diff --git a/extensions/markdown-basics/cgmanifest.json b/extensions/markdown-basics/cgmanifest.json
index 0a50694d7ed..29d1260e5f0 100644
--- a/extensions/markdown-basics/cgmanifest.json
+++ b/extensions/markdown-basics/cgmanifest.json
@@ -33,7 +33,7 @@
 				"git": {
 					"name": "microsoft/vscode-markdown-tm-grammar",
 					"repositoryUrl": "https://github.com/microsoft/vscode-markdown-tm-grammar",
-					"commitHash": "b068fcb2fbfa834e695505bfb02bbcc0b4edab8b"
+					"commitHash": "09c3e715102d08bba4c4ea828634474fc58b6f57"
 				}
 			},
 			"license": "MIT",
diff --git a/extensions/markdown-basics/syntaxes/markdown.tmLanguage.json b/extensions/markdown-basics/syntaxes/markdown.tmLanguage.json
index a0dfdc270f4..31d9bf5922a 100644
--- a/extensions/markdown-basics/syntaxes/markdown.tmLanguage.json
+++ b/extensions/markdown-basics/syntaxes/markdown.tmLanguage.json
@@ -4,7 +4,7 @@
 		"If you want to provide a fix or improvement, please create a pull request against the original repository.",
 		"Once accepted there, we are happy to receive an update request."
 	],
-	"version": "https://github.com/microsoft/vscode-markdown-tm-grammar/commit/b068fcb2fbfa834e695505bfb02bbcc0b4edab8b",
+	"version": "https://github.com/microsoft/vscode-markdown-tm-grammar/commit/09c3e715102d08bba4c4ea828634474fc58b6f57",
 	"name": "Markdown",
 	"scopeName": "text.html.markdown",
 	"patterns": [
@@ -2838,7 +2838,7 @@
 					"name": "punctuation.definition.constant.end.markdown"
 				}
 			},
-			"match": "(\\[)((?<square>[^\\[\\]\\\\]|\\\\.|\\[\\g<square>*+\\])*+)(\\])(\\[)([^\\]]*+)(\\])",
+			"match": "(?<![\\]\\\\])(\\[)((?<square>[^\\[\\]\\\\]|\\\\.|\\[\\g<square>*+\\])*+)(\\])(\\[)([^\\]]*+)(\\])",
 			"name": "meta.link.reference.markdown"
 		},
 		"link-ref-literal": {
@@ -2859,7 +2859,7 @@
 					"name": "punctuation.definition.constant.end.markdown"
 				}
 			},
-			"match": "(\\[)((?<square>[^\\[\\]\\\\]|\\\\.|\\[\\g<square>*+\\])*+)(\\])[ ]?(\\[)(\\])",
+			"match": "(?<![\\]\\\\])(\\[)((?<square>[^\\[\\]\\\\]|\\\\.|\\[\\g<square>*+\\])*+)(\\])[ ]?(\\[)(\\])",
 			"name": "meta.link.reference.literal.markdown"
 		},
 		"link-ref-shortcut": {
@@ -2874,7 +2874,7 @@
 					"name": "punctuation.definition.link.title.end.markdown"
 				}
 			},
-			"match": "(\\[)(\\S+?)(\\])",
+			"match": "(?<![\\]\\\\])(\\[)(\\S+?)(\\])",
 			"name": "meta.link.reference.markdown"
 		},
 		"raw": {
diff --git a/extensions/markdown-language-features/src/languageFeatures/documentLinkProvider.ts b/extensions/markdown-language-features/src/languageFeatures/documentLinkProvider.ts
index b43f564c510..e6fadaa05f2 100644
--- a/extensions/markdown-language-features/src/languageFeatures/documentLinkProvider.ts
+++ b/extensions/markdown-language-features/src/languageFeatures/documentLinkProvider.ts
@@ -166,9 +166,9 @@ function stripAngleBrackets(link: string) {
 const linkPattern = /(\[((!\[[^\]]*?\]\(\s*)([^\s\(\)]+?)\s*\)\]|(?:\\\]|[^\]])*\])\(\s*)(([^\s\(\)]|\([^\s\(\)]*?\))+)\s*(".*?")?\)/g;
 
 /**
- * Matches `[text][ref]`
+ * Matches `[text][ref]` or `[shorthand]`
  */
-const referenceLinkPattern = /(?:(\[((?:\\\]|[^\]])+)\]\[\s*?)([^\s\]]*?)\]|\[\s*?([^\s\]]*?)\])(?![\:\(])/g;
+const referenceLinkPattern = /(^|[^\]\\])(?:(?:(\[((?:\\\]|[^\]])+)\]\[\s*?)([^\s\]]*?)\]|\[\s*?([^\s\]]*?)\])(?![\:\(]))/gm;
 
 /**
  * Matches `<http://example.com>`
@@ -318,15 +318,15 @@ export class MdLinkProvider implements vscode.DocumentLinkProvider {
 		for (const match of text.matchAll(referenceLinkPattern)) {
 			let linkStart: vscode.Position;
 			let linkEnd: vscode.Position;
-			let reference = match[3];
+			let reference = match[4];
 			if (reference) { // [text][ref]
-				const pre = match[1];
-				const offset = (match.index || 0) + pre.length;
+				const pre = match[2];
+				const offset = ((match.index ?? 0) + match[1].length) + pre.length;
 				linkStart = document.positionAt(offset);
 				linkEnd = document.positionAt(offset + reference.length);
-			} else if (match[4]) { // [ref][], [ref]
-				reference = match[4];
-				const offset = (match.index || 0) + 1;
+			} else if (match[5]) { // [ref][], [ref]
+				reference = match[5];
+				const offset = ((match.index ?? 0) + match[1].length) + 1;
 				linkStart = document.positionAt(offset);
 				linkEnd = document.positionAt(offset + reference.length);
 			} else {
diff --git a/extensions/markdown-language-features/src/test/documentLinkProvider.test.ts b/extensions/markdown-language-features/src/test/documentLinkProvider.test.ts
index d24d255cec3..1df40657d74 100644
--- a/extensions/markdown-language-features/src/test/documentLinkProvider.test.ts
+++ b/extensions/markdown-language-features/src/test/documentLinkProvider.test.ts
@@ -172,6 +172,16 @@ suite('markdown.DocumentLinkProvider', () => {
 		assert.strictEqual(links.length, 0);
 	});
 
+	test('Should not include reference links with escaped leading brackets', async () => {
+		const links = await getLinksForFile(joinLines(
+			`\\[bad link][good]`,
+			`\\[good]`,
+			`[good]: http://example.com`,
+		));
+		assert.strictEqual(links.length, 1);
+		assertRangeEqual(links[0].range, new vscode.Range(2, 8, 2, 26)); // Should only find the definition
+	});
+
 	test('Should not consider links in code fenced with backticks', async () => {
 		const links = await getLinksForFile(joinLines(
 			'```',