diff --git a/lib/yard/parser/ruby/legacy/ruby_lex.rb b/lib/yard/parser/ruby/legacy/ruby_lex.rb
index 0a843d0f5..40f805ff0 100644
--- a/lib/yard/parser/ruby/legacy/ruby_lex.rb
+++ b/lib/yard/parser/ruby/legacy/ruby_lex.rb
@@ -656,7 +656,7 @@ def lex_init()
           if @lex_state != EXPR_END && @lex_state != EXPR_CLASS &&
              (@lex_state != EXPR_ARG || @space_seen)
             c = peek(0)
-            tk = identify_here_document if /[-\w\"\'\`]/ =~ c
+            tk = identify_here_document if /[-~\w\"\'\`]/ =~ c
           end
           if !tk
             @lex_state = EXPR_BEG
@@ -1063,6 +1063,8 @@ def identify_here_document
         ch = getc
         if ch == "-"
           ch = getc
+        elsif ch == "~"
+          ch = getc
           indent = true
         end
         if /['"`]/ =~ ch # '
@@ -1096,9 +1098,12 @@ def identify_here_document
         str = String.new
         while (l = gets)
           l.chomp!
-          l.strip! if indent
-          break if l == quoted
-          str << l.chomp << "\n"
+          if l == quoted
+            str = dedent(str) if indent
+            break
+          else
+            str << l.chomp << "\n"
+          end
         end
 
         @reader.divert_read_from(reserve)
@@ -1108,6 +1113,16 @@ def identify_here_document
         Token(Ltype2Token[lt], str).set_text(str.dump)
       end
 
+      def dedent(str)
+        lines = str.split("\n", -1)
+        dedent_amt = lines.map do |line|
+          line =~ /\S/ ? line.match(/^ */).offset(0)[1] : nil
+        end.compact.min || 0
+        return str if dedent_amt.zero?
+
+        lines.map { |line| line =~ /\S/ ? line.gsub(/^ {#{dedent_amt}}/, "") : line }.join("\n")
+      end
+
       def identify_quotation(initial_char)
         ch = getc
         if lt = PERCENT_LTYPE[ch]
diff --git a/spec/parser/ruby/legacy/statement_list_spec.rb b/spec/parser/ruby/legacy/statement_list_spec.rb
index e6474a992..525b5bdc3 100644
--- a/spec/parser/ruby/legacy/statement_list_spec.rb
+++ b/spec/parser/ruby/legacy/statement_list_spec.rb
@@ -294,6 +294,12 @@ class B; end
   it "converts heredoc to string" do
     src = "<<-XML\n  foo\n\nXML"
     s = stmt(src)
-    expect(s.source).to eq '"foo\n\n"'
+    expect(s.source).to eq '"  foo\n\n"'
+  end
+
+  it "converts squiggly heredoc to string" do
+    src = "<<~XML\n  bar\n\nXML"
+    s = stmt(src)
+    expect(s.source).to eq '"bar\n\n"'
   end
 end