diff --git a/doc-src/SASS_CHANGELOG.md b/doc-src/SASS_CHANGELOG.md
index 7dadcdf6..ffc13ece 100644
--- a/doc-src/SASS_CHANGELOG.md
+++ b/doc-src/SASS_CHANGELOG.md
@@ -5,6 +5,34 @@
 
 ## 3.0.5 (Unreleased)
 
+### `#{}` Interpolation in Properties
+
+Previously, using `#{}` in some places in properties
+would cause a syntax error.
+Now it can be used just about anywhere.
+
+Note that when `#{}` is used near operators like `/`,
+those operators are treated as plain CSS
+rather than math operators.
+For example:
+
+    p {
+      $font-size: 12px;
+      $line-height: 30px;
+      font: #{$font-size}/#{$line-height};
+    }
+
+is compiled to:
+
+    p {
+      font: 12px/30px;
+    }
+
+This is useful, since normally {file:SASS_REFERENCE.md#division-and-slash
+a slash with variables is treated as division}.
+
+### Rails 3 Support
+
 * Fix Sass configuration under Rails 3.
   Thanks [Dan Cheail](http://github.com/codeape).
 
diff --git a/doc-src/SASS_REFERENCE.md b/doc-src/SASS_REFERENCE.md
index 9e0bea88..5f3afbe5 100644
--- a/doc-src/SASS_REFERENCE.md
+++ b/doc-src/SASS_REFERENCE.md
@@ -614,6 +614,7 @@ and equality operators
 are supported for all types.
 
 ##### Division and `/`
+{#division-and-slash}
 
 CSS allows `/` to appear in property values
 as a way of separating numbers.
@@ -648,6 +649,22 @@ is compiled to:
       height: 250px;
       margin-left: 9px; }
 
+If you want to use variables along with a plain CSS `/`,
+you can use `#{}` to insert them.
+For example:
+
+    p {
+      $font-size: 12px;
+      $line-height: 30px;
+      font: #{$font-size}/#{$line-height};
+    }
+
+is compiled to:
+
+    p {
+      font: 12px/30px;
+    }
+
 #### Color Operations
 
 All arithmetic operations are supported for color values,
@@ -820,6 +837,24 @@ is compiled to:
     p.foo {
       border-color: blue; }
 
+It's also possible to use `#{}` to put SassScript into property values.
+In most cases this isn't any better than using a variable,
+but using `#{}` does mean that any operations near it
+will be treated as plain CSS.
+For example:
+
+    p {
+      $font-size: 12px;
+      $line-height: 30px;
+      font: #{$font-size}/#{$line-height};
+    }
+
+is compiled to:
+
+    p {
+      font: 12px/30px;
+    }
+
 ### Variable Defaults: `!default`
 
 You can assign to variables if they aren't already assigned
diff --git a/lib/sass/script/interpolation.rb b/lib/sass/script/interpolation.rb
index 5ed0039d..e016fdb8 100644
--- a/lib/sass/script/interpolation.rb
+++ b/lib/sass/script/interpolation.rb
@@ -10,12 +10,17 @@ module Sass::Script
     # @param after [Node] The SassScript after the interpolation
     # @param wb [Boolean] Whether there was whitespace between `before` and `#{`
     # @param wa [Boolean] Whether there was whitespace between `}` and `after`
-    def initialize(before, mid, after, wb, wa)
+    # @param originally_text [Boolean]
+    #   Whether the original format of the interpolation was plain text,
+    #   not an interpolation.
+    #   This is used when converting back to SassScript.
+    def initialize(before, mid, after, wb, wa, originally_text = false)
       @before = before
       @mid = mid
       @after = after
       @whitespace_before = wb
       @whitespace_after = wa
+      @originally_text = originally_text
     end
 
     # @return [String] A human-readable s-expression representation of the interpolation
@@ -28,7 +33,9 @@ module Sass::Script
       res = ""
       res << @before.to_sass(opts) if @before
       res << ' ' if @before && @whitespace_before
-      res << '#{' << @mid.to_sass(opts) << '}'
+      res << '#{' unless @originally_text
+      res << @mid.to_sass(opts)
+      res << '}' unless @originally_text
       res << ' ' if @after && @whitespace_after
       res << @after.to_sass(opts) if @after
       res
diff --git a/lib/sass/script/lexer.rb b/lib/sass/script/lexer.rb
index d88e5da1..c3387dcd 100644
--- a/lib/sass/script/lexer.rb
+++ b/lib/sass/script/lexer.rb
@@ -175,6 +175,11 @@ module Sass
         @scanner.eos? && @tok.nil?
       end
 
