diff --git a/acceptance/bundle/variables/double_underscore/databricks.yml b/acceptance/bundle/variables/double_underscore/databricks.yml
new file mode 100644
index 000000000..3bb15d42d
--- /dev/null
+++ b/acceptance/bundle/variables/double_underscore/databricks.yml
@@ -0,0 +1,14 @@
+bundle:
+  name: double_underscore
+
+variables:
+  double__underscore:
+    description: "This is a variable with a double underscore"
+    default: "default"
+
+resources:
+  jobs:
+    test_job:
+      name: "test"
+      tasks:
+        - task_key: "test ${var.double__underscore}"
diff --git a/acceptance/bundle/variables/double_underscore/output.txt b/acceptance/bundle/variables/double_underscore/output.txt
new file mode 100644
index 000000000..45529038d
--- /dev/null
+++ b/acceptance/bundle/variables/double_underscore/output.txt
@@ -0,0 +1,7 @@
+
+>>> $CLI bundle validate -o json
+[
+  {
+    "task_key": "test default"
+  }
+]
diff --git a/acceptance/bundle/variables/double_underscore/script b/acceptance/bundle/variables/double_underscore/script
new file mode 100644
index 000000000..a7394df77
--- /dev/null
+++ b/acceptance/bundle/variables/double_underscore/script
@@ -0,0 +1 @@
+trace $CLI bundle validate -o json | jq .resources.jobs.test_job.tasks
diff --git a/integration/bundle/basic_test.go b/integration/bundle/basic_test.go
index 79301b850..53f8e3ef6 100644
--- a/integration/bundle/basic_test.go
+++ b/integration/bundle/basic_test.go
@@ -6,7 +6,9 @@ import (
 	"testing"
 
 	"github.com/databricks/cli/integration/internal/acc"
+	"github.com/databricks/cli/internal/testcli"
 	"github.com/databricks/cli/internal/testutil"
+	"github.com/databricks/cli/libs/testdiff"
 	"github.com/google/uuid"
 	"github.com/stretchr/testify/require"
 )
@@ -35,3 +37,40 @@ func TestBasicBundleDeployWithFailOnActiveRuns(t *testing.T) {
 	// deploy empty bundle again
 	deployBundleWithFlags(t, ctx, root, []string{"--fail-on-active-runs"})
 }
+
+func TestBasicBundleDeployWithDoubleUnderscoreVariables(t *testing.T) {
+	ctx, wt := acc.WorkspaceTest(t)
+
+	nodeTypeId := testutil.GetCloud(t).NodeTypeID()
+	uniqueId := uuid.New().String()
+	root := initTestTemplate(t, ctx, "basic_with_variables", map[string]any{
+		"unique_id":     uniqueId,
+		"node_type_id":  nodeTypeId,
+		"spark_version": defaultSparkVersion,
+	})
+
+	currentUser, err := wt.W.CurrentUser.Me(ctx)
+	require.NoError(t, err)
+
+	ctx, replacements := testdiff.WithReplacementsMap(ctx)
+	replacements.Set(uniqueId, "$UNIQUE_PRJ")
+	replacements.Set(currentUser.UserName, "$USERNAME")
+
+	t.Cleanup(func() {
+		destroyBundle(t, ctx, root)
+	})
+
+	testutil.Chdir(t, root)
+	testcli.AssertOutput(
+		t,
+		ctx,
+		[]string{"bundle", "validate"},
+		testutil.TestData("testdata/basic_with_variables/bundle_validate.txt"),
+	)
+	testcli.AssertOutput(
+		t,
+		ctx,
+		[]string{"bundle", "deploy", "--force-lock", "--auto-approve"},
+		testutil.TestData("testdata/basic_with_variables/bundle_deploy.txt"),
+	)
+}
diff --git a/integration/bundle/bundles/basic_with_variables/databricks_template_schema.json b/integration/bundle/bundles/basic_with_variables/databricks_template_schema.json
new file mode 100644
index 000000000..41a723b0f
--- /dev/null
+++ b/integration/bundle/bundles/basic_with_variables/databricks_template_schema.json
@@ -0,0 +1,21 @@
+{
+    "properties": {
+        "unique_id": {
+            "type": "string",
+            "description": "Unique ID for job name"
+        },
+        "spark_version": {
+            "type": "string",
+            "description": "Spark version used for job cluster"
+        },
+        "node_type_id": {
+            "type": "string",
+            "description": "Node type id for job cluster"
+        },
+        "root_path": {
+            "type": "string",
+            "description": "Root path to deploy bundle to",
+            "default": ""
+        }
+    }
+}
diff --git a/integration/bundle/bundles/basic_with_variables/template/databricks.yml.tmpl b/integration/bundle/bundles/basic_with_variables/template/databricks.yml.tmpl
new file mode 100644
index 000000000..cb02c9e2f
--- /dev/null
+++ b/integration/bundle/bundles/basic_with_variables/template/databricks.yml.tmpl
@@ -0,0 +1,32 @@
+bundle:
+  name: basic
+
+workspace:
+  {{ if .root_path }}
+  root_path: "{{.root_path}}/.bundle/{{.unique_id}}"
+  {{ else }}
+  root_path: "~/.bundle/{{.unique_id}}"
+  {{ end }}
+
+variables:
+  task__key: # Note: the variable has double underscore
+    default: my_notebook_task
+
+resources:
+  jobs:
+    foo__bar: # Note: the resource has double underscore to check that TF provider can use such names
+      name: test-job-basic-{{.unique_id}}
+      tasks:
+        - task_key: ${var.task__key}
+          new_cluster:
+            num_workers: 1
+            spark_version: "{{.spark_version}}"
+            node_type_id: "{{.node_type_id}}"
+          spark_python_task:
+            python_file: ./hello_world.py
+    foo:
+      name: test-job-basic-ref-{{.unique_id}}
+      tasks:
+        - task_key: job_task
+          run_job_task:
+            job_id: ${resources.jobs.foo__bar.id}
diff --git a/integration/bundle/bundles/basic_with_variables/template/hello_world.py b/integration/bundle/bundles/basic_with_variables/template/hello_world.py
new file mode 100644
index 000000000..f301245e2
--- /dev/null
+++ b/integration/bundle/bundles/basic_with_variables/template/hello_world.py
@@ -0,0 +1 @@
+print("Hello World!")
diff --git a/integration/bundle/testdata/basic_with_variables/bundle_deploy.txt b/integration/bundle/testdata/basic_with_variables/bundle_deploy.txt
new file mode 100644
index 000000000..211164174
--- /dev/null
+++ b/integration/bundle/testdata/basic_with_variables/bundle_deploy.txt
@@ -0,0 +1,4 @@
+Uploading bundle files to /Workspace/Users/$USERNAME/.bundle/$UNIQUE_PRJ/files...
+Deploying resources...
+Updating deployment state...
+Deployment complete!
diff --git a/integration/bundle/testdata/basic_with_variables/bundle_validate.txt b/integration/bundle/testdata/basic_with_variables/bundle_validate.txt
new file mode 100644
index 000000000..dc9016a0f
--- /dev/null
+++ b/integration/bundle/testdata/basic_with_variables/bundle_validate.txt
@@ -0,0 +1,7 @@
+Name: basic
+Target: default
+Workspace:
+  User: $USERNAME
+  Path: /Workspace/Users/$USERNAME/.bundle/$UNIQUE_PRJ
+
+Validation OK!
diff --git a/libs/dyn/dynvar/ref.go b/libs/dyn/dynvar/ref.go
index a28938823..ba397267a 100644
--- a/libs/dyn/dynvar/ref.go
+++ b/libs/dyn/dynvar/ref.go
@@ -1,12 +1,16 @@
 package dynvar
 
