diff --git a/packages/babel-template/src/index.js b/packages/babel-template/src/index.js
index 60d0837edb..c4f29583b3 100644
--- a/packages/babel-template/src/index.js
+++ b/packages/babel-template/src/index.js
@@ -3,10 +3,110 @@ import has from "lodash/has";
 import traverse from "babel-traverse";
 import * as babylon from "babylon";
 import { codeFrameColumns } from "babel-code-frame";
+import * as t from "babel-types";
 
 const FROM_TEMPLATE = new Set();
 
-export default function(code: string, opts?: Object): Function {
+export default function(firstArg, ...rest) {
+  if (typeof firstArg === "string") {
+    return factory(firstArg, ...rest);
+  } else {
+    return template(firstArg, ...rest);
+  }
+}
+
+function template(partials: Object | string[], ...args: Array<Object>) {
+  if (!Array.isArray(partials)) {
+    // support template({ options })`string`
+    return templateApply.bind(undefined, partials);
+  }
+  return templateApply(null, partials, ...args);
+}
+
+function templateApply(
+  opts: Object | null,
+  partials: string[],
+  ...args: Array<Object>
+) {
+  if (partials.some(str => str.includes("$BABEL_TEMPLATE$"))) {
+    throw new Error("Template contains illegal substring $BABEL_TEMPLATE$");
+  }
+
+  if (partials.length == 1) {
+    return factory(partials[0], opts);
+  }
+
+  const replacementSet = new Set();
+  const replacementMap = new Map();
+  const replacementValueMap = new Map();
+  let hasNonNumericReplacement = false;
+  for (const arg of args) {
+    if (replacementMap.has(arg)) {
+      continue;
+    }
+
+    if (typeof arg === "number") {
+      replacementMap.set(arg, `$${arg}`);
+    } else if (typeof arg === "string") {
+      // avoid duplicates should t.toIdentifier produce the same result for different arguments
+      const replacementBase = `$BABEL_TEMPLATE$$${t.toIdentifier(arg)}`;
+      let replacement = replacementBase;
+      for (let i = 2; replacementSet.has(replacement); i++) {
+        replacement = `${replacementBase}${i}`;
+      }
+      replacementSet.add(replacement);
+      replacementMap.set(arg, replacement);
+      hasNonNumericReplacement = true;
+    } else {
+      // there can't be duplicates as the size always grows
+      const name = `$BABEL_TEMPLATE$VALUE$${replacementValueMap.size}`;
+
+      // TODO: check if the arg is a Node
+      replacementMap.set(arg, name);
+      replacementValueMap.set(name, arg);
+      hasNonNumericReplacement = true;
+    }
+  }
+
+  if (hasNonNumericReplacement && replacementMap.has(0)) {
+    throw new Error(
+      "Template cannot have a '0' replacement and a named replacement at the same time",
+    );
+  }
+
+  const code = partials.reduce((acc, partial, i) => {
+    if (acc == null) {
+      return partial;
+    }
+
+    const replacement = replacementMap.get(args[i - 1]);
+    return `${acc}${replacement}${partial}`;
+  }, null);
+
+  const func = factory(code, opts);
+
+  return (...args: Array<Object>) => {
+    if (hasNonNumericReplacement) {
+      const argObj = args[0] || {};
+      const converted = {};
+
+      for (const [key, replacement] of replacementMap) {
+        if (typeof key === "number") continue;
+        if (replacementValueMap.has(replacement)) {
+          converted[replacement] = replacementValueMap.get(replacement);
+        } else {
+          converted[replacement] = argObj[key];
+        }
+      }
+
+      args[0] = converted;
+    }
+
+    return func(...args);
+  };
+}
+
+function factory(code: string, opts?: Object): Function {
   // since we lazy parse the template, we get the current stack so we have the
   // original stack to append if it errors when parsing
   let stack;
@@ -19,7 +119,7 @@ export default function(code: string, opts?: Object): Function {
       // error.stack does not exists in IE <= 9
       stack = error.stack
         .split("\n")
-        .slice(1)
+        .slice(2)
         .join("\n");
     }
   }
diff --git a/packages/babel-template/test/template.js b/packages/babel-template/test/template.js
new file mode 100644
index 0000000000..e2916f2d14
--- /dev/null
+++ b/packages/babel-template/test/template.js
@@ -0,0 +1,183 @@
+import generator from "../../babel-generator";
+import * as t from "babel-types";
+import template from "../lib";
+import chai from "chai";
+const expect = chai.expect;
+
+describe("tagged templating", () => {
+  it("basic support", () => {
+    const tpl = template`("stringLiteral")`;
+    const result = tpl();
+
+    expect(result).to.be.ok;
+    expect(t.isStringLiteral(result.expression)).to.be.true;
+  });
+
+  describe("numeric interpolation", () => {
+    it("single replacement", () => {
+      const tpl = template`+${0}`;
+      const node = t.numericLiteral(123);
+      const result = tpl(node);
+
+      expect(result).to.be.ok;
