diff --git a/src/main/java/tools/jackson/dataformat/xml/deser/XmlTokenStream.java b/src/main/java/tools/jackson/dataformat/xml/deser/XmlTokenStream.java
index b5963d38..774bf2b9 100644
--- a/src/main/java/tools/jackson/dataformat/xml/deser/XmlTokenStream.java
+++ b/src/main/java/tools/jackson/dataformat/xml/deser/XmlTokenStream.java
@@ -644,6 +644,9 @@ private final String _collectUntilTag() throws XMLStreamException
                 // note: SPACE is ignorable (and seldom seen), not to be included
                 case XMLStreamConstants.CHARACTERS:
                 case XMLStreamConstants.CDATA:
+                // Only reported if the reader does not replace entity references
+                // (or could not expand this one): still part of text content
+                case XMLStreamConstants.ENTITY_REFERENCE:
                     // 17-Jul-2017, tatu: as per [dataformat-xml#236], need to try to...
                     {
                         String str = _getText(_xmlReader);
@@ -684,6 +687,7 @@ private final int _skipAndCollectTextUntilTag() throws XMLStreamException
             // note: SPACE is ignorable (and seldom seen), not to be included
             case XMLStreamConstants.CHARACTERS:
             case XMLStreamConstants.CDATA:
+            case XMLStreamConstants.ENTITY_REFERENCE:
                 {
                     String str = _getText(_xmlReader);
                     if (chars == null) {
@@ -705,8 +709,9 @@ private final int _skipAndCollectTextUntilTag() throws XMLStreamException
 
     private final String _getText(XMLStreamReader2 r) throws XMLStreamException
     {
+        final String text;
         try {
-            return r.getText();
+            text = r.getText();
         } catch (RuntimeException e) {
             Throwable cause = e.getCause();
             if (cause instanceof XMLStreamException xse) {
@@ -714,6 +719,14 @@ private final String _getText(XMLStreamReader2 r) throws XMLStreamException
             }
             throw e;
         }
+        // An entity reference the reader did not (or could not) expand has no
+        // replacement text to offer: fail rather than silently drop it from content
+        if (text == null && r.getEventType() == XMLStreamConstants.ENTITY_REFERENCE) {
+            throw new XMLStreamException("Unexpanded entity reference '&"+r.getLocalName()
+                    +";' in text content (entity not declared, or not replaced by XMLStreamReader)",
+                    r.getLocation());
+        }
+        return text;
     }
 
     /*
diff --git a/src/test/java/tools/jackson/dataformat/xml/stream/EntityReferenceReadTest.java b/src/test/java/tools/jackson/dataformat/xml/stream/EntityReferenceReadTest.java
new file mode 100644
index 00000000..cab33124
--- /dev/null
+++ b/src/test/java/tools/jackson/dataformat/xml/stream/EntityReferenceReadTest.java
@@ -0,0 +1,90 @@
+package tools.jackson.dataformat.xml.stream;
+
+import java.util.Map;
+
+import javax.xml.stream.XMLInputFactory;
+
+import org.junit.jupiter.api.Test;
+
+import com.ctc.wstx.stax.WstxInputFactory;
+
+import tools.jackson.core.exc.StreamReadException;
+
+import tools.jackson.dataformat.xml.XmlFactory;
+import tools.jackson.dataformat.xml.XmlMapper;
+import tools.jackson.dataformat.xml.XmlTestUtil;
+
+import static org.junit.jupiter.api.Assertions.assertEquals;
+import static org.junit.jupiter.api.Assertions.assertThrows;
+
+// Readers configured with `IS_REPLACING_ENTITY_REFERENCES` disabled report
+// general entity references in text content as `ENTITY_REFERENCE` events.
+// `XmlTokenStream` used to ignore those while collecting text, silently
+// dropping part of the content: either the replacement text has to be used,
+// or (if the reader has none to offer) reading must fail.
+public class EntityReferenceReadTest extends XmlTestUtil
+{
+    private final static String DOC_INTERNAL_ENTITY =
+            "<!DOCTYPE root [<!ENTITY e 'xx'>]>\n"
+            +"<root><a>foo&e;bar</a></root>";
+
+    private final static String DOC_UNDECLARED_ENTITY =
+            "<root><a>foo&e;bar</a></root>";
+
+    // Text collected after an END_ELEMENT goes through a different code path
+    // (mixed content), so cover that one too
+    private final static String DOC_MIXED_CONTENT =
+            "<!DOCTYPE root [<!ENTITY e 'xx'>]>\n"
+            +"<root><a>1</a>foo&e;bar<b>2</b></root>";
+
+    private final XmlMapper NON_REPLACING_MAPPER = _nonReplacingMapper(true);
+
+    private final XmlMapper NON_REPLACING_NO_DTD_MAPPER = _nonReplacingMapper(false);
+
+    private static XmlMapper _nonReplacingMapper(boolean supportDTD) {
+        XMLInputFactory f = new WstxInputFactory();
+        f.setProperty(XMLInputFactory.IS_REPLACING_ENTITY_REFERENCES, Boolean.FALSE);
+        f.setProperty(XMLInputFactory.IS_SUPPORTING_EXTERNAL_ENTITIES, Boolean.FALSE);
+        f.setProperty(XMLInputFactory.SUPPORT_DTD, supportDTD);
+        return mapperBuilder(XmlFactory.builder().xmlInputFactory(f).build()).build();
+    }
+
+    @Test
+    public void testDeclaredEntityNotReplacedByReader() throws Exception
+    {
+        Map<?,?> result = NON_REPLACING_MAPPER.readValue(DOC_INTERNAL_ENTITY, Map.class);
+        assertEquals("fooxxbar", result.get("a"));
+    }
+
+    @Test
+    public void testDeclaredEntityNotReplacedByReaderMixedContent() throws Exception
+    {
+        Map<?,?> result = NON_REPLACING_MAPPER.readValue(DOC_MIXED_CONTENT, Map.class);
+        assertEquals("1", result.get("a"));
+        assertEquals("2", result.get("b"));
+        assertEquals("fooxxbar", result.get(""));
+    }
+
+    @Test
+    public void testUndeclaredEntityNotReplacedByReader() throws Exception
+    {
+        // No DTD, so no replacement text for the reader to hand out: must fail,
+        // not quietly produce "foobar"
+        StreamReadException e = assertThrows(StreamReadException.class,
+                () -> NON_REPLACING_NO_DTD_MAPPER.readValue(DOC_UNDECLARED_ENTITY, Map.class));
+        verifyException(e, "Unexpanded entity reference '&e;'");
+    }
+
+    @Test
+    public void testDefaultReaderStillReplaces() throws Exception
+    {
+        // Default (replacing) reader with DTD support enabled expands the entity
+        // itself; no change in behavior there
+        XMLInputFactory f = new WstxInputFactory();
+        f.setProperty(XMLInputFactory.IS_SUPPORTING_EXTERNAL_ENTITIES, Boolean.FALSE);
+        f.setProperty(XMLInputFactory.SUPPORT_DTD, Boolean.TRUE);
+        XmlMapper mapper = mapperBuilder(XmlFactory.builder().xmlInputFactory(f).build()).build();
+        Map<?,?> result = mapper.readValue(DOC_INTERNAL_ENTITY, Map.class);
+        assertEquals("fooxxbar", result.get("a"));
+    }
+}