diff --git a/src/code_generation.jl b/src/code_generation.jl
index a3357910c..11840addd 100644
--- a/src/code_generation.jl
+++ b/src/code_generation.jl
@@ -198,6 +198,51 @@ function remove_julia_prompt(s::T) where {T <: AbstractString}
     String(take!(io)) |> strip
 end
 
+# escape dollar sign only if not preceeded by backslash already, ie, unescaped -- use negative lookbehind
+# Useful in cases where we have double nested interpolation, eg, string code -> has string literal -> function with interpolation inside it
+escape_interpolation(s::AbstractString) = replace(s, r"(?<!\\)\$" => String(['\\', '$']))
+
+"""
+    find_subsequence_positions(subseq, seq) -> Vector{Int}
+
+Find all positions of a subsequence `subseq` within a larger sequence `seq`. Used to lookup positions of code blocks in markdown.
+
+This function scans the sequence `seq` and identifies all starting positions where the subsequence `subseq` is found. Both `subseq` and `seq` should be vectors of integers, typically obtained using `codeunits` on strings.
+
+# Arguments
+- `subseq`: A vector of integers representing the subsequence to search for.
+- `seq`: A vector of integers representing the larger sequence in which to search.
+
+# Returns
+- `Vector{Int}`: A vector of starting positions (1-based indices) where the subsequence is found in the sequence.
+
+# Examples
+```julia
+find_subsequence_positions(codeunits("ab"), codeunits("cababcab")) # Returns [2, 5]
+```
+"""
+function find_subsequence_positions(subseq, seq)
+    positions = Int[]
+    len_subseq = length(subseq)
+    len_seq = length(seq)
+    lim = len_seq - len_subseq + 1
+    cur = 1
+    while cur <= lim
+        match = true
+        @inbounds for i in 1:len_subseq
+            if seq[cur + i - 1] != subseq[i]
+                match = false
+                break
+            end
+        end
+        if match
+            push!(positions, cur)
+        end
+        cur += 1
+    end
+    return positions
+end
+
 """
     extract_code_blocks(markdown_content::String) -> Vector{String}
 
@@ -243,17 +288,46 @@ extract_code_blocks(markdown_multiple)
 # Output: ["x = 5", "y = x + 2"]
 ```
 """
-function extract_code_blocks(markdown_content::AbstractString)
-    # Define the pattern for Julia code blocks
-    pattern = r"```julia\n(.*?)\n```"s
-
-    # Find all matches and extract the code
-    matches = eachmatch(pattern, markdown_content)
+function extract_code_blocks(markdown_content::T) where {T <: AbstractString}
+    # Convert content and delimiters to codeunits
+    content_units = codeunits(markdown_content)
+    start_delim_units = codeunits("```julia")
+    end_delim_units = codeunits("```")
+
+    # Find all starting and ending positions of code blocks
+    start_positions = find_subsequence_positions(start_delim_units, content_units)
+    end_positions = setdiff(find_subsequence_positions(end_delim_units, content_units),
+        start_positions)
+    unused_end_positions = trues(length(end_positions))
+
+    # Generate code block position pairs
+    block_positions = Tuple{Int, Int}[]
+    for start_pos in reverse(start_positions)
+        for (i, end_pos) in enumerate(end_positions)
+            if end_pos > start_pos && unused_end_positions[i]
+                push!(block_positions, (start_pos, end_pos))
+                unused_end_positions[i] = false
+                break
+            end
+        end
+    end
 
-    # Extract and clean the code blocks (remove the julia prompt)
-    code_blocks = String[remove_julia_prompt(m.captures[1]) for m in matches]
+    # Filter out nested blocks (only if they have full overlap)
+    filtered_positions = filter(inner -> !any(outer -> (outer[1] < inner[1]) &&
+                (inner[2] < outer[2]),
+            block_positions),
+        block_positions)
+
+    # Extract code blocks
+    eltype_ = typeof(@view(markdown_content[begin:end]))
+    code_blocks = Vector{eltype_}()
+    for (start_pos, end_pos) in filtered_positions
+        code_block = markdown_content[(start_pos + length(start_delim_units)):(end_pos - 1)]
+        # Also remove the julia prompt
+        push!(code_blocks, remove_julia_prompt(strip(code_block)))
+    end
 
-    return code_blocks
+    return reverse(code_blocks) # Reverse to maintain original order
 end
 
 """
diff --git a/test/code_generation.jl b/test/code_generation.jl
index 1f18e7d34..892f253e1 100644
--- a/test/code_generation.jl
+++ b/test/code_generation.jl
@@ -1,6 +1,7 @@
 using PromptingTools: extract_julia_imports
 using PromptingTools: detect_pkg_operation, detect_missing_packages, extract_function_name
 using PromptingTools: has_julia_prompt, remove_julia_prompt, extract_code_blocks, eval!
