diff --git a/test/api/unit/libs/highlightMentions.js b/test/api/unit/libs/highlightMentions.test.js
similarity index 51%
rename from test/api/unit/libs/highlightMentions.js
rename to test/api/unit/libs/highlightMentions.test.js
index 6d46e14aee..a68cd9d6d7 100644
--- a/test/api/unit/libs/highlightMentions.js
+++ b/test/api/unit/libs/highlightMentions.test.js
@@ -1,7 +1,5 @@
 import mongoose from 'mongoose';
-import {
-  highlightMentions,
-} from '../../../../website/server/libs/highlightMentions';
+import highlightMentions from '../../../../website/server/libs/highlightMentions';
 
 describe('highlightMentions', () => {
   beforeEach(() => {
@@ -13,9 +11,12 @@ describe('highlightMentions', () => {
         return this;
       },
       exec () {
-        return Promise.resolve([{
-          auth: { local: { username: 'user' } }, _id: '111',
-        }, { auth: { local: { username: 'user2' } }, _id: '222' }, { auth: { local: { username: 'user3' } }, _id: '333' }, { auth: { local: { username: 'user-dash' } }, _id: '444' }, { auth: { local: { username: 'user_underscore' } }, _id: '555' },
+        return Promise.resolve([
+          { auth: { local: { username: 'user' } }, _id: '111' },
+          { auth: { local: { username: 'user2' } }, _id: '222' },
+          { auth: { local: { username: 'user3' } }, _id: '333' },
+          { auth: { local: { username: 'user-dash' } }, _id: '444' },
+          { auth: { local: { username: 'user_underscore' } }, _id: '555' },
         ]);
       },
     };
@@ -32,29 +33,76 @@ describe('highlightMentions', () => {
     const result = await highlightMentions(text);
     expect(result[0]).to.equal(text);
   });
+
   it('highlights existing users', async () => {
     const text = '@user: message';
     const result = await highlightMentions(text);
     expect(result[0]).to.equal('[@user](/profile/111): message');
   });
+
   it('highlights special characters', async () => {
     const text = '@user-dash: message @user_underscore';
     const result = await highlightMentions(text);
     expect(result[0]).to.equal('[@user-dash](/profile/444): message [@user_underscore](/profile/555)');
   });
+
   it('doesn\'t highlight nonexisting users', async () => {
     const text = '@nouser message';
     const result = await highlightMentions(text);
     expect(result[0]).to.equal('@nouser message');
   });
+
   it('highlights multiple existing users', async () => {
     const text = '@user message (@user2) @user3 @user';
     const result = await highlightMentions(text);
     expect(result[0]).to.equal('[@user](/profile/111) message ([@user2](/profile/222)) [@user3](/profile/333) [@user](/profile/111)');
   });
+
   it('doesn\'t highlight more than 5 users', async () => {
     const text = '@user @user2 @user3 @user4 @user5 @user6';
     const result = await highlightMentions(text);
     expect(result[0]).to.equal(text);
   });
+
+  describe('exceptions in code blocks', () => {
+    it('doesn\'t highlight user in inline code block', async () => {
+      const text = '`@user`';
+
+      const result = await highlightMentions(text);
+
+      expect(result[0]).to.equal(text);
+    });
+
+    it('doesn\'t highlight user in fenced code block', async () => {
+      const text = 'Text\n\n```\n// code referencing @user\n```\n\nText';
+
+      const result = await highlightMentions(text);
+
+      expect(result[0]).to.equal(text);
+    });
+
+    it('doesn\'t highlight user in indented code block', async () => {
+      const text = '      @user';
+
+      const result = await highlightMentions(text);
+
+      expect(result[0]).to.equal(text);
+    });
+
+    it('does highlight user that\'s after in-line code block', async () => {
+      const text = '`<code />` for @user';
+
+      const result = await highlightMentions(text);
+
+      expect(result[0]).to.equal('`<code />` for [@user](/profile/111)');
+    });
+
+    it('does highlight same content properly', async () => {
+      const text = '@user `@user`';
+
+      const result = await highlightMentions(text);
+
+      expect(result[0]).to.equal('[@user](/profile/111) `@user`');
+    });
+  });
 });
diff --git a/website/server/controllers/api-v3/chat.js b/website/server/controllers/api-v3/chat.js
index 60e5284594..5ade8f037a 100644
--- a/website/server/controllers/api-v3/chat.js
+++ b/website/server/controllers/api-v3/chat.js
@@ -22,7 +22,7 @@ import guildsAllowingBannedWords from '../../libs/guildsAllowingBannedWords';
 import { getMatchesByWordArray } from '../../libs/stringUtils';
 import bannedSlurs from '../../libs/bannedSlurs';
 import apiError from '../../libs/apiError';
-import { highlightMentions } from '../../libs/highlightMentions';
+import highlightMentions from '../../libs/highlightMentions';
 
 const FLAG_REPORT_EMAILS = nconf.get('FLAG_REPORT_EMAIL').split(',').map(email => ({ email, canSend: true }));
 
diff --git a/website/server/controllers/api-v3/members.js b/website/server/controllers/api-v3/members.js
index bc2e5b3065..01334d26b4 100644
--- a/website/server/controllers/api-v3/members.js
+++ b/website/server/controllers/api-v3/members.js
@@ -24,7 +24,7 @@ import { sentMessage } from '../../libs/inbox';
 import {
   sanitizeText as sanitizeMessageText,
 } from '../../models/message';
-import { highlightMentions } from '../../libs/highlightMentions';
+import highlightMentions from '../../libs/highlightMentions';
 
 const { achievements } = common;
 
diff --git a/website/server/libs/highlightMentions.js b/website/server/libs/highlightMentions.js
index b04777ca2d..a50c490593 100644
--- a/website/server/libs/highlightMentions.js
+++ b/website/server/libs/highlightMentions.js
@@ -1,12 +1,117 @@
+import habiticaMarkdown from 'habitica-markdown';
+
 import { model as User } from '../models/user';
 
