diff --git a/crates/oxc_ast/src/generated/ast_builder.rs b/crates/oxc_ast/src/generated/ast_builder.rs
index 3f8d9b3d8c334..904eee5bf45f4 100644
--- a/crates/oxc_ast/src/generated/ast_builder.rs
+++ b/crates/oxc_ast/src/generated/ast_builder.rs
@@ -17,6 +17,8 @@ use oxc_syntax::{
     comment_node::CommentNodeId, reference::ReferenceId, scope::ScopeId, symbol::SymbolId,
 };
 
+use oxc_span::Atom;
+
 use crate::{AstBuilder, ast::*};
 
 impl<'a> AstBuilder<'a> {
@@ -1788,7 +1790,16 @@ impl<'a> AstBuilder<'a> {
         span: Span,
         value: TemplateElementValue<'a>,
         tail: bool,
+        escape_raw: bool,
     ) -> TemplateElement<'a> {
+        let value = if escape_raw {
+            TemplateElementValue {
+                raw: escape_template_element_raw(value.raw.as_str(), self),
+                cooked: value.cooked,
+            }
+        } else {
+            value
+        };
         TemplateElement { span, value, tail, lone_surrogates: Default::default() }
     }
 
@@ -1806,7 +1817,16 @@ impl<'a> AstBuilder<'a> {
         value: TemplateElementValue<'a>,
         tail: bool,
         lone_surrogates: bool,
+        escape_raw: bool,
     ) -> TemplateElement<'a> {
+        let value = if escape_raw {
+            TemplateElementValue {
+                raw: escape_template_element_raw(value.raw.as_str(), self),
+                cooked: value.cooked,
+            }
+        } else {
+            value
+        };
         TemplateElement { span, value, tail, lone_surrogates }
     }
 
@@ -15134,3 +15154,58 @@ impl<'a> AstBuilder<'a> {
         Box::new_in(self.js_doc_unknown_type(span), self.allocator)
     }
 }
+
+/// Escape special characters for template element raw value.
+///
+/// Escapes: backticks, `${`, backslashes, and carriage returns.
+fn escape_template_element_raw<'a>(raw: &str, ast: AstBuilder<'a>) -> Atom<'a> {
+    let bytes = raw.as_bytes();
+    let mut extra_bytes = 0usize;
+    for i in 0..bytes.len() {
+        extra_bytes += match bytes[i] {
+            b'\\' | b'`' | b'\r' => 1,
+            b'$' if bytes.get(i + 1) == Some(&b'{') => 1,
+            _ => 0,
+        };
+    }
+    if extra_bytes == 0 {
+        return ast.atom(raw);
+    }
+    let len = bytes.len() + extra_bytes;
+    let layout = std::alloc::Layout::array::<u8>(len).unwrap();
+    let ptr = ast.allocator.alloc_layout(layout);
+    #[expect(clippy::undocumented_unsafe_blocks)]
+    unsafe {
+        let escaped = std::slice::from_raw_parts_mut(ptr.as_ptr(), len);
+        let mut j = 0;
+        for i in 0..bytes.len() {
+            match bytes[i] {
+                b'\\' => {
+                    *escaped.get_unchecked_mut(j) = b'\\';
+                    *escaped.get_unchecked_mut(j + 1) = b'\\';
+                    j += 2;
+                }
+                b'`' => {
+                    *escaped.get_unchecked_mut(j) = b'\\';
+                    *escaped.get_unchecked_mut(j + 1) = b'`';
+                    j += 2;
+                }
+                b'$' if bytes.get(i + 1) == Some(&b'{') => {
+                    *escaped.get_unchecked_mut(j) = b'\\';
+                    *escaped.get_unchecked_mut(j + 1) = b'$';
+                    j += 2;
+                }
+                b'\r' => {
+                    *escaped.get_unchecked_mut(j) = b'\\';
+                    *escaped.get_unchecked_mut(j + 1) = b'r';
+                    j += 2;
+                }
+                b => {
+                    *escaped.get_unchecked_mut(j) = b;
+                    j += 1;
+                }
+            }
+        }
+        Atom::from(std::str::from_utf8_unchecked(escaped))
+    }
+}
diff --git a/crates/oxc_codegen/tests/integration/js.rs b/crates/oxc_codegen/tests/integration/js.rs
index 2c2f1030f1c7b..b829509afd3c6 100644
--- a/crates/oxc_codegen/tests/integration/js.rs
+++ b/crates/oxc_codegen/tests/integration/js.rs
@@ -1,4 +1,7 @@
-use oxc_codegen::{CodegenOptions, IndentChar};
+use oxc_allocator::Allocator;
+use oxc_ast::AstBuilder;
+use oxc_codegen::{Codegen, CodegenOptions, IndentChar};
+use oxc_span::SPAN;
 
