diff --git a/gql/state.go b/gql/state.go
index 9313671b021fc2f8ff01e63c7732f232a80c6226..2370108d8f51fd21e3b8f9654f3b4756d0750b22 100644
--- a/gql/state.go
+++ b/gql/state.go
@@ -19,22 +19,26 @@ package gql
 import "github.com/dgraph-io/dgraph/lex"
 
 const (
-	leftCurl  = '{'
-	rightCurl = '}'
+	leftCurl     = '{'
+	rightCurl    = '}'
+	queryMode    = 1
+	mutationMode = 2
 )
 
 const (
-	itemText       lex.ItemType = 5 + iota // plain text
-	itemLeftCurl                           // left curly bracket
-	itemRightCurl                          // right curly bracket
-	itemComment                            // comment
-	itemName                               // [9] names
-	itemOpType                             // operation type
-	itemString                             // quoted string
-	itemLeftRound                          // left round bracket
-	itemRightRound                         // right round bracket
-	itemArgName                            // argument name
-	itemArgVal                             // argument val
+	itemText            lex.ItemType = 5 + iota // plain text
+	itemLeftCurl                                // left curly bracket
+	itemRightCurl                               // right curly bracket
+	itemComment                                 // comment
+	itemName                                    // [9] names
+	itemOpType                                  // operation type
+	itemString                                  // quoted string
+	itemLeftRound                               // left round bracket
+	itemRightRound                              // right round bracket
+	itemArgName                                 // argument name
+	itemArgVal                                  // argument val
+	itemMutationOp                              // mutation operation
+	itemMutationContent                         // mutation content
 )
 
 func lexText(l *lex.Lexer) lex.StateFn {
@@ -47,7 +51,11 @@ Loop:
 			l.Next()         // advance one to get back to where we saw leftCurl.
 			l.Depth += 1     // one level down.
 			l.Emit(itemLeftCurl)
-			return lexInside // we're in.
+			if l.Mode == mutationMode {
+				return lexInsideMutation
+			} else {
+				return lexInside
+			}
 
 		case r == rightCurl:
 			return l.Errorf("Too many right characters")
@@ -79,7 +87,7 @@ func lexInside(l *lex.Lexer) lex.StateFn {
 			l.Depth += 1
 			l.Emit(itemLeftCurl)
 		case r == lex.EOF:
-			return l.Errorf("unclosed action")
+			return l.Errorf("Unclosed action")
 		case isSpace(r) || isEndOfLine(r) || r == ',':
 			l.Ignore()
 		case isNameBegin(r):
@@ -128,6 +136,64 @@ func lexComment(l *lex.Lexer) lex.StateFn {
 	return nil // Stop the run loop.
 }
 
+func lexInsideMutation(l *lex.Lexer) lex.StateFn {
+	for {
+		switch r := l.Next(); {
+		case r == rightCurl:
+			l.Depth -= 1
+			l.Emit(itemRightCurl)
+			if l.Depth == 0 {
+				return lexText
+			}
+		case r == leftCurl:
+			l.Depth += 1
+			l.Emit(itemLeftCurl)
+			if l.Depth >= 2 {
+				return lexTextMutation
+			}
+		case r == lex.EOF:
+			return l.Errorf("Unclosed mutation action")
+		case isSpace(r) || isEndOfLine(r):
+			l.Ignore()
+		case isNameBegin(r):
+			return lexNameMutation
+		default:
+			return l.Errorf("Unrecognized character in lexInsideMutation: %#U", r)
+		}
+	}
+}
+
+func lexNameMutation(l *lex.Lexer) lex.StateFn {
+	for {
+		// The caller already checked isNameBegin, and absorbed one rune.
+		r := l.Next()
+		if isNameBegin(r) {
+			continue
+		}
+		l.Backup()
+		l.Emit(itemMutationOp)
+		break
+	}
+	return lexInsideMutation
+}
+
+func lexTextMutation(l *lex.Lexer) lex.StateFn {
+	for {
+		r := l.Next()
+		if r == lex.EOF {
+			return l.Errorf("Unclosed mutation text")
+		}
+		if r != rightCurl {
+			// Absorb everything until we find '}'.
+			continue
+		}
+		l.Backup()
+		l.Emit(itemMutationContent)
+		break
+	}
+	return lexInsideMutation
+}
+
 func lexOperationType(l *lex.Lexer) lex.StateFn {
 	for {
 		r := l.Next()
@@ -136,8 +202,13 @@ func lexOperationType(l *lex.Lexer) lex.StateFn {
 		}
 		l.Backup()
 		word := l.Input[l.Start:l.Pos]
-		if word == "query" || word == "mutation" {
+		if word == "mutation" {
+			l.Emit(itemOpType)
+			l.Mode = mutationMode
+
+		} else if word == "query" {
 			l.Emit(itemOpType)
+			l.Mode = queryMode
 		}
 		break
 	}
diff --git a/gql/state_test.go b/gql/state_test.go
index a1ce13d61805ea6f4c56a8acac731792f76c2da8..69ff92730141c52d6282dc956dd4dc359fc9bd39 100644
--- a/gql/state_test.go
+++ b/gql/state_test.go
@@ -17,7 +17,6 @@
 package gql
 
 import (
-	"fmt"
 	"testing"
 
 	"github.com/dgraph-io/dgraph/lex"
@@ -25,7 +24,7 @@ import (
 
 func TestNewLexer(t *testing.T) {
 	input := `
-	mutation {
+	query {
 		me( id: 10, xid: rick ) {
 			name0 # my name
 			_city, # 0what would fail lex.
@@ -38,6 +37,56 @@ func TestNewLexer(t *testing.T) {
 	l := lex.NewLexer(input)
 	go run(l)
 	for item := range l.Items {
-		fmt.Println(item.String())
+		if item.Typ == lex.ItemError {
+			t.Error(item.String())
+		}
+		t.Log(item.String())
+	}
+}
+
+func TestNewLexerMutation(t *testing.T) {
+	input := `
+	mutation {
+		set {
+			What is <this> .
+			Why is this #!!?
+			How is this?
+		}
+		delete {
+			Why is this
+		}
+	}
+	query {
+		me(xid: rick) {
+			_city
+		}
+	}`
+	l := lex.NewLexer(input)
+	go run(l)
+	for item := range l.Items {
+		if item.Typ == lex.ItemError {
+			t.Error(item.String())
+		}
+		t.Log(item.String())
+	}
+}
+
+func TestAbruptMutation(t *testing.T) {
+	input := `
+	mutation {
+		set {
+			What is <this> .
+			Why is this #!!?
+			How is this?
+	}`
+	l := lex.NewLexer(input)
+	go run(l)
+	var typ lex.ItemType
+	for item := range l.Items {
+		t.Log(item.String())
+		typ = item.Typ
+	}
+	if typ != lex.ItemError {
+		t.Error("This should fail.")
 	}
 }
diff --git a/lex/lexer.go b/lex/lexer.go
index 2b4b3cabd56b4b5e1f2df588a1f6a0f37da7bd03..9027e11044c0e08449a18179af0902d37abe3702 100644
--- a/lex/lexer.go
+++ b/lex/lexer.go
@@ -63,6 +63,7 @@ type Lexer struct {
 	Width int       // width of last rune read from input.
 	Items chan item // channel of scanned items.
 	Depth int       // nesting of {}
+	Mode  int       // mode based on information so far.
 }
 
 func NewLexer(input string) *Lexer {