.g4 b/omegaconf/grammar/OmegaConfGrammarLexer.g4
index 50c4f10a6..e7325f8ad 100644
--- a/omegaconf/grammar/OmegaConfGrammarLexer.g4
+++ b/omegaconf/grammar/OmegaConfGrammarLexer.g4
@@ -16,13 +16,23 @@ fragment ESC_BACKSLASH: '\\\\';  // escaped backslash
 
 TOP_INTER_OPEN: INTER_OPEN -> type(INTER_OPEN), pushMode(INTERPOLATION_MODE);
 
-ESC_INTER: '\\${';
-TOP_ESC: ESC_BACKSLASH+ -> type(ESC);
+// Regular string: anything that does not contain any $ and does not end with \
+// (this ensures this rule will not consume characters required to recognize other tokens).
+ANY_STR: ~[$]* ~[\\$];
+
+// Escaped interpolation: '\${', optionally preceded by an even number of \
+ESC_INTER: ESC_BACKSLASH* '\\${';
+
+// Escaped backslashes: even number of \ followed by an interpolation.
+// The interpolation must *not* be matched by this rule (this is why we use a predicate lookahead).
+TOP_ESC: ESC_BACKSLASH+ { self._input.LA(1) == ord("$") and self._input.LA(2) == ord("{") }? -> type(ESC);
+
+// Other backslashes that will not need escaping.
+BACKSLASHES: '\\'+ -> type(ANY_STR);
+
+// The dollar sign must be singled out so that we can recognize interpolations.
+DOLLAR: '$' -> type(ANY_STR);
 
-// The backslash and dollar characters must not be grouped with others, so that
-// we can properly detect the tokens above.
-SPECIAL_CHAR: [\\$];
-ANY_STR: ~[\\$]+;  // anything else
 
 ////////////////
 // VALUE_MODE //
@@ -96,11 +106,26 @@ mode QUOTED_SINGLE_MODE;
 QSINGLE_INTER_OPEN: INTER_OPEN -> type(INTER_OPEN), pushMode(INTERPOLATION_MODE);
 MATCHING_QUOTE_CLOSE: '\'' -> popMode;
 
-QSINGLE_ESC: ('\\\'' | ESC_BACKSLASH)+ -> type(ESC);
+// Regular string: anything that does not contain any $ *or quote* and does not end with \
+QSINGLE_STR: ~['$]* ~['\\$] -> type(ANY_STR);
+
 QSINGLE_ESC_INTER: ESC_INTER -> type(ESC_INTER);
 
-QSINGLE_SPECIAL_CHAR: SPECIAL_CHAR -> type(SPECIAL_CHAR);
-QSINGLE_STR: ~['\\$]+ -> type(ANY_STR);
+// In a quoted string we also have the following escape sequences:
+//    - \', optionally preceded by an even number of \ (escaped quote)
+//    - an even number of \ followed by either the closing quote (trailing backslashes) or by
+//      an interpolation (as in `DEFAULT_MODE`) -- which must not be matched by this rule
+QSINGLE_ESC:
+    (
+        ESC_BACKSLASH* '\\\'' |
+        ESC_BACKSLASH+ {(
+            self._input.LA(1) == ord("'") or
+            (self._input.LA(1) == ord("$") and self._input.LA(2) == ord("{"))
+        )}?
+    ) -> type(ESC);
+
+QSINGLE_BACKSLASHES: '\\'+ -> type(ANY_STR);
+QSINGLE_DOLLAR: '$' -> type(ANY_STR);
 
 
 ////////////////////////
@@ -114,8 +139,18 @@ mode QUOTED_DOUBLE_MODE;
 QDOUBLE_INTER_OPEN: INTER_OPEN -> type(INTER_OPEN), pushMode(INTERPOLATION_MODE);
 QDOUBLE_CLOSE: '"' -> type(MATCHING_QUOTE_CLOSE), popMode;
 
