diff --git a/sqlit/domains/query/app/multi_statement.py b/sqlit/domains/query/app/multi_statement.py
index fd13d715..381a97f6 100644
--- a/sqlit/domains/query/app/multi_statement.py
+++ b/sqlit/domains/query/app/multi_statement.py
@@ -19,7 +19,8 @@
 def _iter_sql_chars(sql: str) -> Iterator[tuple[int, str, bool]]:
     """Iterate through SQL characters, tracking string literal context.
 
-    Handles escape sequences (backslash) and SQL-style doubled quotes.
+    Handles escape sequences (backslash), SQL-style doubled quotes,
+    and PostgreSQL dollar-quoted strings ($$ or $tag$).
 
     Yields:
         (index, char, outside_string) tuples where outside_string is True
@@ -27,9 +28,24 @@ def _iter_sql_chars(sql: str) -> Iterator[tuple[int, str, bool]]:
     """
     in_single_quote = False
     in_double_quote = False
+    in_dollar_tag: str | None = None
     i = 0
 
     while i < len(sql):
+        # If inside a dollar-quoted string, check for the closing tag
+        if in_dollar_tag is not None:
+            if sql[i:].startswith(in_dollar_tag):
+                # Yield the characters of the closing tag as inside string
+                for offset in range(len(in_dollar_tag)):
+                    yield (i + offset, sql[i + offset], False)
+                i += len(in_dollar_tag)
+                in_dollar_tag = None
+                continue
+            else:
+                yield (i, sql[i], False)
+                i += 1
+                continue
+
         char = sql[i]
 
         # Handle escape sequences in strings
@@ -51,6 +67,18 @@ def _iter_sql_chars(sql: str) -> Iterator[tuple[int, str, bool]]:
             i += 2
             continue
 
+        # Check for PostgreSQL dollar-quoted string start
+        if char == "$" and not in_single_quote and not in_double_quote:
+            # Match $[a-zA-Z_][a-zA-Z0-9_]*$ or $$
+            match = re.match(r"^\$([a-zA-Z_][a-zA-Z0-9_]*)?\$", sql[i:])
+            if match:
+                delimiter = match.group(0)
+                in_dollar_tag = delimiter
+                for offset in range(len(delimiter)):
+                    yield (i + offset, sql[i + offset], False)
+                i += len(delimiter)
+                continue
+
         # Toggle quote state and yield
         if char == "'" and not in_double_quote:
             in_single_quote = not in_single_quote
diff --git a/tests/unit/test_multi_statement.py b/tests/unit/test_multi_statement.py
index 21e33077..617abb2c 100644
--- a/tests/unit/test_multi_statement.py
+++ b/tests/unit/test_multi_statement.py
@@ -76,6 +76,55 @@ def test_handles_multiline_statements(self):
 
         assert len(statements) == 2
 
+    def test_preserves_semicolons_in_dollar_quoted_strings(self):
+        """Should not split on semicolons inside dollar-quoted strings."""
+        from sqlit.domains.query.app.multi_statement import split_statements
+
+        query = """
+        CREATE OR REPLACE FUNCTION example()
+        RETURNS void AS $$
+        BEGIN
+            INSERT INTO t (x) VALUES ('a;b');
+        END;
+        $$ LANGUAGE plpgsql;
+        SELECT 1;
+        """
+        statements = split_statements(query)
+
+        assert len(statements) == 2
+        assert "CREATE OR REPLACE FUNCTION" in statements[0]
+        assert "SELECT 1" in statements[1]
+
+    def test_preserves_semicolons_in_named_dollar_quoted_strings(self):
+        """Should not split on semicolons inside named dollar-quoted strings."""
+        from sqlit.domains.query.app.multi_statement import split_statements
+
+        query = """
+        CREATE OR REPLACE FUNCTION example()
+        RETURNS void AS $func_tag$
+        BEGIN
+            INSERT INTO t (x) VALUES ('a;b');
+        END;
+        $func_tag$ LANGUAGE plpgsql;
+        SELECT 1;
+        """
+        statements = split_statements(query)
+
+        assert len(statements) == 2
+        assert "CREATE OR REPLACE FUNCTION" in statements[0]
+        assert "SELECT 1" in statements[1]
+
+    def test_dollar_quotes_inside_standard_strings_are_ignored(self):
+        """Should ignore dollar quote delimiters when inside standard string literals."""
+        from sqlit.domains.query.app.multi_statement import split_statements
+
+        query = "INSERT INTO t (x) VALUES ('$$'); SELECT 1"
+        statements = split_statements(query)
+
+        assert len(statements) == 2
+        assert "INSERT" in statements[0]
+        assert "SELECT 1" in statements[1]
+
 
 class TestMultiStatementResult:
     """Tests for MultiStatementResult data structure."""