diff --git a/lib/markdown2.py b/lib/markdown2.py
index 8dd1c48e..855ce806 100755
--- a/lib/markdown2.py
+++ b/lib/markdown2.py
@@ -116,6 +116,7 @@
 __author__ = "Trent Mick"
 
 import argparse
+import html
 import logging
 import re
 import sys
@@ -1578,7 +1579,7 @@ def header_id_from_text(self,
             None to not have an id attribute and to exclude this header from
             the TOC (if the "toc" extra is specified).
         """
-        header_id = _slugify(text)
+        header_id = _slugify(html.unescape(text))
         if prefix and isinstance(prefix, str):
             header_id = prefix + '-' + header_id
 
diff --git a/test/tm-cases/header_ids_entity.html b/test/tm-cases/header_ids_entity.html
new file mode 100644
index 00000000..6c21b7fa
--- /dev/null
+++ b/test/tm-cases/header_ids_entity.html
@@ -0,0 +1,5 @@
+<h1 id="escaped-lt">&lt;escaped-lt</h1>
+
+<h1 id="rd-notes">R&amp;D Notes</h1>
+
+<h1 id="normal-header">Normal Header</h1>
diff --git a/test/tm-cases/header_ids_entity.opts b/test/tm-cases/header_ids_entity.opts
new file mode 100644
index 00000000..38b8bfe8
--- /dev/null
+++ b/test/tm-cases/header_ids_entity.opts
@@ -0,0 +1 @@
+{"extras": ["header-ids"]}
diff --git a/test/tm-cases/header_ids_entity.text b/test/tm-cases/header_ids_entity.text
new file mode 100644
index 00000000..2dbfcc85
--- /dev/null
+++ b/test/tm-cases/header_ids_entity.text
@@ -0,0 +1,5 @@
+# &lt;escaped-lt
+
+# R&amp;D Notes
+
+# Normal Header