+      # @return [Boolean] Whether or not the last token lexed was `:end_interpolation`.
+      def after_interpolation?
+        @prev && @prev.type == :end_interpolation
+      end
+
       # Raise an error to the effect that `name` was expected in the input stream
       # and wasn't found.
       #
@@ -327,10 +332,6 @@ MESSAGE
       def current_position
         @offset + 1
       end
-
-      def after_interpolation?
-        @prev && @prev.type == :end_interpolation
-      end
     end
   end
 end
diff --git a/lib/sass/script/parser.rb b/lib/sass/script/parser.rb
index aa4eda0f..55b0782e 100644
--- a/lib/sass/script/parser.rb
+++ b/lib/sass/script/parser.rb
@@ -150,8 +150,10 @@ module Sass
         def production(name, sub, *ops)
           class_eval <<RUBY
             def #{name}
+              interp = try_ops_after_interp(#{ops.inspect}, #{name.inspect}) and return interp
               return unless e = #{sub}
               while tok = try_tok(#{ops.map {|o| o.inspect}.join(', ')})
+                interp = try_op_before_interp(tok, e) and return interp
                 line = @lexer.line
                 e = Operation.new(e, assert_expr(#{sub.inspect}), tok.type)
                 e.line = line
@@ -164,8 +166,9 @@ RUBY
         def unary(op, sub)
           class_eval <<RUBY
             def unary_#{op}
-              return #{sub} unless try_tok(:#{op})
-              line = @lexer.line
+              return #{sub} unless tok = try_tok(:#{op})
+              interp = try_op_before_interp(tok) and return interp
+              line = @lexer.line 
               op = UnaryOperation.new(assert_expr(:unary_#{op}), :#{op})
               op.line = line
               op
@@ -182,8 +185,31 @@ RUBY
       production :expr, :interpolation, :comma
       production :equals, :interpolation, :single_eq
 
-      def interpolation
-        e = concat
+      def try_op_before_interp(op, prev = nil)
+        return unless @lexer.peek.type == :begin_interpolation
+        wb = @lexer.whitespace?(op)
+        str = Script::String.new(Lexer::OPERATORS_REVERSE[op.type])
+        str.line = @lexer.line
+        interp = Script::Interpolation.new(prev, str, nil, wb, !:wa, :originally_text)
+        interp.line = @lexer.line
+        interpolation(interp)
+      end
+
+      def try_ops_after_interp(ops, name)
+        return unless @lexer.after_interpolation?
+        return unless op = try_tok(*ops)
+        interp = try_op_before_interp(op) and return interp
+
+        wa = @lexer.whitespace?
+        str = Script::String.new(Lexer::OPERATORS_REVERSE[op.type])
+        str.line = @lexer.line
+        interp = Script::Interpolation.new(nil, str, assert_expr(name), !:wb, wa, :originally_text)
+        interp.line = @lexer.line
+        return interp
+      end
+
+      def interpolation(first = concat)
+        e = first
         while interp = try_tok(:begin_interpolation)
           wb = @lexer.whitespace?(interp)
           line = @lexer.line
diff --git a/test/sass/script_conversion_test.rb b/test/sass/script_conversion_test.rb
index 2e95cd26..08c17bc0 100755
--- a/test/sass/script_conversion_test.rb
+++ b/test/sass/script_conversion_test.rb
@@ -158,6 +158,49 @@ RUBY
     assert_renders "\#{$bar}"
   end
 
