diff --git a/changelog.d/punycode-mention.fix b/changelog.d/punycode-mention.fix
new file mode 100644
index 000000000..f013c2dac
--- /dev/null
+++ b/changelog.d/punycode-mention.fix
@@ -0,0 +1 @@
+Fix mentioning punycode domains when using Markdown
diff --git a/lib/pleroma/formatter.ex b/lib/pleroma/formatter.ex
index a46c3e381..11d5af2fb 100644
--- a/lib/pleroma/formatter.ex
+++ b/lib/pleroma/formatter.ex
@@ -124,7 +124,7 @@ defmodule Pleroma.Formatter do
   end
 
   def markdown_to_html(text) do
-    Earmark.as_html!(text, %Earmark.Options{compact_output: true})
+    Earmark.as_html!(text, %Earmark.Options{compact_output: true, smartypants: false})
   end
 
   def html_escape({text, mentions, hashtags}, type) do
diff --git a/test/pleroma/web/common_api/utils_test.exs b/test/pleroma/web/common_api/utils_test.exs
index 4ce039d64..27b1da1e3 100644
--- a/test/pleroma/web/common_api/utils_test.exs
+++ b/test/pleroma/web/common_api/utils_test.exs
@@ -200,7 +200,7 @@ defmodule Pleroma.Web.CommonAPI.UtilsTest do
       {result, _, []} = Utils.format_input(code, "text/markdown")
 
       assert result ==
-               ~s[<p><span class="h-card"><a class="u-url mention" data-user="#{mario.id}" href="#{mario.ap_id}" rel="ugc">@<span>mario</span></a></span> <span class="h-card"><a class="u-url mention" data-user="#{luigi.id}" href="#{luigi.ap_id}" rel="ugc">@<span>luigi</span></a></span> yo what’s up?</p>]
+               ~s[<p><span class="h-card"><a class="u-url mention" data-user="#{mario.id}" href="#{mario.ap_id}" rel="ugc">@<span>mario</span></a></span> <span class="h-card"><a class="u-url mention" data-user="#{luigi.id}" href="#{luigi.ap_id}" rel="ugc">@<span>luigi</span></a></span> yo what&#39;s up?</p>]
     end
 
     test "remote mentions" do
@@ -211,7 +211,7 @@ defmodule Pleroma.Web.CommonAPI.UtilsTest do
       {result, _, []} = Utils.format_input(code, "text/markdown")
 
       assert result ==
-               ~s[<p><span class="h-card"><a class="u-url mention" data-user="#{mario.id}" href="#{mario.ap_id}" rel="ugc">@<span>mario</span></a></span> <span class="h-card"><a class="u-url mention" data-user="#{luigi.id}" href="#{luigi.ap_id}" rel="ugc">@<span>luigi</span></a></span> yo what’s up?</p>]
+               ~s[<p><span class="h-card"><a class="u-url mention" data-user="#{mario.id}" href="#{mario.ap_id}" rel="ugc">@<span>mario</span></a></span> <span class="h-card"><a class="u-url mention" data-user="#{luigi.id}" href="#{luigi.ap_id}" rel="ugc">@<span>luigi</span></a></span> yo what&#39;s up?</p>]
     end
 
     test "raw HTML" do
@@ -229,7 +229,7 @@ defmodule Pleroma.Web.CommonAPI.UtilsTest do
     test "blockquote" do
       code = ~s[> whoms't are you quoting?]
       {result, [], []} = Utils.format_input(code, "text/markdown")
-      assert result == "<blockquote><p>whoms’t are you quoting?</p></blockquote>"
+      assert result == "<blockquote><p>whoms&#39;t are you quoting?</p></blockquote>"
     end
 
     test "code" do
diff --git a/test/pleroma/web/common_api_test.exs b/test/pleroma/web/common_api_test.exs
index a98b16d4b..b21dd4e23 100644
--- a/test/pleroma/web/common_api_test.exs
+++ b/test/pleroma/web/common_api_test.exs
@@ -843,6 +843,18 @@ defmodule Pleroma.Web.CommonAPITest do
       {:ok, _} = CommonAPI.post(user, %{status: "nice", quote_id: public.id})
       {:ok, _} = CommonAPI.post(another_user, %{status: "nice", quote_id: public.id})
     end
+
+    test "it properly mentions punycode domain" do
+      user = insert(:user)
+
+      _mentioned_user =
+        insert(:user, ap_id: "https://xn--i2raa.com/users/yyy", nickname: "yyy@xn--i2raa.com")
+
+      {:ok, activity} =
+        CommonAPI.post(user, %{status: "hey @yyy@xn--i2raa.com", content_type: "text/markdown"})
+
+      assert "https://xn--i2raa.com/users/yyy" in Object.normalize(activity).data["to"]
+    end
   end
 
   describe "reactions" do