diff --git a/.changeset/dirty-eels-stand.md b/.changeset/dirty-eels-stand.md
new file mode 100644
index 00000000..c5e3e3f4
--- /dev/null
+++ b/.changeset/dirty-eels-stand.md
@@ -0,0 +1,5 @@
+---
+"streamdown": patch
+---
+
+fix: escape HTML when rehype-raw is omitted (#330)
diff --git a/packages/streamdown/__tests__/markdown.test.tsx b/packages/streamdown/__tests__/markdown.test.tsx
index 6de4206b..5224841f 100644
--- a/packages/streamdown/__tests__/markdown.test.tsx
+++ b/packages/streamdown/__tests__/markdown.test.tsx
@@ -318,6 +318,25 @@ describe("Markdown Component", () => {
         expect(em.textContent).toBe("HTML");
       }
     });
+
+    it("should escape HTML when rehype-raw is omitted", () => {
+      const options: Options = {
+        children: "Text with <em>HTML</em> and <h2>heading</h2> tags",
+        rehypePlugins: [], // No rehype-raw
+      };
+
+      const { container } = render(<Markdown {...options} />);
+
+      // HTML should be escaped and displayed as text
+      expect(container.innerHTML).toContain("&lt;em&gt;");
+      expect(container.innerHTML).toContain("&lt;/em&gt;");
+      expect(container.innerHTML).toContain("&lt;h2&gt;");
+      expect(container.innerHTML).toContain("&lt;/h2&gt;");
+
+      // Should not contain actual HTML elements
+      expect(container.querySelector("em")).toBeFalsy();
+      expect(container.querySelector("h2")).toBeFalsy();
+    });
   });
 
   describe("Processor Caching", () => {
diff --git a/packages/streamdown/lib/markdown.ts b/packages/streamdown/lib/markdown.ts
index ea1f2632..1717f414 100644
--- a/packages/streamdown/lib/markdown.ts
+++ b/packages/streamdown/lib/markdown.ts
@@ -2,11 +2,13 @@ import type { Element, Nodes } from "hast";
 import { toJsxRuntime } from "hast-util-to-jsx-runtime";
 import type { ComponentType, JSX, ReactElement } from "react";
 import { Fragment, jsx, jsxs } from "react/jsx-runtime";
+import rehypeRaw from "rehype-raw";
 import remarkParse from "remark-parse";
 import type { Options as RemarkRehypeOptions } from "remark-rehype";
 import remarkRehype from "remark-rehype";
 import type { PluggableList } from "unified";
 import { unified } from "unified";
+import { remarkEscapeHtml } from "./remark/escape-html";
 
 export type ExtraProps = {
   node?: Element | undefined;
@@ -177,16 +179,28 @@ const getCachedProcessor = (options: Readonly<Options>) => {
   return processor;
 };
 
+const hasRehypeRaw = (plugins: PluggableList): boolean =>
+  plugins.some((plugin) =>
+    Array.isArray(plugin) ? plugin[0] === rehypeRaw : plugin === rehypeRaw
+  );
+
 const createProcessor = (options: Readonly<Options>) => {
   const rehypePlugins = options.rehypePlugins || EMPTY_PLUGINS;
   const remarkPlugins = options.remarkPlugins || EMPTY_PLUGINS;
+
+  // When rehype-raw is NOT present, escape HTML to display it as text
+  // When rehype-raw IS present, HTML is processed normally
+  const finalRemarkPlugins = hasRehypeRaw(rehypePlugins)
+    ? remarkPlugins
+    : [...remarkPlugins, remarkEscapeHtml];
+
   const remarkRehypeOptions = options.remarkRehypeOptions
     ? { ...DEFAULT_REMARK_REHYPE_OPTIONS, ...options.remarkRehypeOptions }
     : DEFAULT_REMARK_REHYPE_OPTIONS;
 
   return unified()
     .use(remarkParse)
-    .use(remarkPlugins)
+    .use(finalRemarkPlugins)
     .use(remarkRehype, remarkRehypeOptions)
     .use(rehypePlugins);
 };
diff --git a/packages/streamdown/lib/remark/escape-html.ts b/packages/streamdown/lib/remark/escape-html.ts
new file mode 100644
index 00000000..ae8a2dd2
--- /dev/null
+++ b/packages/streamdown/lib/remark/escape-html.ts
@@ -0,0 +1,20 @@
+import type { HTML, Root } from "mdast";
+import type { Plugin } from "unified";
+import type { Parent } from "unist";
+import { visit } from "unist-util-visit";
+
+// Convert HTML nodes to text when rehype-raw is not present
+// This allows HTML to be displayed as escaped text instead of being stripped
+export const remarkEscapeHtml: Plugin<[], Root> = () => (tree) => {
+  visit(tree, "html", (node: HTML, index: number | null, parent?: Parent) => {
+    if (!parent || typeof index !== "number") {
+      return;
+    }
+
+    // Convert HTML node to text node - React will handle escaping
+    parent.children[index] = {
+      type: "text",
+      value: node.value,
+    };
+  });
+};