 use crate::tester::{
     test, test_minify, test_minify_same, test_options, test_same, test_same_ignore_parse_errors,
@@ -691,3 +694,41 @@ fn indentation() {
         CodegenOptions { initial_indent: 1, ..CodegenOptions::default() },
     );
 }
+
+#[test]
+fn template_literal_escape_when_building_ast() {
+    use oxc_ast::ast::TemplateElementValue;
+
+    let allocator = Allocator::default();
+    let ast = AstBuilder::new(&allocator);
+
+    // Create a template literal with special characters that need escaping:
+    // backtick, ${, and backslash
+    // Pass escape_raw: true to automatically escape the raw field
+    let cooked = "hello`world${foo}\\bar";
+    let value = TemplateElementValue { raw: ast.atom(cooked), cooked: Some(ast.atom(cooked)) };
+    let element = ast.template_element(SPAN, value, true, true); // escape_raw: true
+    let quasis = ast.vec1(element);
+    let template_literal = ast.template_literal(SPAN, quasis, ast.vec());
+
+    let expr = ast.expression_template_literal(
+        SPAN,
+        template_literal.quasis,
+        template_literal.expressions,
+    );
+    let stmt = ast.statement_expression(SPAN, expr);
+    let program = ast.program(
+        SPAN,
+        oxc_span::SourceType::mjs(),
+        "",
+        ast.vec(),
+        None,
+        ast.vec(),
+        ast.vec1(stmt),
+    );
+
+    let result = Codegen::new().build(&program).code;
+    // The raw value should have been escaped by template_element with escape_raw: true
+    // backtick, ${, and backslash are all escaped
+    assert_eq!(result, "`hello\\`world\\${foo}\\\\bar`;\n");
+}
diff --git a/crates/oxc_minifier/src/peephole/remove_unused_expression.rs b/crates/oxc_minifier/src/peephole/remove_unused_expression.rs
index 2de02f5724da1..8f2c7473efb85 100644
--- a/crates/oxc_minifier/src/peephole/remove_unused_expression.rs
+++ b/crates/oxc_minifier/src/peephole/remove_unused_expression.rs
@@ -273,6 +273,7 @@ impl<'a> PeepholeOptimizations {
                                 e.span(),
                                 TemplateElementValue { raw: "".into(), cooked: Some("".into()) },
                                 false,
+                                false,
                             )
                         })
                         .take(expressions.len() + 1),
@@ -299,6 +300,7 @@ impl<'a> PeepholeOptimizations {
                         temp_lit.span,
                         TemplateElementValue { raw: "".into(), cooked: Some("".into()) },
                         false,
+                        false,
                     )
                 })
                 .take(expressions.len() + 1),
diff --git a/crates/oxc_minifier/src/peephole/replace_known_methods.rs b/crates/oxc_minifier/src/peephole/replace_known_methods.rs
index 3b639ac9de0e9..0d2930210ec13 100644
--- a/crates/oxc_minifier/src/peephole/replace_known_methods.rs
+++ b/crates/oxc_minifier/src/peephole/replace_known_methods.rs
@@ -333,6 +333,7 @@ impl<'a> PeepholeOptimizations {
                             cooked: Some(cooked),
                         },
                         false,
+                        false, // raw is already escaped by escape_string_for_template_literal
                     )
                 }));
                 if let Some(last_quasi) = quasis.last_mut() {
diff --git a/crates/oxc_parser/src/js/expression.rs b/crates/oxc_parser/src/js/expression.rs
index 38a9cd09cb784..143e14dd10d48 100644
--- a/crates/oxc_parser/src/js/expression.rs
+++ b/crates/oxc_parser/src/js/expression.rs
@@ -643,6 +643,7 @@ impl<'a> ParserImpl<'a> {
             TemplateElementValue { raw, cooked },
             tail,
             lone_surrogates,
+            false, // escape_raw: parser provides already-escaped values from source
         )
     }
 
diff --git a/crates/oxc_transformer/src/plugins/styled_components.rs b/crates/oxc_transformer/src/plugins/styled_components.rs
index 20f6283850f85..322d7862ee738 100644
--- a/crates/oxc_transformer/src/plugins/styled_components.rs
+++ b/crates/oxc_transformer/src/plugins/styled_components.rs
@@ -1155,6 +1155,7 @@ mod tests {
                 SPAN,
                 TemplateElementValue { raw: ast.atom(input), cooked: Some(ast.atom(input)) },
                 true,
+                false,
             )),
             ast.vec(),
         );
diff --git a/tasks/ast_tools/src/generators/ast_builder.rs b/tasks/ast_tools/src/generators/ast_builder.rs
index 8ebd29c6ea5b3..793e97122f77c 100644
--- a/tasks/ast_tools/src/generators/ast_builder.rs
+++ b/tasks/ast_tools/src/generators/ast_builder.rs
@@ -90,6 +90,9 @@ impl Generator for AstBuilderGenerator {
                 reference::ReferenceId
             };
 
