diff --git a/README.md b/README.md
index 317c3ac..a105915 100644
--- a/README.md
+++ b/README.md
@@ -35,6 +35,12 @@ acorn.Parser.extend(jsx({ allowNamespaces: false }))
 
 Note that by default `allowNamespaces` is enabled for spec compliancy.
 
+By default, HTML entities are parsed and transformed within strings. To disable this functionality (and treat HTML entities as plain text), you can provide `transformEntities: false` as an option:
+
+```javascript
+acorn.Parser.extend(jsx({ transformEntities: false }))
+```
+
 ## License
 
 This plugin is issued under the [MIT license](./LICENSE).
diff --git a/index.js b/index.js
index 004e080..cc33ff6 100644
--- a/index.js
+++ b/index.js
@@ -75,7 +75,8 @@ module.exports = function(options) {
   return function(Parser) {
     return plugin({
       allowNamespaces: options.allowNamespaces !== false,
-      allowNamespacedObjects: !!options.allowNamespacedObjects
+      allowNamespacedObjects: !!options.allowNamespacedObjects,
+      transformEntities: options.transformEntities !== false
     }, Parser);
   };
 };
@@ -130,12 +131,6 @@ function plugin(options, Parser) {
           out += this.input.slice(chunkStart, this.pos);
           return this.finishToken(tok.jsxText, out);
 
-        case 38: // '&'
-          out += this.input.slice(chunkStart, this.pos);
-          out += this.jsx_readEntity();
-          chunkStart = this.pos;
-          break;
-
         case 62: // '>'
         case 125: // '}'
           this.raise(
@@ -144,6 +139,15 @@ function plugin(options, Parser) {
               (ch === 62 ? ">" : "}") + "` or " + "`{\"" + this.input[this.pos] + "\"}" + "`?"
           );
 
+        case 38: // '&' (NOTE: must come directly BEFORE default case)
+          if (options.transformEntities) {
+            out += this.input.slice(chunkStart, this.pos);
+            out += this.jsx_readEntity();
+            chunkStart = this.pos;
+            break;
+          }
+          /* intentional fallthrough */
+
         default:
           if (isNewLine(ch)) {
             out += this.input.slice(chunkStart, this.pos);
diff --git a/test/tests-jsx.js b/test/tests-jsx.js
index b53549d..59d07fa 100644
--- a/test/tests-jsx.js
+++ b/test/tests-jsx.js
@@ -4634,6 +4634,59 @@ test('<A>foo&gt;</A>', {
     }
   ]
 });
+test('<A>foo&gt;</A>', {
+  "type": "Program",
+  "start": 0,
+  "end": 14,
+  "body": [
+    {
+      "type": "ExpressionStatement",
+      "start": 0,
+      "end": 14,
+      "expression": {
+        "type": "JSXElement",
+        "start": 0,
+        "end": 14,
+        "openingElement": {
+          "type": "JSXOpeningElement",
+          "start": 0,
+          "end": 3,
+          "attributes": [],
+          "name": {
+            "type": "JSXIdentifier",
+            "start": 1,
+            "end": 2,
+            "name": "A"
+          },
+          "selfClosing": false
+        },
+        "closingElement": {
+          "type": "JSXClosingElement",
+          "start": 10,
+          "end": 14,
+          "name": {
+            "type": "JSXIdentifier",
+            "start": 12,
+            "end": 13,
+            "name": "A"
+          }
+        },
+        "children": [
+          {
+            "type": "JSXText",
+            "start": 3,
+            "end": 10,
+            "value": "foo&gt;",
+            "raw": "foo&gt;"
+          }
+        ]
+      }
+    }
+  ]
+}, {
+}, {
+  transformEntities: false
+});
 test('function*it(){yield <a></a>}', {
   "type": "Program",
   "start": 0,