diff --git a/src/compiler/commandLineParser.ts b/src/compiler/commandLineParser.ts
index e5950db05b6..d69b91bd5b4 100644
--- a/src/compiler/commandLineParser.ts
+++ b/src/compiler/commandLineParser.ts
@@ -430,8 +430,9 @@ namespace ts {
             let nextChar = (i + 1 < jsonText.length) ? jsonText.charAt(i + 1) : undefined;
             if (processingString) {
                 if (currentChar === "\\"
-                    && nextChar === "\"") {
-                    // Escaped quote consume the 2 characters
+                    && nextChar !== undefined) {
+                    // Found an escaped character 
+                    // consume the \ and the escaped char
                     result += currentChar;
                     result += nextChar;
                     i += 1;
diff --git a/tests/cases/unittests/tsconfigParsing.ts b/tests/cases/unittests/tsconfigParsing.ts
index 3da1acb83c3..f48593b3169 100644
--- a/tests/cases/unittests/tsconfigParsing.ts
+++ b/tests/cases/unittests/tsconfigParsing.ts
@@ -77,6 +77,22 @@ module ts {
       	}`, { config: { exclude: ["xx/*file.d.ts*/"] } });
     });
     
+    it("handles escaped characters in strings correctly", () => {
+      assertParseResult(
+        `{
+      		"exclude": [
+  					"xx\\"//files"
+  				]
+      	}`, { config: { exclude: ["xx\"//files"] } });
+        
+      assertParseResult(
+        `{
+      		"exclude": [
+  					"xx\\\\" // end of line comment
+  				]
+      	}`, { config: { exclude: ["xx\\"] } });
+     });
+    
     it("returns object with error when json is invalid", () => {
        assertParseError("invalid");      
     });