diff --git a/scripts/update_lit_checks.py b/scripts/update_lit_checks.py
index 0e6801e663c..f53fe6b1f36 100755
--- a/scripts/update_lit_checks.py
+++ b/scripts/update_lit_checks.py
@@ -51,11 +51,6 @@
 # segments included in the output.
 ITEM_NAME = r'\$[^\s()]*|\$"[^"]*"|declare'
 
-# FIXME: This does not handle nested string contents. For example,
-#  (data (i32.const 10) "hello(")
-# will look unterminated, due to the '(' inside the string. As a result, the
-# code below will consider more elements after the |data| to be part of it,
-# until it sees enough closing ')' symbols.
 ITEM_RE = re.compile(r'(?:^\s*\(rec\s*)?(^\s*)\((' + ALL_ITEMS + r')\s+(' + ITEM_NAME + ').*$',
                      re.MULTILINE)
 
@@ -140,9 +135,20 @@ def find_end(module, start):
     # open parenthesis at `start`.
     assert module[start] == '('
     depth = 1
+    in_string = False
+    escaped = False
     for end in range(start + 1, len(module)):
         if depth == 0:
             break
+        if in_string:
+            if escaped:
+                escaped = False
+            elif module[end] == '\\':
+                escaped = True
+            elif module[end] == '"':
+                in_string = False
+        elif module[end] == '"':
+            in_string = True
         elif module[end] == '(':
             depth += 1
         elif module[end] == ')':
@@ -150,6 +156,7 @@ def find_end(module, start):
     return end
 
 
+
 def find_annotations(module, start):
     # Search backward to find the start of the line containing the first of the
     # annotations preceding `start`, if any.
diff --git a/test/unit/test_update_lit_checks_strings.py b/test/unit/test_update_lit_checks_strings.py
new file mode 100755
index 00000000000..99a528b796c
--- /dev/null
+++ b/test/unit/test_update_lit_checks_strings.py
@@ -0,0 +1,41 @@
+import os
+import subprocess
+import sys
+import tempfile
+from pathlib import Path
+
+from scripts.test import shared
+
+from . import utils
+
+
+class UpdateLitChecksStringsTest(utils.BinaryenTestCase):
+    def test_parentheses_in_strings(self):
+        # The updater must not treat data bytes as WAT delimiters. Include
+        # escaped quotes and backslashes so the following function stays separate.
+        strings = ['hello', 'hello(', 'hello)', 'hello(()', r'hello\"(', r'hello\\(']
+        with tempfile.TemporaryDirectory() as temp:
+            for string in strings:
+                with self.subTest(string=string):
+                    test = Path(temp) / 'input.wat'
+                    test.write_text(';; RUN: wasm-opt %s -S -o - | filecheck %s\n'
+                                    '(module\n'
+                                    ' (memory $mem 1)\n'
+                                    f' (data $data (i32.const 0) "{string}")\n'
+                                    ' (func $after (result i32) (i32.const 42))\n'
+                                    ')\n')
+                    command = [sys.executable,
+                               os.path.join(shared.options.binaryen_root, 'scripts', 'update_lit_checks.py'),
+                               '--binaryen-bin', shared.options.binaryen_bin,
+                               '--force', '--all-items', '--dry-run', str(test)]
+                    result = subprocess.run(command, capture_output=True, text=True)
+                    self.assertEqual(result.returncode, 0, result.stderr)
+                    lines = result.stdout.splitlines()
+                    # Both items get their own CHECK block, rather than the
+                    # function being absorbed into data's CHECK-NEXT block.
+                    self.assertEqual(sum(';; CHECK:' in line and '(func $after' in line
+                                         for line in lines), 1, result.stdout)
+                    self.assertFalse(any(';; CHECK-NEXT:' in line and '(func $after' in line
+                                         for line in lines), result.stdout)
+                    self.assertTrue(any(';; CHECK:' in line and '(data $data' in line
+                                        and line.rstrip().endswith('")') for line in lines), result.stdout)