diff --git a/CHANGELOG.md b/CHANGELOG.md
index 40baa4c42bbd..bfe8bbeb97f8 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -11,6 +11,7 @@ and this project adheres to [Semantic Versioning](https://semver.org/spec/v2.0.0
 
 - Make sure `contain-*` utility variables resolve to a valid value ([#13521](https://github.com/tailwindlabs/tailwindcss/pull/13521))
 - Support unbalanced parentheses and braces in quotes in arbitrary values and variants ([#13608](https://github.com/tailwindlabs/tailwindcss/pull/13608))
+- Keep underscores in dashed-idents ([#13538](https://github.com/tailwindlabs/tailwindcss/pull/13538))
 
 ### Changed
 
diff --git a/packages/tailwindcss/src/utils/decode-arbitrary-value.test.ts b/packages/tailwindcss/src/utils/decode-arbitrary-value.test.ts
index e78a25f7418d..1890465809ee 100644
--- a/packages/tailwindcss/src/utils/decode-arbitrary-value.test.ts
+++ b/packages/tailwindcss/src/utils/decode-arbitrary-value.test.ts
@@ -14,13 +14,40 @@ describe('decoding arbitrary values', () => {
     expect(decodeArbitraryValue('foo\\_bar')).toBe('foo_bar')
   })
 
-  it('should not replace underscores in url()', () => {
+  it('should not replace underscores in url(…)', () => {
     expect(decodeArbitraryValue('url(./my_file.jpg)')).toBe('url(./my_file.jpg)')
   })
 
-  it('should leave var(…) as is', () => {
-    expect(decodeArbitraryValue('var(--foo)')).toBe('var(--foo)')
-    expect(decodeArbitraryValue('var(--headings-h1-size)')).toBe('var(--headings-h1-size)')
+  it('should not replace underscores in var(…)', () => {
+    expect(decodeArbitraryValue('var(--foo_bar)')).toBe('var(--foo_bar)')
+  })
+
+  it('should replace underscores in the fallback value of var(…)', () => {
+    expect(decodeArbitraryValue('var(--foo_bar, "my_content")')).toBe(
+      'var(--foo_bar, "my content")',
+    )
+  })
+
+  it('should not replace underscores in nested var(…)', () => {
+    expect(decodeArbitraryValue('var(--foo_bar, var(--bar_baz))')).toBe(
+      'var(--foo_bar, var(--bar_baz))',
+    )
+  })
+
+  it('should replace underscores in the fallback value of nested var(…)', () => {
+    expect(decodeArbitraryValue('var(--foo_bar, var(--bar_baz, "my_content"))')).toBe(
+      'var(--foo_bar, var(--bar_baz, "my content"))',
+    )
+  })
+
+  it('should not replace underscores in dashed idents', () => {
+    expect(decodeArbitraryValue('--foo_bar')).toBe('--foo_bar')
+  })
+
+  it('should replace underscores in strings that look like dashed idents', () => {
+    expect(decodeArbitraryValue('content-["some--thing_here"]')).toBe(
+      'content-["some--thing here"]',
+    )
   })
 })
 
diff --git a/packages/tailwindcss/src/utils/decode-arbitrary-value.ts b/packages/tailwindcss/src/utils/decode-arbitrary-value.ts
index f644e663995a..e1f6d708fc82 100644
--- a/packages/tailwindcss/src/utils/decode-arbitrary-value.ts
+++ b/packages/tailwindcss/src/utils/decode-arbitrary-value.ts
@@ -1,5 +1,17 @@
 import { addWhitespaceAroundMathOperators } from './math-operators'
 
+const BACKSLASH = 0x5c
+const UNDERSCORE = 0x5f
+const DASH = 0x2d
+const DOUBLE_QUOTE = 0x22
+const SINGLE_QUOTE = 0x27
+const LOWER_A = 0x61
+const LOWER_Z = 0x7a
+const UPPER_A = 0x41
+const UPPER_Z = 0x5a
+const ZERO = 0x30
+const NINE = 0x39
+
 export function decodeArbitraryValue(input: string): string {
   // We do not want to normalize anything inside of a url() because if we
   // replace `_` with ` `, then it will very likely break the url.
@@ -14,28 +26,126 @@ export function decodeArbitraryValue(input: string): string {
 }
 