 import (
+	"fmt"
 	"regexp"
 
 	"github.com/databricks/cli/libs/dyn"
 )
 
-var re = regexp.MustCompile(`\$\{([a-zA-Z]+([-_]?[a-zA-Z0-9]+)*(\.[a-zA-Z]+([-_]?[a-zA-Z0-9]+)*(\[[0-9]+\])*)*(\[[0-9]+\])*)\}`)
+var (
+	baseVarDef = `[a-zA-Z]+([-_]*[a-zA-Z0-9]+)*`
+	re         = regexp.MustCompile(fmt.Sprintf(`\$\{(%s(\.%s(\[[0-9]+\])*)*(\[[0-9]+\])*)\}`, baseVarDef, baseVarDef))
+)
 
 // ref represents a variable reference.
 // It is a string [dyn.Value] contained in a larger [dyn.Value].
diff --git a/libs/dyn/dynvar/ref_test.go b/libs/dyn/dynvar/ref_test.go
index 4110732f8..637ecb98e 100644
--- a/libs/dyn/dynvar/ref_test.go
+++ b/libs/dyn/dynvar/ref_test.go
@@ -15,9 +15,13 @@ func TestNewRefNoString(t *testing.T) {
 
 func TestNewRefValidPattern(t *testing.T) {
 	for in, refs := range map[string][]string{
-		"${hello_world.world_world}": {"hello_world.world_world"},
-		"${helloworld.world-world}":  {"helloworld.world-world"},
-		"${hello-world.world-world}": {"hello-world.world-world"},
+		"${hello_world.world_world}":  {"hello_world.world_world"},
+		"${helloworld.world-world}":   {"helloworld.world-world"},
+		"${hello-world.world-world}":  {"hello-world.world-world"},
+		"${hello_world.world__world}": {"hello_world.world__world"},
+		"${hello_world.world--world}": {"hello_world.world--world"},
+		"${hello_world.world-_world}": {"hello_world.world-_world"},
+		"${hello_world.world_-world}": {"hello_world.world_-world"},
 	} {
 		ref, ok := newRef(dyn.V(in))
 		require.True(t, ok, "should match valid pattern: %s", in)
@@ -36,8 +40,6 @@ func TestNewRefInvalidPattern(t *testing.T) {
 		"${_-_._-_.id}",                 // cannot use _- in sequence
 		"${0helloworld.world-world}",    // interpolated first section shouldn't start with number
 		"${helloworld.9world-world}",    // interpolated second section shouldn't start with number
-		"${a-a.a-_a-a.id}",              // fails because of -_ in the second segment
-		"${a-a.a--a-a.id}",              // fails because of -- in the second segment
 	}
 	for _, v := range invalid {
 		_, ok := newRef(dyn.V(v))