diff --git a/CHANGELOG.rst b/CHANGELOG.rst
index e7900c570..7adf1622a 100644
--- a/CHANGELOG.rst
+++ b/CHANGELOG.rst
@@ -19,6 +19,7 @@ Interactive improvements
 - The history search now preserves ordering between :kbd:`ctrl-s` forward and :kbd:`ctrl-r` backward searches.
 - Left mouse click now can select pager items.
 - Instead of flashing all the text to the left of the cursor, fish now flashes the matched token during history token search, the completed token during completion (:issue:`11050`), the autosuggestion when deleting it, and the full command line in all other cases.
+- Pasted commands are now stripped of any ``$ `` prefix.
 
 New or improved bindings
 ^^^^^^^^^^^^^^^^^^^^^^^^
diff --git a/doc_src/cmds/commandline.rst b/doc_src/cmds/commandline.rst
index 808a0093c..627de3041 100644
--- a/doc_src/cmds/commandline.rst
+++ b/doc_src/cmds/commandline.rst
@@ -45,8 +45,9 @@ The following options change the way ``commandline`` updates the command line bu
 **-a** or **--append**
     Do not remove the current commandline, append the specified string at the end of it.
 
-**-i** or **--insert**
-    Do not remove the current commandline, insert the specified string at the current cursor position
+**-i**, **--insert** or **--insert-smart**
+    Do not remove the current commandline, insert the specified string at the current cursor position.
+    The **--insert-smart** option turns on a Do-What-I-Mean (DWIM) mode: it strips any **$** prefix from the first command on each line.
 
 **-r** or **--replace**
     Remove the current commandline and replace it with the specified string (default)
diff --git a/share/completions/commandline.fish b/share/completions/commandline.fish
index 5855e31af..3bfa83c2c 100644
--- a/share/completions/commandline.fish
+++ b/share/completions/commandline.fish
@@ -1,6 +1,7 @@
 complete -c commandline -s h -l help -d "Display help and exit"
 complete -c commandline -s a -l append -d "Add text to the end of the selected area"
 complete -c commandline -s i -l insert -d "Add text at cursor"
+complete -c commandline -s i -l insert-smart -d 'Add text at cursor but DWIM, stripping leading $'
 complete -c commandline -s r -l replace -d "Replace selected part"
 
 complete -c commandline -s j -l current-job -d "Select job under cursor"
diff --git a/share/functions/__fish_paste.fish b/share/functions/__fish_paste.fish
index aca62434e..981c0983a 100644
--- a/share/functions/__fish_paste.fish
+++ b/share/functions/__fish_paste.fish
@@ -43,6 +43,6 @@ function __fish_paste
     end
 
     if test -n "$data"
-        commandline -i -- $data
+        commandline --insert-smart -- $data
     end
 end
diff --git a/src/builtins/commandline.rs b/src/builtins/commandline.rs
index 580cd1431..4944b4dfc 100644
--- a/src/builtins/commandline.rs
+++ b/src/builtins/commandline.rs
@@ -1,11 +1,12 @@
 use super::prelude::*;
+use crate::ast::{Ast, Leaf};
 use crate::common::{unescape_string, UnescapeFlags, UnescapeStringStyle};
 use crate::complete::Completion;
 use crate::expand::{expand_string, ExpandFlags, ExpandResultCode};
 use crate::input::input_function_get_code;
 use crate::input_common::{CharEvent, ReadlineCmd};
 use crate::operation_context::{no_cancel, OperationContext};
-use crate::parse_constants::ParserTestErrorBits;
+use crate::parse_constants::{ParseTreeFlags, ParserTestErrorBits};
 use crate::parse_util::{
     parse_util_detect_errors, parse_util_get_offset_from_line, parse_util_job_extent,
     parse_util_lineno, parse_util_process_extent, parse_util_token_extent,
@@ -31,11 +32,14 @@ enum TextScope {
 }
 
 /// For text insertion, how should it be done.
+#[derive(Eq, PartialEq)]
 enum AppendMode {
     // replace current text
     Replace,
     // insert at cursor position
     Insert,
+    // insert at cursor position, DWIM style.
+    InsertSmart,
     // insert at end of current token/command/buffer
     Append,
 }
@@ -75,9 +79,12 @@ fn replace_part(
             out.push_utfstr(&buff[range.clone()]);
             out.push_utfstr(insert);
         }
-        AppendMode::Insert => {
+        AppendMode::Insert | AppendMode::InsertSmart => {
             assert!(cursor_pos >= range.start);
             assert!(cursor_pos <= range.end);
+            let insert = strip_dollar_prefixes(insert_mode, &buff[range.start..cursor_pos], insert)
+                .map(Cow::Owned)
+                .unwrap_or(Cow::Borrowed(insert));
             out.push_utfstr(&buff[range.start..cursor_pos]);
             out.push_utfstr(&insert);
             out.push_utfstr(&buff[cursor_pos..range.end]);
@@ -93,6 +100,43 @@ fn replace_part(
     }
 }
 
