diff --git a/usr.bin/make/unit-tests/varmod.exp b/usr.bin/make/unit-tests/varmod.exp
index 39a9383953dd..e4257bb0b596 100644
--- a/usr.bin/make/unit-tests/varmod.exp
+++ b/usr.bin/make/unit-tests/varmod.exp
@@ -1 +1,6 @@
-exit status 0
+make: "varmod.mk" line 42: To escape a dollar, use \$, not $$, at "$$:L} != """
+make: "varmod.mk" line 42: Invalid variable name ':', at "$:L} != """
+make: "varmod.mk" line 47: Dollar followed by nothing
+make: Fatal errors encountered -- cannot continue
+make: stopped in unit-tests
+exit status 1
diff --git a/usr.bin/make/unit-tests/varmod.mk b/usr.bin/make/unit-tests/varmod.mk
index 68bf165bf72b..0a2a4c52c29b 100644
--- a/usr.bin/make/unit-tests/varmod.mk
+++ b/usr.bin/make/unit-tests/varmod.mk
@@ -1,8 +1,51 @@
-# $NetBSD: varmod.mk,v 1.2 2020/08/16 14:25:16 rillig Exp $
+# $NetBSD: varmod.mk,v 1.3 2020/09/13 07:42:20 rillig Exp $
 #
 # Tests for variable modifiers, such as :Q, :S,from,to or :Ufallback.
 
-# TODO: Implementation
+DOLLAR1=	$$
+DOLLAR2=	${:U\$}
 
-all:
-	@:;
+# To get a single '$' sign in the value of a variable expression, it has to
+# be written as '$$' in a literal variable value.
+#
+# See Var_Parse, where it calls Var_Subst.
+.if ${DOLLAR1} != "\$"
+.  error
+.endif
+
+# Another way to get a single '$' sign is to use the :U modifier.  In the
+# argument of that modifier, a '$' is escaped using the backslash instead.
+#
+# See Var_Parse, where it calls Var_Subst.
+.if ${DOLLAR2} != "\$"
+.  error
+.endif
+
+# It is also possible to use the :U modifier directly in the expression.
+#
+# See Var_Parse, where it calls Var_Subst.
+.if ${:U\$} != "\$"
+.  error
+.endif
+
+# XXX: As of 2020-09-13, it is not possible to use '$$' in a variable name
+# to mean a single '$'.  This contradicts the manual page, which says that
+# '$' can be escaped as '$$'.
+.if ${$$:L} != ""
+.  error
+.endif
+
+# In lint mode, make prints helpful error messages.
+# For compatibility, make does not print these error messages in normal mode.
+# Should it?
+.MAKEFLAGS: -dL
+.if ${$$:L} != ""
+.  error
+.endif
+
+# A '$' followed by nothing is an error as well.
+.if ${:Uword:@word@${word}$@} != "word"
+.  error
+.endif
+
+all: # nothing
diff --git a/usr.bin/make/var.c b/usr.bin/make/var.c
index fd826f57304b..44e66ee4a2e3 100644
--- a/usr.bin/make/var.c
+++ b/usr.bin/make/var.c
@@ -1,4 +1,4 @@
-/*	$NetBSD: var.c,v 1.506 2020/09/13 05:55:39 rillig Exp $	*/
+/*	$NetBSD: var.c,v 1.507 2020/09/13 07:42:20 rillig Exp $	*/
 
 /*
  * Copyright (c) 1988, 1989, 1990, 1993
@@ -69,14 +69,14 @@
  */
 
 #ifndef MAKE_NATIVE
-static char rcsid[] = "$NetBSD: var.c,v 1.506 2020/09/13 05:55:39 rillig Exp $";
+static char rcsid[] = "$NetBSD: var.c,v 1.507 2020/09/13 07:42:20 rillig Exp $";
 #else
 #include <sys/cdefs.h>
 #ifndef lint
 #if 0
 static char sccsid[] = "@(#)var.c	8.3 (Berkeley) 3/19/94";
 #else
-__RCSID("$NetBSD: var.c,v 1.506 2020/09/13 05:55:39 rillig Exp $");
+__RCSID("$NetBSD: var.c,v 1.507 2020/09/13 07:42:20 rillig Exp $");
 #endif
 #endif /* not lint */
 #endif
@@ -3369,6 +3369,27 @@ ParseVarname(const char **pp, char startc, char endc,
     return Buf_Destroy(&buf, FALSE);
 }
 
+static Boolean
+ValidShortVarname(char varname, const char *start)
+{
+    if (varname != '\0' && strchr(")}:$", varname) == NULL)
+	return TRUE;
+
+    if (!DEBUG(LINT))
+	return FALSE;
+
+    if (varname == '$')
+	Parse_Error(PARSE_FATAL,
+		    "To escape a dollar, use \\$, not $$, at \"%s\"", start);
+    else if (varname == '\0')
+	Parse_Error(PARSE_FATAL, "Dollar followed by nothing");
+    else
+	Parse_Error(PARSE_FATAL,
+		    "Invalid variable name '%c', at \"%s\"", varname, start);
+
+    return FALSE;
+}
+
 /*-
  *-----------------------------------------------------------------------
  * Var_Parse --
@@ -3454,8 +3475,7 @@ Var_Parse(const char **pp, GNode *ctxt, VarEvalFlags eflags, void **freePtr)
 	 * value if it exists.
 	 */
 
-	/* Error out some really stupid names */
-	if (startc == '\0' || strchr(")}:$", startc)) {
+	if (!ValidShortVarname(startc, start)) {
 	    (*pp)++;
 	    return var_Error;
 	}
@@ -3572,7 +3592,7 @@ Var_Parse(const char **pp, GNode *ctxt, VarEvalFlags eflags, void **freePtr)
      * return.
      */
     nstr = Buf_GetAll(&v->val, NULL);
-    if (strchr(nstr, '$') != NULL && (eflags & VARE_WANTRES) != 0) {
+    if (strchr(nstr, '$') != NULL && (eflags & VARE_WANTRES)) {
 	nstr = Var_Subst(nstr, ctxt, eflags);
 	*freePtr = nstr;
     }