+            ///@@line_break
+            use oxc_span::Atom;
+
             ///@@line_break
             use crate::{AstBuilder, ast::*};
 
@@ -97,6 +100,47 @@ impl Generator for AstBuilderGenerator {
             impl<'a> AstBuilder<'a> {
                 #fns
             }
+
+            ///@@line_break
+            /// Escape special characters for template element raw value.
+            ///
+            /// Escapes: backticks, `${`, backslashes, and carriage returns.
+            fn escape_template_element_raw<'a>(raw: &str, ast: AstBuilder<'a>) -> Atom<'a> {
+                let bytes = raw.as_bytes();
+                // Calculate size needed for escaped string
+                let mut extra_bytes = 0usize;
+                for i in 0..bytes.len() {
+                    extra_bytes += match bytes[i] {
+                        b'\\' | b'`' | b'\r' => 1,
+                        b'$' if bytes.get(i + 1) == Some(&b'{') => 1,
+                        _ => 0,
+                    };
+                }
+                if extra_bytes == 0 {
+                    return ast.atom(raw);
+                }
+                // Allocate directly in arena
+                let len = bytes.len() + extra_bytes;
+                let layout = std::alloc::Layout::array::<u8>(len).unwrap();
+                let ptr = ast.allocator.alloc_layout(layout);
+                // SAFETY: `ptr` points to `len` bytes of valid memory allocated by the arena.
+                // Input is valid UTF-8, we only escape ASCII bytes, so output is also valid UTF-8.
+                #[expect(clippy::undocumented_unsafe_blocks)]
+                unsafe {
+                    let escaped = std::slice::from_raw_parts_mut(ptr.as_ptr(), len);
+                    let mut j = 0;
+                    for i in 0..bytes.len() {
+                        match bytes[i] {
+                            b'\\' => { *escaped.get_unchecked_mut(j) = b'\\'; *escaped.get_unchecked_mut(j + 1) = b'\\'; j += 2; }
+                            b'`' => { *escaped.get_unchecked_mut(j) = b'\\'; *escaped.get_unchecked_mut(j + 1) = b'`'; j += 2; }
+                            b'$' if bytes.get(i + 1) == Some(&b'{') => { *escaped.get_unchecked_mut(j) = b'\\'; *escaped.get_unchecked_mut(j + 1) = b'$'; j += 2; }
+                            b'\r' => { *escaped.get_unchecked_mut(j) = b'\\'; *escaped.get_unchecked_mut(j + 1) = b'r'; j += 2; }
+                            b => { *escaped.get_unchecked_mut(j) = b; j += 1; }
+                        }
+                    }
+                    Atom::from(std::str::from_utf8_unchecked(escaped))
+                }
+            }
         };
 
         Output::Rust { path: output_path(AST_CRATE_PATH, "ast_builder.rs"), tokens: output }
@@ -262,13 +306,32 @@ fn generate_builder_methods_for_struct_impl(
 
     let params_docs = generate_doc_comment_for_params(params);
 
+    // Special case for TemplateElement: add `escape_raw` parameter
+    let (extra_params, body) = if struct_name == "TemplateElement" {
+        let extra_params = quote! { , escape_raw: bool };
+        let body = quote! {
+            let value = if escape_raw {
+                TemplateElementValue {
+                    raw: escape_template_element_raw(value.raw.as_str(), self),
+                    cooked: value.cooked,
+                }
+            } else {
+                value
+            };
+            #struct_ident { #fields }
+        };
+        (extra_params, body)
+    } else {
+        (quote! {}, quote! { #struct_ident { #fields } })
+    };
+
     let method = quote! {
         ///@@line_break
         #fn_docs
         #params_docs
         #[inline]
-        pub fn #fn_name #generic_params (self, #fn_params) -> #struct_ty #where_clause {
-            #struct_ident { #fields }
+        pub fn #fn_name #generic_params (self, #fn_params #extra_params) -> #struct_ty #where_clause {
+            #body
         }
     };