+using PromptingTools: escape_interpolation, find_subsequence_positions
 
 @testset "extract_imports tests" begin
     @test extract_julia_imports("using Test, LinearAlgebra") ==
@@ -71,6 +72,29 @@ a=\"\"\"
  \"\"\""""
 end
 
+@testset "escape_interpolation" begin
+    @test escape_interpolation("aaa") == "aaa"
+    @test escape_interpolation("\$") == String(['\\', '$'])
+end
+
+@testset "find_subsequence_positions" begin
+    # Test 1: Basic functionality
+    @test find_subsequence_positions(codeunits("ab"), codeunits("cababcab")) == [2, 4, 7]
+
+    # Test 2: Subsequence not in sequence
+    @test find_subsequence_positions(codeunits("xyz"), codeunits("hello")) == []
+
+    # Test 3: Empty subsequence -- should return all positions+1
+    @test find_subsequence_positions(codeunits(""), codeunits("hello")) == 1:6
+
+    # Test 4: Subsequence longer than sequence
+    @test find_subsequence_positions(codeunits("longsubsequence"), codeunits("short")) == []
+
+    # Test 5: Repeated characters
+    @test find_subsequence_positions(codeunits("ana"), codeunits("banana")) == [2, 4]
+    @test find_subsequence_positions(codeunits("a"), codeunits("a"^6)) == 1:6
+end
+
 @testset "extract_code_blocks" begin
     # Single Julia Code Block
     markdown_content = """
@@ -79,7 +103,8 @@ end
     println("Hello, World!")
     ```
     """
-    @test extract_code_blocks(markdown_content) == ["println(\"Hello, World!\")"]
+    @test extract_code_blocks(markdown_content) ==
+          SubString{String}["println(\"Hello, World!\")"]
 
     # Multiple Julia Code Blocks
     markdown_content = """
@@ -92,7 +117,7 @@ end
     ```
     """
     @test extract_code_blocks(markdown_content) ==
-          ["println(\"First Block\")", "println(\"Second Block\")"]
+          SubString{String}["println(\"First Block\")", "println(\"Second Block\")"]
 
     # No Julia Code Blocks
     markdown_content = """
@@ -109,9 +134,10 @@ end
     println("This is Julia")
     ```
     """
-    @test extract_code_blocks(markdown_content) == ["println(\"This is Julia\")"]
+    @test extract_code_blocks(markdown_content) ==
+          SubString{String}["println(\"This is Julia\")"]
 
-    # Nested Code Blocks"
+    # Nested Blocks (plain block outer)
     markdown_content = """
     ```
     ```julia
@@ -119,7 +145,28 @@ end
     ```
     ```
     """
-    @test extract_code_blocks(markdown_content) == ["println(\"Nested Block\")"]
+    @test extract_code_blocks(markdown_content) ==
+          SubString{String}["println(\"Nested Block\")"]
+
+    # Nested Julia code blocks
+    markdown_example = """
+    ```julia
+    # Outer Julia code block
+
+    # An example of a nested Julia code block in markdown
+    \"\"\"
+    ```julia
+    x = 5
+    println(x)
+    ```
+    \"\"\"
+
+    y = 10
+    println(y)
+    ```
+    """
+    @test extract_code_blocks(markdown_example) ==
+          SubString{String}["# Outer Julia code block\n\n# An example of a nested Julia code block in markdown\n\"\"\"\n```julia\nx = 5\nprintln(x)\n```\n\"\"\"\n\ny = 10\nprintln(y)"]
 end
 
 @testset "extract_function_name" begin