diff --git a/packages/langium-cli/src/generator/grammar-serializer.ts b/packages/langium-cli/src/generator/grammar-serializer.ts
index 03aacec08..8bf0e8ee8 100644
--- a/packages/langium-cli/src/generator/grammar-serializer.ts
+++ b/packages/langium-cli/src/generator/grammar-serializer.ts
@@ -41,9 +41,13 @@ export function serializeGrammar(services: LangiumCoreServices, grammars: Gramma
                 });
                 // The json serializer returns strings with \n line delimiter by default
                 // We need to translate these line endings to the OS specific line ending
-                const json = normalizeEOL(serializedGrammar
+                let json = normalizeEOL(serializedGrammar
                     .replace(/\\/g, '\\\\')
                     .replace(new RegExp(delimiter, 'g'), '\\' + delimiter));
+                if (!production) {
+                    // Escape ${ in template strings
+                    json = json.replace(/\${/g, '\\${');
+                }
                 return expandToNode`
 
                     let loaded${grammar.name}Grammar: Grammar | undefined;
diff --git a/packages/langium-cli/test/generator/grammar-serializer.test.ts b/packages/langium-cli/test/generator/grammar-serializer.test.ts
index ff924d5d1..19959d933 100644
--- a/packages/langium-cli/test/generator/grammar-serializer.test.ts
+++ b/packages/langium-cli/test/generator/grammar-serializer.test.ts
@@ -6,15 +6,21 @@
 
 import type { LangiumConfig } from '../../src/package-types.js';
 import { EmptyFileSystem, URI, type Grammar } from 'langium';
-import { describe, expect, test } from 'vitest';
+import { afterEach, describe, expect, test } from 'vitest';
 import { RelativePath } from '../../src/package-types.js';
 import { serializeGrammar } from '../../src/generator/grammar-serializer.js';
 import { createLangiumGrammarServices } from 'langium/grammar';
 import { expandToString } from 'langium/generate';
+import { clearDocuments } from 'langium/test';
 
 const grammarServices = createLangiumGrammarServices(EmptyFileSystem);
 
 describe('Grammar serializer', () => {
+
+    afterEach(() => {
+        clearDocuments(grammarServices.shared);
+    });
+
     test('should include comments of AST elements', async () => {
         // arrange
         const config: LangiumConfig = {
@@ -45,4 +51,64 @@ describe('Grammar serializer', () => {
         expect(moduleString).toMatch('"$comment": "/**\\\\n * This is the entry rule\\\\n */"');
     });
 
+    test('should escape template strings in development mode', async () => {
+        // arrange
+        const config: LangiumConfig = {
+            projectName: 'Magic',
+            languages: [],
+            mode: 'development',
+            [RelativePath]: '/path/to/magic',
+        };
+
+        const grammarText = expandToString`
+        grammar Test
+        entry Model: template='\${' backtick='\`' single="'";
+        `;
+
+        const document = grammarServices.shared.workspace.LangiumDocumentFactory.fromString<Grammar>(grammarText, URI.file('test.langium'));
+        grammarServices.shared.workspace.LangiumDocuments.addDocument(document);
+        await grammarServices.shared.workspace.DocumentBuilder.build([document]);
+        const grammar = document.parseResult.value;
+
+        // act
+        const moduleString = serializeGrammar(grammarServices.grammar, [grammar], config);
+
+        // assert
+        // Escapes `${` sequence correctly
+        expect(moduleString).toMatch('"value": "\\${"');
+        // Escapes the "`" character correctly
+        expect(moduleString).toMatch('"value": "\\`');
+        // Does not escape single quotes
+        expect(moduleString).toMatch('"value": "\'"');
+    });
+
+    test('should escape single quotes in production mode', async () => {
+        // arrange
+        const config: LangiumConfig = {
+            projectName: 'Magic',
+            languages: [],
+            mode: 'production',
+            [RelativePath]: '/path/to/magic',
+        };
+
+        const grammarText = expandToString`
+        grammar Test
+        entry Model: single="'" backtick='\`';
+        `;
+
+        const document = grammarServices.shared.workspace.LangiumDocumentFactory.fromString<Grammar>(grammarText, URI.file('test.langium'));
+        grammarServices.shared.workspace.LangiumDocuments.addDocument(document);
+        await grammarServices.shared.workspace.DocumentBuilder.build([document]);
+        const grammar = document.parseResult.value;
+
+        // act
+        const moduleString = serializeGrammar(grammarServices.grammar, [grammar], config);
+
+        // assert
+        // Escapes single quote character correctly
+        expect(moduleString).toMatch('"value":"\\\'"');
+        // Does not escape backticks
+        expect(moduleString).toMatch('"value":"`"');
+    });
+
 });