diff --git a/docs/en_US/release_notes_8_6.rst b/docs/en_US/release_notes_8_6.rst
index af41dbb1f..edc7cda3d 100644
--- a/docs/en_US/release_notes_8_6.rst
+++ b/docs/en_US/release_notes_8_6.rst
@@ -28,4 +28,5 @@ Housekeeping
 
 Bug fixes
 *********
+  | `Issue #7294 <https://github.com/pgadmin-org/pgadmin4/issues/7294>`_ -  Fixed an issue where double dollar quoted code is treated as string in syntax highlighter.
 
diff --git a/web/package.json b/web/package.json
index 3e462d94b..acd3f4596 100644
--- a/web/package.json
+++ b/web/package.json
@@ -76,7 +76,7 @@
   "dependencies": {
     "@babel/plugin-proposal-class-properties": "^7.10.4",
     "@babel/preset-react": "^7.12.13",
-    "@codemirror/lang-sql": "^6.6.2",
+    "@codemirror/lang-sql": "^6.6.3",
     "@date-io/core": "^1.3.6",
     "@date-io/date-fns": "1.x",
     "@emotion/sheet": "^1.0.1",
diff --git a/web/pgadmin/static/js/components/ReactCodeMirror/extensions/dialect.js b/web/pgadmin/static/js/components/ReactCodeMirror/extensions/dialect.js
index 2850abc13..f2b227ddb 100644
--- a/web/pgadmin/static/js/components/ReactCodeMirror/extensions/dialect.js
+++ b/web/pgadmin/static/js/components/ReactCodeMirror/extensions/dialect.js
@@ -5,7 +5,7 @@ const keywords = PostgreSQL.spec.keywords.replace(/\b\w\b/, '') + ' ' + extraKey
 
 const PgSQL = SQLDialect.define({
   charSetCasts: true,
-  doubleDollarQuotedStrings: true,
+  doubleDollarQuotedStrings: false,
   operatorChars: '+-*/<>=~!@#%^&|`?',
   specialVar: '',
   keywords: keywords,
diff --git a/web/yarn.lock b/web/yarn.lock
index 15fdbd116..1a1990d1c 100644
--- a/web/yarn.lock
+++ b/web/yarn.lock
@@ -2383,9 +2383,9 @@ __metadata:
   languageName: node
   linkType: hard
 
-"@codemirror/lang-sql@npm:^6.6.2":
-  version: 6.6.2
-  resolution: "@codemirror/lang-sql@npm:6.6.2"
+"@codemirror/lang-sql@npm:^6.6.3":
+  version: 6.6.3
+  resolution: "@codemirror/lang-sql@npm:6.6.3"
   dependencies:
     "@codemirror/autocomplete": ^6.0.0
     "@codemirror/language": ^6.0.0
@@ -2393,7 +2393,7 @@ __metadata:
     "@lezer/common": ^1.2.0
     "@lezer/highlight": ^1.0.0
     "@lezer/lr": ^1.0.0
-  checksum: 664b20c65a8fa142f76baec7fe3c7c419e12ee89481fef0083917cc8640256af4945a9c82712ae67c6e96a5f2a46007e1dda8b3ce3d38d61d13da0ed116bcae9
+  checksum: b8e554bda9107107283674a6397cdb4816ad8bb429afd739fdc5e0339ef60170f09bdd93e7dc3eaf7f24ffaec5c7477ee42af7c05cb471990657014fac2fea1e
   languageName: node
   linkType: hard
 
@@ -14946,7 +14946,7 @@ __metadata:
     "@babel/preset-env": ^7.10.2
     "@babel/preset-react": ^7.12.13
     "@babel/preset-typescript": ^7.22.5
-    "@codemirror/lang-sql": ^6.6.2
+    "@codemirror/lang-sql": ^6.6.3
     "@date-io/core": ^1.3.6
     "@date-io/date-fns": 1.x
     "@emotion/core": ^10.0.14