diff --git a/compiler/parse/__test__.js b/compiler/parse/__test__.js
index 6684e30fe6..956d2905cd 100644
--- a/compiler/parse/__test__.js
+++ b/compiler/parse/__test__.js
@@ -143,4 +143,54 @@ describe( 'parse', () => {
 			js: null
 		});
 	});
+
+	it( 'parses an {{#each}}...{{/each}} block', () => {
+		const template = `{{#each animals as animal}}<p>{{animal}}</p>{{/each}}`;
+
+		assert.deepEqual( parse( template ), {
+			html: {
+				start: 0,
+				end: 53,
+				type: 'Fragment',
+				children: [
+					{
+						start: 0,
+						end: 53,
+						type: 'EachBlock',
+						expression: {
+							start: 8,
+							end: 15,
+							type: 'Identifier',
+							name: 'animals'
+						},
+						context: 'animal',
+						children: [
+							{
+								start: 27,
+								end: 44,
+								type: 'Element',
+								name: 'p',
+								attributes: [],
+								children: [
+									{
+										start: 30,
+										end: 40,
+										type: 'MustacheTag',
+										expression: {
+											start: 32,
+											end: 38,
+											type: 'Identifier',
+											name: 'animal'
+										}
+									}
+								]
+							}
+						]
+					}
+				]
+			},
+			css: null,
+			js: null
+		});
+	});
 });
diff --git a/compiler/parse/index.js b/compiler/parse/index.js
index 2c07fe96ac..c03285d8d7 100644
--- a/compiler/parse/index.js
+++ b/compiler/parse/index.js
@@ -39,6 +39,15 @@ export default function parse ( template ) {
 			}
 		},
 
+		read ( pattern ) {
+			const match = pattern.exec( this.template.slice( this.index ) );
+			if ( !match || match.index !== 0 ) return null;
+
+			parser.index += match[0].length;
+
+			return match[0];
+		},
+
 		readUntil ( pattern ) {
 			const match = pattern.exec( this.template.slice( this.index ) );
 			return this.template.slice( this.index, match ? ( this.index += match.index ) : this.template.length );
diff --git a/compiler/parse/state/mustache.js b/compiler/parse/state/mustache.js
index b3a1860047..abe7dac84f 100644
--- a/compiler/parse/state/mustache.js
+++ b/compiler/parse/state/mustache.js
@@ -1,5 +1,7 @@
 import readExpression from '../read/expression.js';
 
+const validIdentifier = /[a-zA-Z_$][a-zA-Z0-9_$]*/;
+
 export default function mustache ( parser ) {
 	const start = parser.index;
 	parser.index += 2;
@@ -45,9 +47,6 @@ export default function mustache ( parser ) {
 
 		const expression = readExpression( parser );
 
-		parser.allowWhitespace();
-		parser.eat( '}}', true );
-
 		const block = {
 			start,
 			end: null,
@@ -56,6 +55,20 @@ export default function mustache ( parser ) {
 			children: []
 		};
 
+		parser.allowWhitespace();
+
+		// {{#each}} blocks must declare a context – {{#each list as item}}
+		if ( type === 'EachBlock' ) {
+			parser.eat( 'as', true );
+			parser.requireWhitespace();
+
+			block.context = parser.read( validIdentifier ); // TODO check it's not a keyword
+
+			parser.allowWhitespace();
+		}
+
+		parser.eat( '}}', true );
+
 		parser.current().children.push( block );
 		parser.stack.push( block );
 	}
diff --git a/test/samples/each-block/_config.js b/test/samples/each-block/_config.js
new file mode 100644
index 0000000000..27c25a79f2
--- /dev/null
+++ b/test/samples/each-block/_config.js
@@ -0,0 +1,15 @@
+import * as assert from 'assert';
+
+export default {
+	description: '{{#each}}...{{/each}} block',
+	data: {
+		animals: [ 'alpaca', 'baboon', 'capybara' ]
+	},
+	html: '<p>alpaca</p><p>baboon</p><p>capybara</p><!--#each animals-->',
+	test ( component, target ) {
+		component.set({ animals: [ 'alpaca', 'baboon', 'caribou', 'dogfish' ] });
+		assert.equal( target.innerHTML, '<p>alpaca</p><p>baboon</p><p>caribou</p><p>dogfish</p><!--#each animals-->' );
+		component.set({ animals: [] });
+		assert.equal( target.innerHTML, '<!--#each animals-->' );
+	}
+};
diff --git a/test/samples/each-block/main.svelte b/test/samples/each-block/main.svelte
new file mode 100644
index 0000000000..23bfc3c465
--- /dev/null
+++ b/test/samples/each-block/main.svelte
@@ -0,0 +1,3 @@
+{{#each animals as animal}}
+	<p>{{animal}}</p>
+{{/each}}