+// Prefix must be at the beginning of a process.
+fn strip_dollar_prefixes(insert_mode: AppendMode, prefix: &wstr, insert: &wstr) -> Option<WString> {
+    if insert_mode != AppendMode::InsertSmart {
+        return None;
+    }
+    insert.find(L!("$ "))?; // Early return.
+    let source = prefix.to_owned() + insert;
+    let ast = Ast::parse(
+        &source,
+        ParseTreeFlags::ACCEPT_INCOMPLETE_TOKENS | ParseTreeFlags::LEAVE_UNTERMINATED,
+        None,
+    );
+    let mut stripped = WString::new();
+    let mut have = prefix.len();
+    for node in ast.walk() {
+        let Some(ds) = node.as_decorated_statement() else {
+            continue;
+        };
+        let Some(range) = ds.command.range() else {
+            continue;
+        };
+        let pos = range.start();
+        if pos < prefix.len() {
+            continue;
+        }
+        if (pos == 0 || source.as_char_slice()[pos - 1] == '\n')
+            && source.as_char_slice()[pos] == '$'
+            && source.char_at(pos + 1) == ' '
+        {
+            stripped.push_utfstr(&source[have..pos]);
+            have = pos + "$ ".len();
+        }
+    }
+    stripped.push_utfstr(&source[have..]);
+    return Some(stripped);
+}
+
 /// Output the specified selection.
 ///
 /// \param begin start of selection
@@ -222,6 +266,7 @@ pub fn commandline(parser: &Parser, streams: &mut IoStreams, args: &mut [&wstr])
     let long_options: &[WOption] = &[
         wopt(L!("append"), ArgType::NoArgument, 'a'),
         wopt(L!("insert"), ArgType::NoArgument, 'i'),
+        wopt(L!("insert-smart"), ArgType::NoArgument, '\x06'),
         wopt(L!("replace"), ArgType::NoArgument, 'r'),
         wopt(L!("current-buffer"), ArgType::NoArgument, 'b'),
         wopt(L!("current-job"), ArgType::NoArgument, 'j'),
@@ -255,6 +300,7 @@ pub fn commandline(parser: &Parser, streams: &mut IoStreams, args: &mut [&wstr])
             'a' => append_mode = Some(AppendMode::Append),
             'b' => buffer_part = Some(TextScope::String),
             'i' => append_mode = Some(AppendMode::Insert),
+            '\x06' => append_mode = Some(AppendMode::InsertSmart),
             'r' => append_mode = Some(AppendMode::Replace),
             'c' => cut_at_cursor = true,
             't' => buffer_part = Some(TextScope::Token),
@@ -422,6 +468,33 @@ pub fn commandline(parser: &Parser, streams: &mut IoStreams, args: &mut [&wstr])
 
     let buffer_part = buffer_part.unwrap_or(TextScope::String);
 
+    if append_mode == AppendMode::InsertSmart {
+        if search_field_mode {
+            streams.err.append(wgettext_fmt!(
+                BUILTIN_ERR_COMBO2_EXCLUSIVE,
+                cmd,
+                "--insert-smart",
+                "--search-field"
+            ));
+            builtin_print_error_trailer(parser, streams.err, cmd);
+            return STATUS_INVALID_ARGS;
+        }
+        match buffer_part {
+            TextScope::String | TextScope::Job | TextScope::Process => (),
+            TextScope::Token => {
+                // To-do: we can support it in command position.
+                streams.err.append(wgettext_fmt!(
+                    BUILTIN_ERR_COMBO2_EXCLUSIVE,
+                    cmd,
+                    "--insert-smart",
+                    "--current-token"
+                ));
+                builtin_print_error_trailer(parser, streams.err, cmd);
+                return STATUS_INVALID_ARGS;
+            }
+        }
+    }
+
     if line_mode || column_mode {
         if positional_args != 0 {
             let arg = w.argv[w.wopt_index];
diff --git a/src/parse_constants.rs b/src/parse_constants.rs
index 4ad84fe9c..e4e3ea4c3 100644
--- a/src/parse_constants.rs
+++ b/src/parse_constants.rs
@@ -17,7 +17,7 @@ pub struct ParseTreeFlags: u8 {
         const CONTINUE_AFTER_ERROR = 1 << 0;
         /// include comment tokens.
         const INCLUDE_COMMENTS = 1 << 1;
-        /// indicate that the tokenizer should accept incomplete tokens */
+        /// indicate that the tokenizer should accept incomplete tokens
         const ACCEPT_INCOMPLETE_TOKENS = 1 << 2;
         /// indicate that the parser should not generate the terminate token, allowing an 'unfinished'
         /// tree where some nodes may have no productions.
diff --git a/tests/checks/commandline.fish b/tests/checks/commandline.fish
index 6562d5873..52a323be3 100644
--- a/tests/checks/commandline.fish
+++ b/tests/checks/commandline.fish
@@ -25,3 +25,10 @@ echo Help $status
 commandline -pC 0 --input "test | test"
 echo $status
 # CHECK: 0
+
+commandline --insert-smart '$ echo 123' --current-token
+# CHECKERR: commandline: --insert-smart --current-token: options cannot be used together
+# CHECKERR: {{.*}}/commandline.fish (line {{\d+}}):
+# CHECKERR: commandline --insert-smart '$ echo 123' --current-token
+# CHECKERR: ^
+# CHECKERR: (Type 'help commandline' for related documentation)