diff --git a/compiler/parser-lossless/src/grammar.lalrpop b/compiler/parser-lossless/src/grammar.lalrpop
index 68f3b1cca6c..03c143c3873 100644
--- a/compiler/parser-lossless/src/grammar.lalrpop
+++ b/compiler/parser-lossless/src/grammar.lalrpop
@@ -861,7 +861,7 @@ extern {
         Arrow => LalrToken{ token: Token::Arrow, .. },
         BigArrow => LalrToken{ token: Token::BigArrow, .. },
         At => LalrToken{ token: Token::At, .. },
-        // Underscore => tokens::Token::Underscore,
+        Underscore => LalrToken { token: Token::Underscore, .. },
 
         // Keywords
         True => LalrToken { token: Token::True, .. },
diff --git a/compiler/parser-lossless/src/tokens.rs b/compiler/parser-lossless/src/tokens.rs
index db9f072eeab..6ec1cfd1a07 100644
--- a/compiler/parser-lossless/src/tokens.rs
+++ b/compiler/parser-lossless/src/tokens.rs
@@ -101,6 +101,11 @@ pub enum Token {
     // with an LR(1) parser - we potentially get shift-reduce conflicts and other ambiguities between
     // member accesses, program ids, tuple accesses, etc. We could make it work but let's just cut to the
     // chase here.
+
+    // Catch identifiers starting with underscore
+    #[regex(r"_[a-zA-Z][a-zA-Z0-9_]*", priority = 10)]
+    InvalidLeadingUnderscoreIdent,
+
     #[regex(r"[a-zA-Z][a-zA-Z0-9_]*", id_variant)]
     // We need to special case `group::abc` and `signature::abc` as otherwise these are keywords.
     #[token(r"group::[a-zA-Z][a-zA-Z0-9_]*", |_| IdVariants::Path)]
@@ -514,6 +519,9 @@ impl<'a> Iterator for Lexer<'a> {
         if matches!(token, Token::Bidi) {
             self.handler.emit_err(ParserError::lexer_bidi_override_span(span));
             return None;
+        } else if matches!(token, Token::InvalidLeadingUnderscoreIdent) {
+            self.handler.emit_err(ParserError::identifier_cannot_start_with_underscore(span));
+            return None;
         } else if matches!(token, Token::Integer) {
             let (s, radix) = if let Some(s) = text.strip_prefix("0x") {
                 (s, 16)
diff --git a/errors/src/errors/parser/parser_errors.rs b/errors/src/errors/parser/parser_errors.rs
index 388f3efa411..40731c09a2e 100644
--- a/errors/src/errors/parser/parser_errors.rs
+++ b/errors/src/errors/parser/parser_errors.rs
@@ -471,4 +471,11 @@ create_messages!(
         msg: format!("Digit {digit} invalid in radix {radix} (token {token})."),
         help: None,
     }
+
+    @formatted
+    identifier_cannot_start_with_underscore {
+        args: (),
+        msg: "Identifiers cannot start with an underscore.",
+        help: Some("Identifiers must start with a letter.".to_string()),
+    }
 );
diff --git a/tests/expectations/parser/identifiers/leading_underscore_expression_fail.out b/tests/expectations/parser/identifiers/leading_underscore_expression_fail.out
new file mode 100644
index 00000000000..2439c9e9c56
--- /dev/null
+++ b/tests/expectations/parser/identifiers/leading_underscore_expression_fail.out
@@ -0,0 +1,7 @@
+Error [EPAR0370053]: Identifiers cannot start with an underscore.
+    --> test:5:16
+     |
+   5 |         return _value;
+     |                ^^^^^^
+     |
+     = Identifiers must start with a letter.
diff --git a/tests/expectations/parser/identifiers/leading_underscore_fail.out b/tests/expectations/parser/identifiers/leading_underscore_fail.out
new file mode 100644
index 00000000000..9f591a07eac
--- /dev/null
+++ b/tests/expectations/parser/identifiers/leading_underscore_fail.out
@@ -0,0 +1,7 @@
+Error [EPAR0370053]: Identifiers cannot start with an underscore.
+    --> test:4:13
+     |
+   4 |         let _c: u32 = a + b;
+     |             ^^
+     |
+     = Identifiers must start with a letter.
diff --git a/tests/tests/parser/identifiers/leading_underscore_expression_fail.leo b/tests/tests/parser/identifiers/leading_underscore_expression_fail.leo
new file mode 100644
index 00000000000..b7baa8ee4e7
--- /dev/null
+++ b/tests/tests/parser/identifiers/leading_underscore_expression_fail.leo
@@ -0,0 +1,12 @@
+program test.aleo {
+    // Tests underscore in expression context
+    transition main() -> u32 {
+        // this should error when lexer sees _value
+        return _value;
+    }
+    
+    function foo(_param: u32) -> u32 {
+        return _param;
+    }
+}
+
diff --git a/tests/tests/parser/identifiers/leading_underscore_fail.leo b/tests/tests/parser/identifiers/leading_underscore_fail.leo
new file mode 100644
index 00000000000..99029d9a2df
--- /dev/null
+++ b/tests/tests/parser/identifiers/leading_underscore_fail.leo
@@ -0,0 +1,13 @@
+program test.aleo {
+    transition main(a: u32, b: u32) -> u32 {
+        // single leading underscore, typed
+        let _c: u32 = a + b;
+        
+        // single leading underscore, untyped
+        let _temp = 10u32;
+        
+        // using underscore-prefixed variable in expression
+        return _c + _temp;
+    }
+}
+