diff --git a/crates/bashkit/src/parser/lexer.rs b/crates/bashkit/src/parser/lexer.rs
index d88068e8..57f9f6aa 100644
--- a/crates/bashkit/src/parser/lexer.rs
+++ b/crates/bashkit/src/parser/lexer.rs
@@ -525,6 +525,19 @@ impl<'a> Lexer<'a> {
                             continue;
                         }
                     }
+                    // Handle $(...) inside double-quoted word segments
+                    // to preserve single-quoted strings within command substitutions
+                    if c == '$' && quote_char == '"' {
+                        word.push(c);
+                        self.advance();
+                        if self.peek_char() == Some('(') {
+                            word.push('(');
+                            self.advance();
+                            self.read_command_subst_into(&mut word);
+                            continue;
+                        }
+                        continue;
+                    }
                     word.push(c);
                     self.advance();
                 }
diff --git a/crates/bashkit/tests/cmdsub_quote_test.rs b/crates/bashkit/tests/cmdsub_quote_test.rs
new file mode 100644
index 00000000..94cd8d1c
--- /dev/null
+++ b/crates/bashkit/tests/cmdsub_quote_test.rs
@@ -0,0 +1,34 @@
+//! Test for issue #803: single-quoted strings inside $() lose double quotes
+
+use bashkit::Bash;
+
+#[tokio::test]
+async fn cmdsub_preserves_double_quotes_in_single_quotes() {
+    let mut bash = Bash::new();
+    let result = bash
+        .exec(r#"x="$(echo '{"a":1}')"; echo "${x}""#)
+        .await
+        .unwrap();
+    assert_eq!(result.stdout.trim(), r#"{"a":1}"#);
+}
+
+#[tokio::test]
+async fn cmdsub_preserves_double_quotes_simple() {
+    let mut bash = Bash::new();
+    let result = bash
+        .exec(r#"y="$(echo 'say "hello" please')"; echo "${y}""#)
+        .await
+        .unwrap();
+    assert_eq!(result.stdout.trim(), r#"say "hello" please"#);
+}
+
+/// Without outer double quotes, $() preserves double quotes correctly
+#[tokio::test]
+async fn cmdsub_without_outer_quotes_works() {
+    let mut bash = Bash::new();
+    let result = bash
+        .exec(r#"x=$(echo '{"a":1}'); echo "$x""#)
+        .await
+        .unwrap();
+    assert_eq!(result.stdout.trim(), r#"{"a":1}"#);
+}