diff --git a/hy/lex/states.py b/hy/lex/states.py
index 6966a39..8e5951c 100644
--- a/hy/lex/states.py
+++ b/hy/lex/states.py
@@ -20,6 +20,7 @@
 
 from hy.models.expression import HyExpression
 from hy.models.integer import HyInteger
+from hy.models.lambdalist import HyLambdaListKeyword
 from hy.models.symbol import HySymbol
 from hy.models.string import HyString
 from hy.models.dict import HyDict
@@ -45,6 +46,7 @@ def _resolve_atom(obj):
     Resolve a bare atom into one of the following (in order):
 
         - Integer
+        - LambdaListKeyword
         - Symbol
     """
     try:
@@ -52,6 +54,9 @@ def _resolve_atom(obj):
     except ValueError:
         pass
 
+    if obj.startswith("&"):
+        return HyLambdaListKeyword(obj)
+
     table = {
         "true": "True",
         "false": "False",
diff --git a/hy/models/lambdalist.py b/hy/models/lambdalist.py
new file mode 100644
index 0000000..b5da9e7
--- /dev/null
+++ b/hy/models/lambdalist.py
@@ -0,0 +1,39 @@
+# Copyright (c) 2013 James King <james@agentultra.com>
+#
+# Permission is hereby granted, free of charge, to any person obtaining a
+# copy of this software and associated documentation files (the "Software"),
+# to deal in the Software without restriction, including without limitation
+# the rights to use, copy, modify, merge, publish, distribute, sublicense,
+# and/or sell copies of the Software, and to permit persons to whom the
+# Software is furnished to do so, subject to the following conditions:
+#
+# The above copyright notice and this permission notice shall be included in
+# all copies or substantial portions of the Software.
+#
+# THE SOFTWARE IS PROVIDED "AS IS", WITHOUT WARRANTY OF ANY KIND, EXPRESS OR
+# IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF MERCHANTABILITY,
+# FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT.  IN NO EVENT SHALL
+# THE AUTHORS OR COPYRIGHT HOLDERS BE LIABLE FOR ANY CLAIM, DAMAGES OR OTHER
+# LIABILITY, WHETHER IN AN ACTION OF CONTRACT, TORT OR OTHERWISE, ARISING
+# FROM, OUT OF OR IN CONNECTION WITH THE SOFTWARE OR THE USE OR OTHER
+# DEALINGS IN THE SOFTWARE.
+
+from hy.models.string import HyString
+
+
+class HyLambdaListKeyword(HyString):
+    """
+    Hy LambdaListKeyword. Demarcates arguments in an argument list.
+
+    (defun my-fun (x &rest xs &optional (foo "default string")))
+
+    becomes:
+
+    def my_fun(x, *xs, foo="default string"):
+        pass
+    """
+
+    _valid_types = ["&rest", "&optional", "&kwargs"]
+
+    def __init__(self, string):
+        self += string
diff --git a/tests/lex/test_lex.py b/tests/lex/test_lex.py
index 7740fed..5660418 100644
--- a/tests/lex/test_lex.py
+++ b/tests/lex/test_lex.py
@@ -20,6 +20,7 @@
 
 from hy.models.expression import HyExpression
 from hy.models.integer import HyInteger
+from hy.models.lambdalist import HyLambdaListKeyword
 from hy.models.symbol import HySymbol
 from hy.models.string import HyString
 from hy.models.dict import HyDict
@@ -62,6 +63,14 @@ def test_lex_expression_integer():
     assert objs == [HyExpression([HySymbol("foo"), HyInteger(2)])]
 
 
+def test_lex_lambda_list_keyword():
+    """ Make sure expressions can produce lambda list keywords """
+    objs = tokenize("(x &rest xs)")
+    assert objs == [HyExpression([HySymbol("x"),
+                                  HyLambdaListKeyword("&rest"),
+                                  HySymbol("xs")])]
+
+
 def test_lex_line_counting():
     """ Make sure we can count lines / columns """
     entry = tokenize("(foo (one two))")[0]