+  def test_interpolation_in_function
+    assert_renders 'flabnabbit(#{1 + "foo"})'
+    assert_renders 'flabnabbit($foo #{1 + "foo"}$baz)'
+    assert_renders 'flabnabbit($foo #{1 + "foo"}#{2 + "bar"} $baz)'
+  end
+
+  def test_interpolation_near_operators
+    assert_renders '#{1 + 2} , #{3 + 4}'
+    assert_renders '#{1 + 2}, #{3 + 4}'
+    assert_renders '#{1 + 2} ,#{3 + 4}'
+    assert_renders '#{1 + 2},#{3 + 4}'
+
+    assert_renders '3 / #{3 + 4}'
+    assert_renders '3 /#{3 + 4}'
+    assert_renders '3/ #{3 + 4}'
+    assert_renders '3/#{3 + 4}'
+
+    assert_renders '#{1 + 2} * 7'
+    assert_renders '#{1 + 2}* 7'
+    assert_renders '#{1 + 2} *7'
+    assert_renders '#{1 + 2}*7'
+
+    assert_renders '-#{1 + 2}'
+    assert_renders '- #{1 + 2}'
+
+    assert_renders '5 + #{1 + 2} * #{3 + 4}'
+    assert_renders '5 +#{1 + 2} * #{3 + 4}'
+    assert_renders '5+#{1 + 2} * #{3 + 4}'
+    assert_renders '#{1 + 2} * #{3 + 4} + 5'
+    assert_renders '#{1 + 2} * #{3 + 4}+ 5'
+    assert_renders '#{1 + 2} * #{3 + 4}+5'
+
+    assert_equal '5 / #{1 + 2} + #{3 + 4}', render('5 / (#{1 + 2} + #{3 + 4})')
+    assert_equal '5 / #{1 + 2} + #{3 + 4}', render('5 /(#{1 + 2} + #{3 + 4})')
+    assert_equal '5 / #{1 + 2} + #{3 + 4}', render('5 /( #{1 + 2} + #{3 + 4} )')
+    assert_equal '#{1 + 2} + #{3 + 4} / 5', render('(#{1 + 2} + #{3 + 4}) / 5')
+    assert_equal '#{1 + 2} + #{3 + 4} / 5', render('(#{1 + 2} + #{3 + 4})/ 5')
+    assert_equal '#{1 + 2} + #{3 + 4} / 5', render('( #{1 + 2} + #{3 + 4} )/ 5')
+
+    assert_renders '#{1 + 2} + 2 + 3'
+    assert_renders '#{1 + 2} +2 + 3'
+  end
+
   def test_string_interpolation
     assert_renders '"foo#{$bar}baz"'
     assert_renders '"foo #{$bar}baz"'
diff --git a/test/sass/script_test.rb b/test/sass/script_test.rb
index afcb8f84..770a8733 100755
--- a/test/sass/script_test.rb
+++ b/test/sass/script_test.rb
@@ -97,7 +97,63 @@ class SassScriptTest < Test::Unit::TestCase
     assert_equal Sass::Script::String.new("foo/bar"), eval("foo/bar")
   end
 