-QDOUBLE_ESC: ('\\"' | ESC_BACKSLASH)+ -> type(ESC);
+QDOUBLE_STR: ~["$]* ~["\\$] -> type(ANY_STR);
+
 QDOUBLE_ESC_INTER: ESC_INTER -> type(ESC_INTER);
 
-QDOUBLE_SPECIAL_CHAR: SPECIAL_CHAR -> type(SPECIAL_CHAR);
-QDOUBLE_STR: ~["\\$]+ -> type(ANY_STR);
+QDOUBLE_ESC:
+    (
+        ESC_BACKSLASH* '\\"' |
+        ESC_BACKSLASH+ {(
+            self._input.LA(1) == ord('"') or
+            (self._input.LA(1) == ord("$") and self._input.LA(2) == ord("{"))
+        )}?
+    ) -> type(ESC);
+
+QDOUBLE_BACKSLASHES: '\\'+ -> type(ANY_STR);
+QDOUBLE_DOLLAR: '$' -> type(ANY_STR);
diff --git a/omegaconf/grammar/OmegaConfGrammarParser.g4 b/omegaconf/grammar/OmegaConfGrammarParser.g4
index 4383da946..5ec70cf07 100644
--- a/omegaconf/grammar/OmegaConfGrammarParser.g4
+++ b/omegaconf/grammar/OmegaConfGrammarParser.g4
@@ -23,7 +23,7 @@ singleElement: element EOF;
 
 // Composite text expression (may contain interpolations).
 
-text: (interpolation | ESC | ESC_INTER | SPECIAL_CHAR | ANY_STR)+;
+text: (interpolation | ESC | ESC_INTER | ANY_STR)+;
 
 
 // Elements.
diff --git a/omegaconf/grammar_visitor.py b/omegaconf/grammar_visitor.py
index 4588253ef..8df6bfa70 100644
--- a/omegaconf/grammar_visitor.py
+++ b/omegaconf/grammar_visitor.py
@@ -289,7 +289,7 @@ def visitSingleElement(
         return self.visit(ctx.getChild(0))
 
     def visitText(self, ctx: OmegaConfGrammarParser.TextContext) -> Any:
-        # (interpolation | ESC | ESC_INTER | SPECIAL_CHAR | ANY_STR)+
+        # (interpolation | ESC | ESC_INTER | ANY_STR)+
 
