diff --git a/highlighters/main/main-highlighter.zsh b/highlighters/main/main-highlighter.zsh
index 9776ba4..7f8c47b 100644
--- a/highlighters/main/main-highlighter.zsh
+++ b/highlighters/main/main-highlighter.zsh
@@ -72,6 +72,9 @@ _zsh_highlight_main_add_region_highlight() {
   integer start=$1 end=$2
   shift 2
 
+  (( highlighted_alias )) && return
+  (( in_alias )) && highlighted_alias=1
+
   # The calculation was relative to $buf but region_highlight is relative to $BUFFER.
   (( start += buf_offset ))
   (( end += buf_offset ))
@@ -363,10 +366,18 @@ _zsh_highlight_highlighter_main_paint()
 _zsh_highlight_main_highlighter_highlight_list()
 {
   integer start_pos end_pos=0 buf_offset=$1 has_end=$3
-  local buf=$4 highlight_glob=true arg arg_raw style
+  # last_alias is the last alias arg (lhs) expanded (if in an alias).
+  #     This allows for expanding alias ls='ls -l' while avoiding loops.
+  local arg buf=$4 highlight_glob=true last_alias style
   local in_array_assignment=false # true between 'a=(' and the matching ')'
-  integer len=$#buf
+  # highlighted_alias is 1 when the alias arg has been highlighted with a non-alias style.
+  #     E.g. alias x=ls;  x has been highlighted as alias AND command.
+  # in_alias is equal to the number of shifts needed until arg=args[1] pops an
+  #     arg from BUFFER and not added by an alias.
+  integer highlighted_alias=0 in_alias=0 len=$#buf
   local -a match mbegin mend list_highlights
+  # seen_alias is a map of aliases already seen to avoid loops like alias a=b b=a
+  local -A seen_alias
   list_highlights=()
 
   # "R" for round
@@ -427,10 +438,12 @@ _zsh_highlight_main_highlighter_highlight_list()
     args=(${(z)buf})
   fi
   while (( $#args )); do
-    # Save an unmunged copy of the current word.
     arg=$args[1]
-    arg_raw="$arg"
     shift args
+    if (( in_alias )); then
+      (( in_alias-- ))
+      (( in_alias == 0 )) && highlighted_alias=0 last_alias= seen_alias=()
+    fi
 
     # Initialize this_word and next_word.
     if (( in_redirection == 0 )); then
@@ -455,7 +468,7 @@ _zsh_highlight_main_highlighter_highlight_list()
       fi
     fi
 
