diff --git a/extensions/php/build/update-grammar.js b/extensions/php/build/update-grammar.js
index da01c30d40df5f4ba082bc887202bb5b28daeb2e..9de0d0542332be2c12dfe5d136a2f5dd1bce3f78 100644
--- a/extensions/php/build/update-grammar.js
+++ b/extensions/php/build/update-grammar.js
@@ -21,6 +21,14 @@ function adaptInjectionScope(grammar) {
 	injections[newInjectionKey] = injection;
 }
 
+function includeDerivativeHtml(grammar) {
+	grammar.patterns.forEach(pattern => {
+		if (pattern.include === 'text.html.basic') {
+			pattern.include = 'text.html.derivative';
+		}
+	});
+}
+
 // Workaround for https://github.com/Microsoft/vscode/issues/40279
 // and https://github.com/Microsoft/vscode-textmate/issues/59
 function fixBadRegex(grammar) {
@@ -61,4 +69,7 @@ function fixBadRegex(grammar) {
 }
 
 updateGrammar.update('atom/language-php', 'grammars/php.cson', './syntaxes/php.tmLanguage.json', fixBadRegex);
-updateGrammar.update('atom/language-php', 'grammars/html.cson', './syntaxes/html.tmLanguage.json', adaptInjectionScope);
+updateGrammar.update('atom/language-php', 'grammars/html.cson', './syntaxes/html.tmLanguage.json', grammar => {
+	adaptInjectionScope(grammar);
+	includeDerivativeHtml(grammar);
+});
diff --git a/extensions/php/syntaxes/html.tmLanguage.json b/extensions/php/syntaxes/html.tmLanguage.json
index 09d631c14c2fb0e25fbcf1df66c3de46ce31108e..4bf15294159fbeadc381e90c61b0638210a2a06b 100644
--- a/extensions/php/syntaxes/html.tmLanguage.json
+++ b/extensions/php/syntaxes/html.tmLanguage.json
@@ -129,7 +129,7 @@
 			"name": "comment.line.shebang.php"
 		},
 		{
-			"include": "text.html.basic"
+			"include": "text.html.derivative"
 		}
 	],
 	"repository": {
diff --git a/extensions/php/test/colorize-fixtures/issue-76997.php b/extensions/php/test/colorize-fixtures/issue-76997.php
new file mode 100644
index 0000000000000000000000000000000000000000..2aedec989997b4233c1a361c17b2d4d720a51b2c
--- /dev/null
+++ b/extensions/php/test/colorize-fixtures/issue-76997.php
@@ -0,0 +1 @@
+<hello></hello>
diff --git a/extensions/php/test/colorize-results/issue-76997_php.json b/extensions/php/test/colorize-results/issue-76997_php.json
new file mode 100644
index 0000000000000000000000000000000000000000..c6863dda6fbf4c599cb1fb9cb0fcb9f10aec9db7
--- /dev/null
+++ b/extensions/php/test/colorize-results/issue-76997_php.json
@@ -0,0 +1,68 @@
+[
+	{
+		"c": "<",
+		"t": "text.html.php meta.tag.other.unrecognized.html.derivative punctuation.definition.tag.begin.html",
+		"r": {
+			"dark_plus": "punctuation.definition.tag: #808080",
+			"light_plus": "punctuation.definition.tag: #800000",
+			"dark_vs": "punctuation.definition.tag: #808080",
+			"light_vs": "punctuation.definition.tag: #800000",
+			"hc_black": "punctuation.definition.tag: #808080"
+		}
+	},
+	{
+		"c": "hello",
+		"t": "text.html.php meta.tag.other.unrecognized.html.derivative entity.name.tag.html",
+		"r": {
+			"dark_plus": "entity.name.tag: #569CD6",
+			"light_plus": "entity.name.tag: #800000",
+			"dark_vs": "entity.name.tag: #569CD6",
+			"light_vs": "entity.name.tag: #800000",
+			"hc_black": "entity.name.tag: #569CD6"
+		}
+	},
+	{
+		"c": ">",
+		"t": "text.html.php meta.tag.other.unrecognized.html.derivative punctuation.definition.tag.end.html",
+		"r": {
+			"dark_plus": "punctuation.definition.tag: #808080",
+			"light_plus": "punctuation.definition.tag: #800000",
+			"dark_vs": "punctuation.definition.tag: #808080",
+			"light_vs": "punctuation.definition.tag: #800000",
+			"hc_black": "punctuation.definition.tag: #808080"
+		}
+	},
+	{
+		"c": "</",
+		"t": "text.html.php meta.tag.other.unrecognized.html.derivative punctuation.definition.tag.begin.html",
+		"r": {
+			"dark_plus": "punctuation.definition.tag: #808080",
+			"light_plus": "punctuation.definition.tag: #800000",
+			"dark_vs": "punctuation.definition.tag: #808080",
+			"light_vs": "punctuation.definition.tag: #800000",
+			"hc_black": "punctuation.definition.tag: #808080"
+		}
+	},
+	{
+		"c": "hello",
+		"t": "text.html.php meta.tag.other.unrecognized.html.derivative entity.name.tag.html",
+		"r": {
+			"dark_plus": "entity.name.tag: #569CD6",
+			"light_plus": "entity.name.tag: #800000",
+			"dark_vs": "entity.name.tag: #569CD6",
+			"light_vs": "entity.name.tag: #800000",
+			"hc_black": "entity.name.tag: #569CD6"
+		}
+	},
+	{
+		"c": ">",
+		"t": "text.html.php meta.tag.other.unrecognized.html.derivative punctuation.definition.tag.end.html",
+		"r": {
+			"dark_plus": "punctuation.definition.tag: #808080",
+			"light_plus": "punctuation.definition.tag: #800000",
+			"dark_vs": "punctuation.definition.tag: #808080",
+			"light_vs": "punctuation.definition.tag: #800000",
+			"hc_black": "punctuation.definition.tag: #808080"
+		}
+	}
+]
\ No newline at end of file