-  def test_interpolation
+  def test_basic_interpolation
+    assert_equal "foo3bar", resolve("foo\#{1 + 2}bar")
+    assert_equal "foo3 bar", resolve("foo\#{1 + 2} bar")
+    assert_equal "foo 3bar", resolve("foo \#{1 + 2}bar")
+    assert_equal "foo 3 bar", resolve("foo \#{1 + 2} bar")
+    assert_equal "foo 35 bar", resolve("foo \#{1 + 2}\#{2 + 3} bar")
+    assert_equal "foo 3 5 bar", resolve("foo \#{1 + 2} \#{2 + 3} bar")
+    assert_equal "3bar", resolve("\#{1 + 2}bar")
+    assert_equal "foo3", resolve("foo\#{1 + 2}")
+    assert_equal "3", resolve("\#{1 + 2}")
+  end
+
+  def test_interpolation_in_function
+    assert_equal 'flabnabbit(1foo)', resolve('flabnabbit(#{1 + "foo"})')
+    assert_equal 'flabnabbit(foo 1foobaz)', resolve('flabnabbit(foo #{1 + "foo"}baz)')
+    assert_equal('flabnabbit(foo 1foo2bar baz)',
+      resolve('flabnabbit(foo #{1 + "foo"}#{2 + "bar"} baz)'))
+  end
+
+  def test_interpolation_near_operators
+    assert_equal '3 , 7', resolve('#{1 + 2} , #{3 + 4}')
+    assert_equal '3, 7', resolve('#{1 + 2}, #{3 + 4}')
+    assert_equal '3 ,7', resolve('#{1 + 2} ,#{3 + 4}')
+    assert_equal '3,7', resolve('#{1 + 2},#{3 + 4}')
+
+    assert_equal '3 / 7', resolve('3 / #{3 + 4}')
+    assert_equal '3 /7', resolve('3 /#{3 + 4}')
+    assert_equal '3/ 7', resolve('3/ #{3 + 4}')
+    assert_equal '3/7', resolve('3/#{3 + 4}')
+
+    assert_equal '3 * 7', resolve('#{1 + 2} * 7')
+    assert_equal '3* 7', resolve('#{1 + 2}* 7')
+    assert_equal '3 *7', resolve('#{1 + 2} *7')
+    assert_equal '3*7', resolve('#{1 + 2}*7')
+
+    assert_equal '-3', resolve('-#{1 + 2}')
+    assert_equal '- 3', resolve('- #{1 + 2}')
+
+    assert_equal '5 + 3 * 7', resolve('5 + #{1 + 2} * #{3 + 4}')
+    assert_equal '5 +3 * 7', resolve('5 +#{1 + 2} * #{3 + 4}')
+    assert_equal '5+3 * 7', resolve('5+#{1 + 2} * #{3 + 4}')
+    assert_equal '3 * 7 + 5', resolve('#{1 + 2} * #{3 + 4} + 5')
+    assert_equal '3 * 7+ 5', resolve('#{1 + 2} * #{3 + 4}+ 5')
+    assert_equal '3 * 7+5', resolve('#{1 + 2} * #{3 + 4}+5')
+
+    assert_equal '5/3 + 7', resolve('5 / (#{1 + 2} + #{3 + 4})')
+    assert_equal '5/3 + 7', resolve('5 /(#{1 + 2} + #{3 + 4})')
+    assert_equal '5/3 + 7', resolve('5 /( #{1 + 2} + #{3 + 4} )')
+    assert_equal '3 + 7/5', resolve('(#{1 + 2} + #{3 + 4}) / 5')
+    assert_equal '3 + 7/5', resolve('(#{1 + 2} + #{3 + 4})/ 5')
+    assert_equal '3 + 7/5', resolve('( #{1 + 2} + #{3 + 4} )/ 5')
+
+    assert_equal '3 + 5', resolve('#{1 + 2} + 2 + 3')
+    assert_equal '3 +5', resolve('#{1 + 2} +2 + 3')
+  end
+
+  def test_string_interpolation
     assert_equal "foo bar, baz bang", resolve('"foo #{"bar"}, #{"baz"} bang"')
     assert_equal "foo bar baz bang", resolve('"foo #{"#{"ba" + "r"} baz"} bang"')
     assert_equal 'foo #{bar baz} bang', resolve('"foo \#{#{"ba" + "r"} baz} bang"')
diff --git a/test/sass/scss/scss_test.rb b/test/sass/scss/scss_test.rb
index 382ccb28..3ea4b55a 100755
--- a/test/sass/scss/scss_test.rb
+++ b/test/sass/scss/scss_test.rb
@@ -727,54 +727,6 @@ div { -foo-\#{$a}-\#{$b}-foo: foo }
 SCSS
   end
 
-  def test_basic_prop_val_interpolation
-    assert_equal <<CSS, render(<<SCSS)
-foo {
-  bar: foo 3 baz; }
-CSS
-foo {bar: foo \#{1 + 2} baz}
-SCSS
-    assert_equal <<CSS, render(<<SCSS)
-foo {
-  bar: foo3 baz; }
-CSS
-foo {bar: foo\#{1 + 2} baz}
-SCSS
-    assert_equal <<CSS, render(<<SCSS)
-foo {
-  bar: foo 3, baz; }
-CSS
-foo {bar: foo \#{1 + 2},baz}
-SCSS
-  end
-
-  def test_prop_val_only_interpolation
-    assert_equal <<CSS, render(<<SCSS)
-foo {
-  bar: bazbang; }
-CSS
-foo {bar: \#{"baz" + "bang"}}
-SCSS
-  end
-
-  def test_prop_val_interpolation_in_string
-    assert_equal <<CSS, render(<<SCSS)
-foo {
-  bar: "bizzle bazbang bop"; }
-CSS
-foo {bar: "bizzle \#{"baz" + "bang"} bop"}
-SCSS
-  end
-
-  def test_prop_val_interpolation_in_function
-    assert_equal <<CSS, render(<<SCSS)
-foo {
-  bar: flabnabbit(1foo); }
-CSS
-foo {bar: flabnabbit(\#{1 + "foo"})}
-SCSS
-  end
-
   def test_basic_prop_name_interpolation
     assert_equal <<CSS, render(<<SCSS)
 foo {