-    if true; then
+    if (( in_alias == 0 )); then
       # Compute the new $start_pos and $end_pos, skipping over whitespace in $buf.
       start_pos=$end_pos
       if [[ $arg == ';' ]] ; then
@@ -531,34 +544,20 @@ _zsh_highlight_main_highlighter_highlight_list()
       # Expand aliases.
       _zsh_highlight_main__type "$arg"
       local res="$REPLY"
-      if [[ $res == "alias" ]]; then
-        () {
-        local -A seen_alias
-        while [[ $REPLY == alias ]]; do
+      if [[ $res == "alias" ]] && [[ $last_alias != $arg ]]; then
+        # Avoid looping forever on alias a=b b=c c=b, but allow alias foo='foo bar'
+        if (( $+seen_alias[$arg] )); then
+          _zsh_highlight_main_add_region_highlight $start_pos $end_pos unknown-token
+          continue
+        fi
         seen_alias[$arg]=1
+        last_alias=$arg
         _zsh_highlight_main__resolve_alias $arg
-        # Use a temporary array to ensure the subscript is interpreted as
-        # an array subscript, not as a scalar subscript
         local -a alias_args
-        # TODO: the ${interactive_comments+set} path needs to skip comments; see test-data/alias-comment1.zsh
+        # Elision is desired in case alias x=''
         alias_args=( ${interactive_comments-${(z)REPLY}}
                      ${interactive_comments+${(zZ+c+)REPLY}} )
-        # Avoid looping forever on alias a=b b=c c=b, but allow alias foo='foo bar'
-        [[ $arg == $alias_args[1] ]] && break
-        arg=$alias_args[1]
-        if (( $+seen_alias[$arg] )); then
-          res=none
-          break
-        fi
-        _zsh_highlight_main__type "$arg"
-        done
-        }
-        _zsh_highlight_main_highlighter_expand_path $arg
-        arg=$REPLY
-        () {
-        # Make sure to use $arg_raw here, rather than $arg.
-        integer insane_alias
-        case $arg_raw in
+        case $arg in
           # Issue #263: aliases with '=' on their LHS.
           #
           # There are three cases:
@@ -566,27 +565,29 @@ _zsh_highlight_main_highlighter_highlight_list()
           # - Unsupported, breaks 'alias -L' output, but invokable:
           ('='*) :;;
           # - Unsupported, not invokable:
-          (*'='*) insane_alias=1;;
+          (*'='*)
+            _zsh_highlight_main_add_region_highlight $start_pos $end_pos unknown-token
+            continue
+            ;;
           # - The common case:
           (*) :;;
         esac
-        if (( insane_alias )); then
-          style=unknown-token
-        # Calling 'type' again; since __type memoizes the answer, this call is just a hash lookup.
-        elif ! _zsh_highlight_main__type "$arg" || [[ $REPLY == 'none' ]]; then
-          style=unknown-token
+        args=( $alias_args $args )
+        if (( in_alias == 0 )); then
+          _zsh_highlight_main_add_region_highlight $start_pos $end_pos alias
+          # Add one because we will in_alias-- on the next loop iteration so
+          # this iteration should be considered in in_alias as well
+          (( in_alias += $#alias_args + 1 ))
         else
-          # The common case.
-          style=alias
-          if (( ${+precommand_options[(re)"$arg"]} )) && (( ! ${+precommand_options[(re)"$arg_raw"]} )); then
-            precommand_options[$arg_raw]=$precommand_options[$arg]
-          fi
+          # This arg is already included in the count, so no need to + 1.
+          (( in_alias += $#alias_args ))
         fi
-        }
+        (( in_redirection++ )) # Stall this arg
+        continue
       else
         _zsh_highlight_main_highlighter_expand_path $arg
         arg=$REPLY
-        _zsh_highlight_main__type "$arg"
+        _zsh_highlight_main__type "$arg" 0
         res="$REPLY"
       fi
     fi
@@ -635,7 +636,7 @@ _zsh_highlight_main_highlighter_highlight_list()
             arg=${(P)MATCH}
             ;;
         esac
-        _zsh_highlight_main__type "$arg"
+        _zsh_highlight_main__type "$arg" 0
         res=$REPLY
       fi
     }
@@ -703,7 +704,7 @@ _zsh_highlight_main_highlighter_highlight_list()
      next_word=':start:'
    elif ! (( in_redirection)) && [[ $this_word == *':start:'* ]]; then # $arg is the command word
      if (( ${+precommand_options[$arg]} )) && _zsh_highlight_main__is_runnable $arg; then
-      [[ $res != alias ]] && style=precommand
+      style=precommand
       flags_with_argument=${precommand_options[$arg]%:*}
       flags_sans_argument=${precommand_options[$arg]#*:}
       next_word=${next_word//:regular:/}
diff --git a/highlighters/main/test-data/alias-comment1.zsh b/highlighters/main/test-data/alias-comment1.zsh
index a2b56c6..0c449e1 100644
--- a/highlighters/main/test-data/alias-comment1.zsh
+++ b/highlighters/main/test-data/alias-comment1.zsh
@@ -33,5 +33,6 @@ alias x=$'# foo\npwd'
 BUFFER='x'
 
 expected_region_highlight=(
-  "1 1 alias 'interactivecomments applies to aliases'" # x becomes pwd
+  '1 1 alias' # x
+  '1 1 comment' # x (#)
 )
diff --git a/highlighters/main/test-data/alias-comment2.zsh b/highlighters/main/test-data/alias-comment2.zsh
index e9ecfca..8bdc5a8 100644
--- a/highlighters/main/test-data/alias-comment2.zsh
+++ b/highlighters/main/test-data/alias-comment2.zsh
@@ -33,5 +33,6 @@ alias x=$'# foo\npwd'
 BUFFER='x'
 
 expected_region_highlight=(
-  "1 1 unknown-token" # x becomes #
+  '1 1 alias' # x
+  '1 1 unknown-token' # x (#)
 )
diff --git a/highlighters/main/test-data/alias-loop.zsh b/highlighters/main/test-data/alias-loop.zsh
index 46e900b..b36d1c9 100644
--- a/highlighters/main/test-data/alias-loop.zsh
+++ b/highlighters/main/test-data/alias-loop.zsh
@@ -33,7 +33,8 @@ alias a=b b=c c=b
 BUFFER='a foo; :'
 
