diff --git a/src/prism.c b/src/prism.c
index ab8de96975..d67b0d760e 100644
--- a/src/prism.c
+++ b/src/prism.c
@@ -11874,7 +11874,8 @@ parser_lex(pm_parser_t *parser) {
                         !(last_state & (PM_LEX_STATE_DOT | PM_LEX_STATE_FNAME)) &&
                         (type == PM_TOKEN_IDENTIFIER) &&
                         ((pm_parser_local_depth(parser, &parser->current) != -1) ||
-                         pm_token_is_numbered_parameter(parser->current.start, parser->current.end))
+                         pm_token_is_numbered_parameter(parser->current.start, parser->current.end) ||
+                         pm_token_is_it(parser->current.start, parser->current.end))
                     ) {
                         lex_state_set(parser, PM_LEX_STATE_END | PM_LEX_STATE_LABEL);
                     }
diff --git a/test/prism/lex_test.rb b/test/prism/lex_test.rb
index 7eac677ef7..eaeb425566 100644
--- a/test/prism/lex_test.rb
+++ b/test/prism/lex_test.rb
@@ -74,6 +74,13 @@ def test_parse_lex_file
       end
     end
 
+    def test_lex_it_in_block
+      # `it` should be treated as a local so we have an "ambiguous regex"
+      # situation below
+      code = "i=2; 42.tap { it /1/i }"
+      assert_equal 2, Prism.lex(code).value.map(&:first).map(&:type).count(:SLASH)
+    end
+
     private
 
     def assert_lex(fixture)