 /**
- * Convert `_` to ` `, except for escaped underscores `\_` they should be
- * converted to `_` instead.
+ * Convert underscores `_` to whitespace ` `
+ *
+ * Except for:
+ *
+ * - Escaped underscores `\_`, these are converted to underscores `_`
+ * - Dashed idents `--foo_bar`, these are left as-is
+ *
+ * Inside strings, dashed idents are considered to be normal strings without any
+ * special meaning, so the `_` in "dashed idents" are converted to whitespace.
  */
 function convertUnderscoresToWhitespace(input: string) {
   let output = ''
-  for (let i = 0; i < input.length; i++) {
-    let char = input[i]
+  let len = input.length
+
+  for (let idx = 0; idx < len; idx++) {
+    let char = input.charCodeAt(idx)
+
+    // Escaped values
+    if (input.charCodeAt(idx) === BACKSLASH) {
+      // An escaped underscore (e.g.: `\_`) is converted to a non-escaped
+      // underscore, but without converting the `_` to a space.
+      if (input.charCodeAt(idx + 1) === UNDERSCORE) {
+        output += '_'
+        idx += 1
+      }
 
-    // Escaped underscore
-    if (char === '\\' && input[i + 1] === '_') {
-      output += '_'
-      i += 1
+      // Consume the backslash and the next character as-is
+      else {
+        output += input.slice(idx, idx + 2)
+        idx += 1
+      }
     }
 
-    // Unescaped underscore
-    else if (char === '_') {
+    // Underscores are converted to whitespace
+    else if (char === UNDERSCORE) {
       output += ' '
     }
 
+    // Start of a dashed ident, consume the ident as-is
+    else if (char === DASH && input.charCodeAt(idx + 1) === DASH) {
+      let start = idx
+
+      // Skip the first two dashes, we already know they are there
+      idx += 2
+
+      char = input.charCodeAt(idx)
+      while (
+        (char >= LOWER_A && char <= LOWER_Z) ||
+        (char >= UPPER_A && char <= UPPER_Z) ||
+        (char >= ZERO && char <= NINE) ||
+        char === DASH ||
+        char === UNDERSCORE ||
+        char === BACKSLASH
+      ) {
+        // Escaped value, consume the next character as-is
+        if (char === BACKSLASH) {
+          // In theory, we can also escape a unicode code point where 1 to 6 hex
+          // digits are allowed after the \. However, each hex digit is also a
+          // valid ident character, so we can just consume the next character
+          // as-is and go to the next character.
+          idx += 1
+        }
+
+        // Next character
+        char = input.charCodeAt(++idx)
+      }
+
+      output += input.slice(start, idx)
+
+      // The last character was not a valid ident character, so we need to back
+      // up one character.
+      idx -= 1
+    }
+
+    // Start of a string
+    else if (char === SINGLE_QUOTE || char === DOUBLE_QUOTE) {
+      let quote = input[idx++]
+
+      // Keep the quote
+      output += quote
+
+      // Consume to the end of the string, but replace any non-escaped
+      // underscores with spaces.
+      while (idx < len && input.charCodeAt(idx) !== char) {
+        // Escaped values
+        if (input.charCodeAt(idx) === BACKSLASH) {
+          // An escaped underscore (e.g.: `\_`) is converted to a non-escaped
+          // underscore, but without converting the `_` to a space.
+          if (input.charCodeAt(idx + 1) === UNDERSCORE) {
+            output += '_'
+            idx += 1
+          }
+
+          // Consume the backslash and the next character as-is
+          else {
+            output += input.slice(idx, idx + 2)
+            idx += 1
+          }
+        }
+
+        // Unescaped underscore
+        else if (input.charCodeAt(idx) === UNDERSCORE) {
+          output += ' '
+        }
+
+        // All other characters
+        else {
+          output += input[idx]
+        }
+
+        idx += 1
+      }
+
+      // Keep the end quote
+      output += quote
+    }
+
     // All other characters
     else {
-      output += char
+      output += input[idx]
     }
   }