diff --git a/tools/setup.py b/tools/setup.py
index 1f065769a7..1a0b491c01 100755
--- a/tools/setup.py
+++ b/tools/setup.py
@@ -54,6 +54,18 @@ gn_args_header = [
 ]
 
 
+def gn_string(s):
+    # In gn, strings are enclosed in double-quotes and use backslash as the
+    # escape character. The only escape sequences supported are:
+    #   \" (for literal quote)
+    #   \$ (for literal dollars sign)
+    #   \\ (for literal backslash)
+    # Any other use of a backslash is treated as a literal backslash.
+    s = re.sub(r'("|\$|\\(?=["$\\]))', r'\\\1', s)
+    s = '"' + s + '"'
+    return s
+
+
 def gn_args_are_generated(lines):
     for line in lines:
         if re.match("^\s*#.*REMOVE THIS LINE", line):
diff --git a/tools/setup_test.py b/tools/setup_test.py
index 670bf33dba..05f094c60d 100644
--- a/tools/setup_test.py
+++ b/tools/setup_test.py
@@ -1,11 +1,18 @@
 # Copyright 2018 the Deno authors. All rights reserved. MIT license.
 
 import os
-from setup import read_gn_args, write_gn_args
+from setup import gn_string, read_gn_args, write_gn_args
 from shutil import rmtree
 from tempfile import mktemp
 
 
+def gn_string_test():
+    assert '"abc"' == gn_string('abc')
+    assert '"foo\\$bar\\"baz"' == gn_string('foo$bar"baz')
+    assert '"do\\not\\escape"' == gn_string('do\\not\\escape')
+    assert '"so\\\\\\very\\\\\\"fun\\"' == gn_string('so\\\\very\\"fun\\')
+
+
 def read_gn_args_test():
     # Args file doesn't exist.
     (args, hand_edited) = read_gn_args("/baddir/hopefully/nonexistent/args.gn")
@@ -53,6 +60,7 @@ def write_gn_args_test():
 
 
 def setup_test():
+    gn_string_test()
     read_gn_args_test()
     write_gn_args_test()