diff --git a/lib/coffee_script/lexer.js b/lib/coffee_script/lexer.js
index 1f1f2d13..3070ad1d 100644
--- a/lib/coffee_script/lexer.js
+++ b/lib/coffee_script/lexer.js
@@ -29,7 +29,7 @@
   STRING_NEWLINES = /\n[ \t]*/g;
   COMMENT_CLEANER = /(^[ \t]*#|\n[ \t]*$)/mg;
   NO_NEWLINE = /^([+\*&|\/\-%=<>:!.\\][<>=&|]*|and|or|is|isnt|not|delete|typeof|instanceof)$/;
-  HEREDOC_INDENT = /^[ \t]+/g;
+  HEREDOC_INDENT = /^[ \t]+/mg;
   // Tokens which a regular expression will never immediately follow, but which
   // a division operator might.
   // See: http://www.mozilla.org/js/language/js20-2002-04/rationale/syntax.html#regular-expressions
@@ -148,8 +148,8 @@
       return false;
     }
     doc = match[2] || match[4];
-    indent = doc.match(HEREDOC_INDENT).sort()[0];
-    doc = doc.replace(new RegExp("^" + indent, 'g'), '').replace(MULTILINER, "\\n").replace('"', '\\"');
+    indent = (doc.match(HEREDOC_INDENT) || ['']).sort()[0];
+    doc = doc.replace(new RegExp("^" + indent, 'gm'), '').replace(MULTILINER, "\\n").replace('"', '\\"');
     this.token('STRING', '"' + doc + '"');
     this.line += this.count(match[1], "\n");
     this.i += match[1].length;
diff --git a/src/lexer.coffee b/src/lexer.coffee
index 48f4031f..69ab3cfc 100644
--- a/src/lexer.coffee
+++ b/src/lexer.coffee
@@ -43,7 +43,7 @@ MULTILINER      : /\n/g
 STRING_NEWLINES : /\n[ \t]*/g
 COMMENT_CLEANER : /(^[ \t]*#|\n[ \t]*$)/mg
 NO_NEWLINE      : /^([+\*&|\/\-%=<>:!.\\][<>=&|]*|and|or|is|isnt|not|delete|typeof|instanceof)$/
-HEREDOC_INDENT  : /^[ \t]+/g
+HEREDOC_INDENT  : /^[ \t]+/mg
 
 # Tokens which a regular expression will never immediately follow, but which
 # a division operator might.
@@ -126,8 +126,8 @@ lex::string_token: ->
 lex::heredoc_token: ->
   return false unless match = @chunk.match(HEREDOC)
   doc: match[2] or match[4]
-  indent: doc.match(HEREDOC_INDENT).sort()[0]
-  doc: doc.replace(new RegExp("^" + indent, 'g'), '')
+  indent: (doc.match(HEREDOC_INDENT) or ['']).sort()[0]
+  doc: doc.replace(new RegExp("^" + indent, 'gm'), '')
           .replace(MULTILINER, "\\n")
           .replace('"', '\\"')
   @token 'STRING', '"' + doc + '"'