 expected_region_highlight=(
-  '1 1 unknown-token' # a
+  '1 1 alias' # a
+  '1 1 unknown-token' # a (invalid alias loop)
   '3 5 default' # foo
   '6 6 commandseparator' # ;
   '8 8 builtin' # :
diff --git a/highlighters/main/test-data/alias-nested-precommand.zsh b/highlighters/main/test-data/alias-nested-precommand.zsh
index 6d4172b..7c2eeeb 100644
--- a/highlighters/main/test-data/alias-nested-precommand.zsh
+++ b/highlighters/main/test-data/alias-nested-precommand.zsh
@@ -35,6 +35,7 @@ BUFFER='a -u phy1729 echo; :'
 
 expected_region_highlight=(
   '1 1 alias' # a
+  '1 1 precommand' # a (sudo)
   '3 4 single-hyphen-option' # -u
   '6 12 default' # phy1729
   '14 17 builtin' # echo
diff --git a/highlighters/main/test-data/alias-nested.zsh b/highlighters/main/test-data/alias-nested.zsh
index b24b496..44ab22b 100644
--- a/highlighters/main/test-data/alias-nested.zsh
+++ b/highlighters/main/test-data/alias-nested.zsh
@@ -34,6 +34,7 @@ BUFFER='a foo; :'
 
 expected_region_highlight=(
   '1 1 alias' # a
+  '1 1 builtin' # a (:)
   '3 5 default' # foo
   '6 6 commandseparator' # ;
   '8 8 builtin' # :
diff --git a/highlighters/main/test-data/alias-precommand-option-argument.zsh b/highlighters/main/test-data/alias-precommand-option-argument1.zsh
similarity index 97%
rename from highlighters/main/test-data/alias-precommand-option-argument.zsh
rename to highlighters/main/test-data/alias-precommand-option-argument1.zsh
index ac96ad6..ad16962 100644
--- a/highlighters/main/test-data/alias-precommand-option-argument.zsh
+++ b/highlighters/main/test-data/alias-precommand-option-argument1.zsh
@@ -35,7 +35,8 @@ BUFFER='sdu phy1729 echo foo'
 
 expected_region_highlight=(
   '1 3 alias' # sdu
-  '5 11 default "issue #540"' # phy1729
+  '1 3 precommand' # sdu (sudo)
+  '5 11 default' # phy1729
   '13 16 commmand "issue #540"' # echo (not builtin)
   '18 20 default' # foo
 )
diff --git a/highlighters/main/test-data/alias-precommand-option-argument2.zsh b/highlighters/main/test-data/alias-precommand-option-argument2.zsh
new file mode 100644
index 0000000..2fceff8
--- /dev/null
+++ b/highlighters/main/test-data/alias-precommand-option-argument2.zsh
@@ -0,0 +1,43 @@
+#!/usr/bin/env zsh
+# -------------------------------------------------------------------------------------------------
+# Copyright (c) 2018 zsh-syntax-highlighting contributors
+# All rights reserved.
+#
+# Redistribution and use in source and binary forms, with or without modification, are permitted
+# provided that the following conditions are met:
+#
+#  * Redistributions of source code must retain the above copyright notice, this list of conditions
+#    and the following disclaimer.
+#  * Redistributions in binary form must reproduce the above copyright notice, this list of
+#    conditions and the following disclaimer in the documentation and/or other materials provided
+#    with the distribution.
+#  * Neither the name of the zsh-syntax-highlighting contributors nor the names of its contributors
+#    may be used to endorse or promote products derived from this software without specific prior
+#    written permission.
+#
+# THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR
+# IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
+# FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDER OR
+# CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL
+# DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE,
+# DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER
+# IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT
+# OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+# -------------------------------------------------------------------------------------------------
+# -*- mode: zsh; sh-indentation: 2; indent-tabs-mode: nil; sh-basic-offset: 2; -*-
+# vim: ft=zsh sw=2 ts=2 et
+# -------------------------------------------------------------------------------------------------
+
+alias sde='sudo -e'
+alias seu='sde -u'
+sudo(){}
+
+BUFFER='seu phy1729 echo foo'
+
+expected_region_highlight=(
+  '1 3 alias' # seu
+  '1 3 precommand' # seu (sudo)
+  '5 11 default' # phy1729
+  '13 16 commmand "issue #540"' # echo (not builtin)
+  '18 20 default' # foo
+)
diff --git a/highlighters/main/test-data/alias-quoted.zsh b/highlighters/main/test-data/alias-quoted.zsh
index bf397f9..e42e2f0 100644
--- a/highlighters/main/test-data/alias-quoted.zsh
+++ b/highlighters/main/test-data/alias-quoted.zsh
@@ -35,5 +35,5 @@ expected_region_highlight=(
   '1 3 unknown-token' # "a"
   '5 7 default' # foo
   '8 8 commandseparator' # ;
-  '10 12 command "issue #544' # \ls
+  '10 12 command' # \ls
 )
diff --git a/highlighters/main/test-data/alias-redirect.zsh b/highlighters/main/test-data/alias-redirect.zsh
index 518cdc3..a6a0aab 100644
--- a/highlighters/main/test-data/alias-redirect.zsh
+++ b/highlighters/main/test-data/alias-redirect.zsh
@@ -31,7 +31,8 @@ alias x=\>
 BUFFER='x foo echo bar'
 