+      expect(t.isUnaryExpression(result.expression)).to.be.true;
+      expect(result.expression.argument).to.equal(node);
+    });
+
+    it("duplicate replacement", () => {
+      const tpl = template`${0} + ${0}`;
+      const node = t.numericLiteral(123);
+      const result = tpl(node);
+
+      expect(result).to.be.ok;
+      expect(t.isBinaryExpression(result.expression)).to.be.true;
+      expect(result.expression.left).to.equal(node);
+      expect(result.expression.right).to.equal(result.expression.left);
+    });
+
+    it("multiple replacement", () => {
+      const tpl = template`${0}.${1}(${2})`;
+      const object = t.identifier("foo");
+      const property = t.identifier("bar");
+      const argument = t.numericLiteral(123);
+      const result = tpl(object, property, argument);
+
+      expect(result).to.be.ok;
+      expect(t.isCallExpression(result.expression)).to.be.true;
+
+      const { callee, arguments: args } = result.expression;
+      expect(t.isMemberExpression(callee)).to.be.true;
+      expect(callee.object).to.equal(object);
+      expect(callee.property).to.equal(property);
+
+      expect(args).to.deep.equal([argument]);
+    });
+  });
+
+  describe("string interpolation", () => {
+    it("has expected internal representation", () => {
+      const tpl = template`${"foo"}(${"b a r"})`;
+      expect(generator(tpl()).code).to.equal(
+        "$BABEL_TEMPLATE$$foo($BABEL_TEMPLATE$$bAR);",
+      );
+    });
+
+    it("simple replacement", () => {
+      const tpl = template`${"foo"}(${"b a r"})`;
+      const arg = {
+        foo: t.identifier("baz"),
+        "b a r": t.numericLiteral(123),
+      };
+
+      const result = tpl(arg);
+
+      expect(result).to.be.ok;
+      expect(t.isCallExpression(result.expression)).to.be.true;
+
+      const { callee, arguments: args } = result.expression;
+
+      expect(callee).to.equal(arg.foo);
+      expect(args).to.deep.equal([arg["b a r"]]);
+    });
+
+    it("does not conflict with similar identifiers", () => {
+      const tpl = template`foo + ${"foo"}`;
+      const arg = {
+        foo: t.identifier("foo"),
+      };
+
+      const result = tpl(arg);
+
+      expect(result).to.be.ok;
+      expect(t.isBinaryExpression(result.expression)).to.be.true;
+
+      const { left, right } = result.expression;
+      expect(left).to.not.equal(right);
+      expect(t.isIdentifier(left, { name: "foo" })).to.be.true;
+
+      expect(right).to.equal(arg.foo);
+    });
+
+    it("does not conflict when t.toIdentifier conflicts", () => {
+      const tpl = template`${"fOO"} + ${"f o o"}`;
+      const arg = {
+        fOO: t.numericLiteral(123),
+        "f o o": t.numericLiteral(321),
+      };
+
+      const result = tpl(arg);
+
+      expect(result).to.be.ok;
+      expect(t.isBinaryExpression(result.expression)).to.be.true;
+
+      const { left, right } = result.expression;
+      expect(left).to.not.equal(right);
+
+      expect(left).to.equal(arg.fOO);
+      expect(right).to.equal(arg["f o o"]);
+    });
+  });
+
+  describe("mixed interpolation", () => {
+    it("throws when 0 is used", () => {
+      expect(() => template`${0} - ${"foo"}`).to.throw(
+        "Template cannot have a '0' replacement and a named replacement at the same time",
+      );
+    });
+
+    it("works", () => {
+      const tpl = template`${1}.${"prop"}`;
+      const arg = {
+        prop: t.identifier("prop"),
+      };
+
+      const result = tpl(arg, t.thisExpression());
+
+      expect(result).to.be.ok;
+      expect(t.isMemberExpression(result.expression)).to.be.true;
+
+      const { object, property } = result.expression;
+
+      expect(t.isThisExpression(object)).to.be.true;
+      expect(property).to.equal(arg.prop);
+    });
+  });
+
+  describe("Node interpolation", () => {
+    it("works", () => {
+      const node = t.identifier("foo");
+      const tpl = template`${node}`;
+
+      const result = tpl();
+
+      expect(result).to.be.ok;
+      expect(result.expression).to.equal(node);
+    });
+  });
+
+  describe("options", () => {
+    it("works", () => {
+      const remove = template({ preserveComments: false })`// comment\nid;`;
+      const preserve = template({ preserveComments: true })`// comment\nid;`;
+
+      const removeResult = remove();
+      const preserveResult = preserve();
+
+      expect(removeResult);
+      expect(preserveResult).to.be.ok;
+
+      // it exists, it just resets to undefined
+      expect(removeResult.leadingComments).to.be.undefined;
+
+      expect(Array.isArray(preserveResult.leadingComments)).to.be.true;
+      expect(preserveResult.leadingComments[0]).to.have.property(
+        "type",
+        "CommentLine",
+      );
+      expect(preserveResult.leadingComments[0]).to.have.property(
+        "value",
+        " comment",
+      );
+    });
+  });
+});