-const mentionRegex = new RegExp('\\B@[-\\w]+', 'g');
+const mentionRegex = /\B@[-\w]+/g;
+const codeTokenTypes = ['code_block', 'code_inline', 'fence'];
 
-export async function highlightMentions (text) { // eslint-disable-line import/prefer-default-export
-  const mentions = text.match(mentionRegex);
+/**
+ * Container class for text blocks and code blocks combined
+ * Blocks have the properties `text` and `isCodeBlock`
+ */
+class TextWithCodeBlocks {
+  constructor (blocks) {
+    this.blocks = blocks;
+    this.textBlocks = blocks.filter(block => !block.isCodeBlock);
+    this.allText = this.textBlocks.map(block => block.text).join('\n');
+  }
+
+  transformTextBlocks (transform) {
+    this.textBlocks.forEach(block => {
+      block.text = transform(block.text);
+    });
+  }
+
+  rebuild () {
+    return this.blocks.map(block => block.text).join('');
+  }
+}
+
+/**
+ * Since tokens have both order and can be nested until infinite depth,
+ * use a branching recursive algorithm to maintain order and check all tokens.
+ */
+function findCodeBlocks (tokens, aggregator) {
+  const result = aggregator || [];
+  const [head, ...tail] = tokens;
+  if (!head) {
+    return result;
+  }
+
+  if (codeTokenTypes.includes(head.type)) {
+    result.push(head);
+  }
+
+  return findCodeBlocks(tail, head.children ? findCodeBlocks(head.children, result) : result);
+}
+
+/**
+ * Since there are many factors that can prefix lines with indentation in
+ * markdown, each line from a token's content needs to be prefixed with a
+ * variable whitespace matcher.
+ *
+ * See for example: https://spec.commonmark.org/0.29/#example-224
+ */
+function withOptionalIndentation (content) {
+  return content.split('\n').map(line => `\\s*${line}`).join('\n');
+}
+
+function createCodeBlockRegex ({ content, type, markup }) {
+  let regexStr = '';
+
+  if (type === 'code_block') {
+    regexStr = withOptionalIndentation(content);
+  } else if (type === 'fence') {
+    regexStr = `\\s*${markup}.*\n${withOptionalIndentation(content)}\\s*${markup}`;
+  } else { // type === code_inline
+    regexStr = `${markup} ?${content} ?${markup}`;
+  }
+
+  return new RegExp(regexStr);
+}
+
+/**
+ * Uses habiticaMarkdown to determine what part of the text are code blocks
+ * according to the specification here: https://spec.commonmark.org/0.29/
+ */
+function findTextAndCodeBlocks (text) {
+  // For token description see https://markdown-it.github.io/markdown-it/#Token
+  const tokens = habiticaMarkdown.parse(text);
+  const codeBlocks = findCodeBlocks(tokens);
+
+  const blocks = [];
+  let remainingText = text;
+  codeBlocks.forEach(codeBlock => {
+    const codeBlockRegex = createCodeBlockRegex(codeBlock);
+    const match = remainingText.match(codeBlockRegex);
+
+    if (match.index) {
+      blocks.push({ text: remainingText.substr(0, match.index), isCodeBlock: false });
+    }
+    blocks.push({ text: match[0], isCodeBlock: true });
+
+    remainingText = remainingText.substr(match.index + match[0].length);
+  });
+
+  if (remainingText) {
+    blocks.push({ text: remainingText, isCodeBlock: false });
+  }
+  return new TextWithCodeBlocks(blocks);
+}
+
+/**
+ * Replaces `@user` mentions by `[@user](/profile/{user-id})` markup to inject
+ * a link towards the user's profile page.
+ * - Only works if there are no more that 5 user mentions
+ * - Skips mentions in code blocks as defined by https://spec.commonmark.org/0.29/
+ */
+export default async function highlightMentions (text) {
+  const textAndCodeBlocks = findTextAndCodeBlocks(text);
+
+  const mentions = textAndCodeBlocks.allText.match(mentionRegex);
   let members = [];
 
-  if (mentions !== null && mentions.length <= 5) {
+  if (mentions && mentions.length <= 5) {
     const usernames = mentions.map(mention => mention.substr(1));
     members = await User
       .find({ 'auth.local.username': { $in: usernames }, 'flags.verifiedUsername': true })
@@ -15,9 +120,12 @@ export async function highlightMentions (text) { // eslint-disable-line import/p
       .exec();
     members.forEach(member => {
       const { username } = member.auth.local;
-      // eslint-disable-next-line no-param-reassign
-      text = text.replace(new RegExp(`@${username}(?![\\-\\w])`, 'g'), `[@${username}](/profile/${member._id})`);
+      const regex = new RegExp(`@${username}(?![\\-\\w])`, 'g');
+      const replacement = `[@${username}](/profile/${member._id})`;
+
+      textAndCodeBlocks.transformTextBlocks(blockText => blockText.replace(regex, replacement));
     });
   }
-  return [text, mentions, members];
+
+  return [textAndCodeBlocks.rebuild(), mentions, members];
 }