         # Single interpolation? If yes, return its resolved value "as is".
         if ctx.getChildCount() == 1:
@@ -356,7 +356,10 @@ def _unescape(
                 if s.type == OmegaConfGrammarLexer.ESC:
                     chrs.append(s.text[1::2])
                 elif s.type == OmegaConfGrammarLexer.ESC_INTER:
-                    chrs.append(s.text[1:])
+                    # `ESC_INTER` is of the form `\\...\${`: the formula below computes
+                    # the number of characters to keep at the end of the string to remove
+                    # the correct number of backslashes.
+                    chrs.append(s.text[-(len(s.text) // 2 + 1) :])
                 else:
                     chrs.append(s.text)
             else:
diff --git a/tests/test_grammar.py b/tests/test_grammar.py
index 025511bea..cabf4e54c 100644
--- a/tests/test_grammar.py
+++ b/tests/test_grammar.py
@@ -143,9 +143,14 @@
     ("str_quoted_too_many_3", "''a''", GrammarParseError),
     ("str_quoted_trailing_esc_1", r"'abc\\'", r" abc\ ".strip()),
     ("str_quoted_trailing_esc_2", r"'abc\\\\'", r" abc\\ ".strip()),
-    ("str_quoted_no_esc_1", r'"abc\def"', r"abc\def"),
-    ("str_quoted_no_esc_2", r'"abc\\def"', r"abc\def"),
-    ("str_quoted_no_esc_3", r'"\\\abc\def"', r"\\abc\def"),
+    ("str_quoted_no_esc_single_1", r"'abc\def'", r"abc\def"),
+    ("str_quoted_no_esc_single_2", r"'abc\\def'", r"abc\\def"),
+    ("str_quoted_no_esc_single_3", r"'\\\abc\def'", r"\\\abc\def"),
+    ("str_quoted_no_esc_dollar_single", r"'abc\\$$'", r"abc\\$$"),
+    ("str_quoted_no_esc_double_1", r'"abc\def"', r"abc\def"),
+    ("str_quoted_no_esc_double_2", r'"abc\\def"', r"abc\\def"),
+    ("str_quoted_no_esc_double_3", r'"\\\abc\def"', r"\\\abc\def"),
+    ("str_quoted_no_esc_dollar_double", r'"abc\\$$"', r"abc\\$$"),
     ("str_quoted_bad_1", r'"abc\"', GrammarParseError),
     ("str_quoted_bad_2", r'"abc\\\"', GrammarParseError),
     ("str_quoted_esc_quote_single_1", r"'abc\'def'", "abc'def"),
@@ -255,8 +260,10 @@
     ("str_quoted_inter", "'${null}'", "None"),
     ("str_quoted_esc_single_1", r"'ab\'cd\'\'${str}'", "ab'cd''hi"),
     ("str_quoted_esc_single_2", r"""'\\\${foo}'""", r"\${foo}"),
+    ("str_quoted_esc_single_3", r"""'\\a_${str}\\'""", r" \\a_hi\ ".strip()),
     ("str_quoted_esc_double_1", r'"ab\"cd\"\"${str}"', 'ab"cd""hi'),
     ("str_quoted_esc_double_2", r'''"\\\${foo}"''', r"\${foo}"),
+    ("str_quoted_esc_double_3", r'''"\\a_${str}\\"''', r" \\a_hi\ ".strip()),
     ("str_quoted_other_quote_double", """'double"'""", 'double"'),
     ("str_quoted_other_quote_single", '''"single'"''', "single'"),
     ("str_quoted_concat_bad_1", '"Hi "${str}', GrammarParseError),
@@ -357,13 +364,16 @@
     ("str_top_esc_inter", r"Esc: \${str}", "Esc: ${str}"),
     ("str_top_esc_inter_wrong_1", r"Wrong: $\{str\}", r"Wrong: $\{str\}"),
     ("str_top_esc_inter_wrong_2", r"Wrong: \${str\}", r"Wrong: ${str\}"),
-    ("str_top_esc_backslash", r"Esc: \\${str}", r"Esc: \hi"),
+    ("str_top_esc_backslash_1", r"Esc: \\${str}", r"Esc: \hi"),
+    ("str_top_esc_backslash_2", r"Esc: \\\\${str}", r"Esc: \\hi"),
     ("str_top_quoted_braces_wrong", r"Wrong: \{${str}\}", r"Wrong: \{hi\}"),
     ("str_top_leading_dollars", r"$$${str}", "$$hi"),
     ("str_top_trailing_dollars", r"${str}$$$$", "hi$$$$"),
-    ("str_top_leading_escapes", r"\\\\\${str}", r"\\${str}"),
-    ("str_top_middle_escapes", r"abc\\\\\${str}", r"abc\\${str}"),
-    ("str_top_trailing_escapes", "${str}" + "\\" * 5, "hi" + "\\" * 3),
+    ("str_top_leading_escapes_1", r"\\\\\${str}", r"\\${str}"),
+    ("str_top_leading_escapes_2", r"\\\\ \${str}", r"\\\\ ${str}"),
+    ("str_top_middle_escapes_1", r"abc\\\\\${str}", r"abc\\${str}"),
+    ("str_top_middle_escapes_2", r"abc\\\\ \${str}", r"abc\\\\ ${str}"),
+    ("str_top_trailing_escapes", "${str}" + "\\" * 5, "hi" + "\\" * 5),
     ("str_top_concat_interpolations", "${null}${float}", "None1.2"),
     ("str_top_issue_617", r""" ${test: "hi\\" }"} """, r" hi\"} "),
     # Whitespaces.