 expected_region_highlight=(
-  '1 1 redirection' # x becomes >
+  '1 1 alias' # x
+  '1 1 redirection' # x (>)
   '3 5 default' # foo
   '7 10 builtin' # echo
   '12 14 default' # bar
diff --git a/highlighters/main/test-data/alias-self.zsh b/highlighters/main/test-data/alias-self.zsh
index c6f12b1..88ed3c8 100644
--- a/highlighters/main/test-data/alias-self.zsh
+++ b/highlighters/main/test-data/alias-self.zsh
@@ -34,5 +34,6 @@ BUFFER='echo bar'
 
 expected_region_highlight=(
   '1 4 alias' # echo
+  '1 4 builtin' # echo
   '6 8 default' # bar
 )
diff --git a/highlighters/main/test-data/alias-to-dir.zsh b/highlighters/main/test-data/alias-to-dir.zsh
index 5e78e14..93aaa62 100644
--- a/highlighters/main/test-data/alias-to-dir.zsh
+++ b/highlighters/main/test-data/alias-to-dir.zsh
@@ -32,5 +32,6 @@ alias x=/
 BUFFER=$'x'
 
 expected_region_highlight=(
-  '1 1 unknown-token' # x
+  '1 1 alias' # x
+  '1 1 unknown-token "issue #202"' # x (/)
 )
diff --git a/highlighters/main/test-data/alias.zsh b/highlighters/main/test-data/alias.zsh
index 9699f0b..8330a04 100644
--- a/highlighters/main/test-data/alias.zsh
+++ b/highlighters/main/test-data/alias.zsh
@@ -48,4 +48,5 @@ fi
 expected_region_highlight+=(
   "9 9 commandseparator" # ;
   "11 16 alias" # alias1
+  "11 16 command" # alias1 (ls)
 )
diff --git a/highlighters/main/test-data/noglob-alias.zsh b/highlighters/main/test-data/noglob-alias.zsh
index 2f96445..5676b5a 100644
--- a/highlighters/main/test-data/noglob-alias.zsh
+++ b/highlighters/main/test-data/noglob-alias.zsh
@@ -32,5 +32,6 @@ BUFFER='x ls'
 
 expected_region_highlight=(
   "1 1 alias" # x
+  "1 1 precommand" # x (command)
   "3 4 command" # ls
 )
diff --git a/highlighters/main/test-data/off-by-one.zsh b/highlighters/main/test-data/off-by-one.zsh
index 3870e20..7d6961a 100644
--- a/highlighters/main/test-data/off-by-one.zsh
+++ b/highlighters/main/test-data/off-by-one.zsh
@@ -33,8 +33,9 @@ f() {}
 BUFFER='a;f;'
 
 expected_region_highlight=(
-  "1 1 alias" # f
+  "1 1 alias" # a
+  "1 1 builtin" # a (:)
   "2 2 commandseparator" # ;
-  "3 3 function" # g
+  "3 3 function" # f
   "4 4 commandseparator" # ;
 )