diff --git a/changelog b/changelog
--- a/changelog
+++ b/changelog
@@ -1,3 +1,7 @@
+pandoc (1.10.0.4)
+
+  * Fixed bug with escaped % in LaTeX reader. Closes #710.
+
 pandoc (1.10.0.3)
 
   * Added further missing fb2 tests to cabal file.
diff --git a/pandoc.cabal b/pandoc.cabal
--- a/pandoc.cabal
+++ b/pandoc.cabal
@@ -1,5 +1,5 @@
 Name:            pandoc
-Version:         1.10.0.3
+Version:         1.10.0.4
 Cabal-Version:   >= 1.10
 Build-Type:      Custom
 License:         GPL
diff --git a/src/Text/Pandoc/Readers/LaTeX.hs b/src/Text/Pandoc/Readers/LaTeX.hs
--- a/src/Text/Pandoc/Readers/LaTeX.hs
+++ b/src/Text/Pandoc/Readers/LaTeX.hs
@@ -690,6 +690,8 @@
 -- parents parameter prevents infinite include loops
 handleIncludes' :: [FilePath] -> String -> IO String
 handleIncludes' _ [] = return []
+handleIncludes' parents ('\\':'%':xs) =
+  ("\\%"++) `fmap` handleIncludes' parents xs
 handleIncludes' parents ('%':xs) = handleIncludes' parents
   $ drop 1 $ dropWhile (/='\n') xs
 handleIncludes' parents ('\\':xs) =
diff --git a/tests/latex-reader.latex b/tests/latex-reader.latex
--- a/tests/latex-reader.latex
+++ b/tests/latex-reader.latex
@@ -841,4 +841,8 @@
 This paragraph should not be part of the note, as it is not
 indented.
 
+\section{Escaped characters}
+
+\$ \% \& \# \_ \{ \}
+
 \end{document}
diff --git a/tests/latex-reader.native b/tests/latex-reader.native
--- a/tests/latex-reader.native
+++ b/tests/latex-reader.native
@@ -370,4 +370,6 @@
  [Para [Str "Notes",Space,Str "can",Space,Str "go",Space,Str "in",Space,Str "quotes.",Note [Para [Str "In",Space,Str "quote."]]]]
 ,OrderedList (1,Decimal,Period)
  [[Para [Str "And",Space,Str "in",Space,Str "list",Space,Str "items.",Note [Para [Str "In",Space,Str "list."]]]]]
-,Para [Str "This",Space,Str "paragraph",Space,Str "should",Space,Str "not",Space,Str "be",Space,Str "part",Space,Str "of",Space,Str "the",Space,Str "note,",Space,Str "as",Space,Str "it",Space,Str "is",Space,Str "not",Space,Str "indented."]]
+,Para [Str "This",Space,Str "paragraph",Space,Str "should",Space,Str "not",Space,Str "be",Space,Str "part",Space,Str "of",Space,Str "the",Space,Str "note,",Space,Str "as",Space,Str "it",Space,Str "is",Space,Str "not",Space,Str "indented."]
+,Header 1 ("",[],[]) [Str "Escaped",Space,Str "characters"]
+,Para [Str "$",Space,Str "%",Space,Str "&",Space,Str "#",Space,Str "_",Space,Str "{",Space,Str "}"]]