diff --git a/highlighters/main/main-highlighter.zsh b/highlighters/main/main-highlighter.zsh
index a4ff7a1..7f5495e 100644
--- a/highlighters/main/main-highlighter.zsh
+++ b/highlighters/main/main-highlighter.zsh
@@ -77,6 +77,16 @@ _zsh_highlight_main_add_region_highlight() {
     [[ $1 == unknown-token ]] && alias_style=unknown-token
     return
   fi
+  if (( in_param )); then
+    if [[ $1 == unknown-token ]]; then
+      param_style=unknown-token
+    fi
+    if [[ -n $param_style ]]; then
+      return
+    fi
+    param_style=$1
+    return
+  fi
 
   # The calculation was relative to $buf but region_highlight is relative to $BUFFER.
   (( start += buf_offset ))
@@ -406,11 +416,13 @@ _zsh_highlight_main_highlighter_highlight_list()
   # alias_style is the style to apply to an alias once in_alias=0
   #     Usually 'alias' but set to 'unknown-token' if any word expanded from
   #     the alias would be highlighted as unknown-token
-  local alias_style arg buf=$4 highlight_glob=true style
+  # param_style is analogous for parameter expansions
+  local alias_style param_style arg buf=$4 highlight_glob=true style
   local in_array_assignment=false # true between 'a=(' and the matching ')'
   # in_alias is equal to the number of shifts needed until arg=args[1] pops an
   #     arg from BUFFER and not added by an alias.
-  integer in_alias=0 len=$#buf
+  # in_param is analogous for parameter expansions
+  integer in_alias=0 in_param=0 len=$#buf
   local -a match mbegin mend list_highlights
   # seen_alias is a map of aliases already seen to avoid loops like alias a=b b=a
   local -A seen_alias
@@ -489,6 +501,14 @@ _zsh_highlight_main_highlighter_highlight_list()
         _zsh_highlight_main_add_region_highlight $start_pos $end_pos $alias_style
       fi
     fi
+    if (( in_param )); then
+      (( in_param-- ))
+      if (( in_param == 0 )); then
+        # start_pos and end_pos are of the '$foo' word (previous $arg) here
+        _zsh_highlight_main_add_region_highlight $start_pos $end_pos $param_style
+        param_style=""
+      fi
+    fi
 
     # Initialize this_word and next_word.
     if (( in_redirection == 0 )); then
@@ -513,7 +533,7 @@ _zsh_highlight_main_highlighter_highlight_list()
       fi
     fi
 
-    if (( in_alias == 0 )); then
+    if (( in_alias == 0 && in_param == 0 )); then
       # Compute the new $start_pos and $end_pos, skipping over whitespace in $buf.
       [[ "$proc_buf" = (#b)(#s)(([ $'\t']|\\$'\n')#)* ]]
       # The first, outer parenthesis
@@ -626,6 +646,7 @@ _zsh_highlight_main_highlighter_highlight_list()
       local -a match mbegin mend
       local MATCH; integer MBEGIN MEND
       local parameter_name
+      local -a words
       if [[ $arg[1] == '$' ]] && [[ ${arg[2]} == '{' ]] && [[ ${arg[-1]} == '}' ]]; then
         parameter_name=${${arg:2}%?}
       elif [[ $arg[1] == '$' ]]; then
@@ -638,14 +659,16 @@ _zsh_highlight_main_highlighter_highlight_list()
         # Set $arg.
         case ${(tP)MATCH} in
           (*array*|*assoc*)
-            local -a words; words=( ${(P)MATCH} )
-            arg=${words[1]}
+            words=( ${(P)MATCH} )
             ;;
           (*)
             # scalar, presumably
-            arg=${(P)MATCH}
+            words=( ${(P)MATCH} )
             ;;
         esac
+        (( in_param = 1 + $#words ))
+        args=( $words $args )
+        arg=$args[1]
         _zsh_highlight_main__type "$arg" 0
         res=$REPLY
       fi
@@ -946,6 +969,7 @@ _zsh_highlight_main_highlighter_highlight_list()
     _zsh_highlight_main_add_region_highlight $start_pos $end_pos $style
   done
   (( in_alias == 1 )) && in_alias=0 _zsh_highlight_main_add_region_highlight $start_pos $end_pos $alias_style
+  (( in_param == 1 )) && in_param=0 _zsh_highlight_main_add_region_highlight $start_pos $end_pos $param_style
   [[ "$proc_buf" = (#b)(#s)(([[:space:]]|\\$'\n')#) ]]
   REPLY=$(( end_pos + ${#match[1]} - 1 ))
   reply=($list_highlights)
diff --git a/highlighters/main/test-data/param-precommand-option-argument1.zsh b/highlighters/main/test-data/param-precommand-option-argument1.zsh
index 58e51ef..84cf03a 100644
--- a/highlighters/main/test-data/param-precommand-option-argument1.zsh
+++ b/highlighters/main/test-data/param-precommand-option-argument1.zsh
@@ -36,7 +36,7 @@ BUFFER='$sudo_u phy1729 echo foo'
 
 expected_region_highlight=(
   '1 7 precommand' # $sudo_u
-  '9 15 default "issue #674"' # phy1729
+  '9 15 default' # phy1729
   '18 20 command "issue #540"' # echo (not builtin)
   '22 24 default' # foo
 )
diff --git a/highlighters/main/test-data/param-precommand-option-argument3.zsh b/highlighters/main/test-data/param-precommand-option-argument3.zsh
index ea5035e..9a8dde2 100644
--- a/highlighters/main/test-data/param-precommand-option-argument3.zsh
+++ b/highlighters/main/test-data/param-precommand-option-argument3.zsh
@@ -36,7 +36,7 @@ BUFFER='$sudo_u phy1729 ls foo'
 
 expected_region_highlight=(
   '1 7 precommand' # sudo_u
-  '9 15 default "issue #674"' # phy1729
-  '17 18 command "issue #674"' # ls
+  '9 15 default' # phy1729
+  '17 18 command' # ls
   '20 22 default' # foo
 )