diff --git a/python/src/com/jetbrains/python/codeInsight/fstrings/FStringParser.java b/python/src/com/jetbrains/python/codeInsight/fstrings/FStringParser.java
index ce98395f72bd..5ba2c88db133 100644
--- a/python/src/com/jetbrains/python/codeInsight/fstrings/FStringParser.java
+++ b/python/src/com/jetbrains/python/codeInsight/fstrings/FStringParser.java
@@ -76,12 +76,14 @@ public class FStringParser {
     int bracesBalance = 0;
     char stringLiteralQuote = '\0';
     int quotesNum = 0;
+    boolean containsNamedUnicodeEscape = false;
 
     int offset = leftBraceOffset + 1;
     while (offset < myNodeContentRange.getEndOffset()) {
       // Actually they aren't allowed inside expression fragments, but we skip them anyway to prevent injection errors
       final int nextOffset = skipNamedUnicodeEscape(offset);
       if (offset != nextOffset) {
+        containsNamedUnicodeEscape = true;
         offset = nextOffset;
         continue;
       }
@@ -139,7 +141,7 @@ public class FStringParser {
     if (contentEndOffset == -1) {
       contentEndOffset = offset;
     }
-    myFragments.add(new FragmentOffsets(leftBraceOffset, contentEndOffset, rightBraceOffset));
+    myFragments.add(new FragmentOffsets(leftBraceOffset, contentEndOffset, rightBraceOffset, containsNamedUnicodeEscape));
     return offset;
   }
 
@@ -155,14 +157,16 @@ public class FStringParser {
     private final int myLeftBraceOffset;
     private final int myRightBraceOffset;
     private final int myContentEndOffset;
+    private final boolean myContainsNamedUnicodeEscape;
 
-    public FragmentOffsets(int leftBraceOffset, int contentEndOffset, int rightBraceOffset) {
+    private FragmentOffsets(int leftBraceOffset, int contentEndOffset, int rightBraceOffset, boolean escape) {
       assert contentEndOffset > leftBraceOffset;
       assert rightBraceOffset < 0 || (contentEndOffset <= rightBraceOffset && leftBraceOffset < rightBraceOffset);
 
       myLeftBraceOffset = leftBraceOffset;
       myRightBraceOffset = rightBraceOffset;
       myContentEndOffset = contentEndOffset;
+      myContainsNamedUnicodeEscape = escape;
     }
 
     public int getLeftBraceOffset() {
@@ -177,6 +181,10 @@ public class FStringParser {
       return myContentEndOffset;
     }
 
+    public boolean containsNamedUnicodeEscape() {
+      return myContainsNamedUnicodeEscape;
+    }
+
     @NotNull
     public TextRange getContentRange() {
       return TextRange.create(myLeftBraceOffset + 1, myContentEndOffset);
diff --git a/python/src/com/jetbrains/python/codeInsight/fstrings/PyFStringsInjector.java b/python/src/com/jetbrains/python/codeInsight/fstrings/PyFStringsInjector.java
index a8518af8e2d0..9851f41b2639 100644
--- a/python/src/com/jetbrains/python/codeInsight/fstrings/PyFStringsInjector.java
+++ b/python/src/com/jetbrains/python/codeInsight/fstrings/PyFStringsInjector.java
@@ -46,6 +46,7 @@ public class PyFStringsInjector extends PyInjectorBase {
     for (ASTNode node : pyString.getStringNodes()) {
       final int relNodeOffset = node.getTextRange().getStartOffset() - pyString.getTextRange().getStartOffset();
       for (FragmentOffsets offsets : getInjectionRanges(node)) {
+        if (offsets.containsNamedUnicodeEscape()) continue;
         registrar.startInjecting(PyDocstringLanguageDialect.getInstance());
         registrar.addPlace(null, null, pyString, offsets.getContentRange().shiftRight(relNodeOffset));
         registrar.doneInjecting();
diff --git a/python/testSrc/com/jetbrains/python/PyFStringTest.java b/python/testSrc/com/jetbrains/python/PyFStringTest.java
index c9d50b4084e8..604b9a255715 100644
--- a/python/testSrc/com/jetbrains/python/PyFStringTest.java
+++ b/python/testSrc/com/jetbrains/python/PyFStringTest.java
@@ -24,7 +24,6 @@ import org.intellij.lang.annotations.Language;
 import org.jetbrains.annotations.NotNull;
 
 import java.util.ArrayList;
-import java.util.Collections;
 import java.util.List;
 
 /**
@@ -97,4 +96,19 @@ public class PyFStringTest extends PyTestCase {
     doTestRanges("f'\\N{foo}\\N{}\\N{{{{{}{|42 + \\N{DIGIT ONE}|}'");
     doTestRanges("f'{|x|:\\N{DIGIT_ONE}}'");
   }
+
+  // PY-20785
+  public void testUnicodeEscapeInsideExpressionFragment() {
+    doTestUnicodeEscapeDetection("f'{\\N{FOO}}'", true);
+    doTestUnicodeEscapeDetection("f'{\"\\N{FOO\"}'", true);
+    doTestUnicodeEscapeDetection("f'{\"\\N{\"}'", true);
+    doTestUnicodeEscapeDetection("f'{\"\\\\N{FOO}\"}'", false);
+  }
+
+  private static void doTestUnicodeEscapeDetection(String fStringText, boolean expected) {
+    final List<FragmentOffsets> fragments = FStringParser.parse(fStringText);
+    assertSize(1, fragments);
+    final FragmentOffsets offsets = fragments.get(0);
+    assertEquals(expected, offsets.containsNamedUnicodeEscape());
+  }
 }