diff --git a/src/languageservice/services/dollarUtils.ts b/src/languageservice/services/dollarUtils.ts
index 8620da8c5..122f11b12 100644
--- a/src/languageservice/services/dollarUtils.ts
+++ b/src/languageservice/services/dollarUtils.ts
@@ -12,7 +12,7 @@ import { JSONDocument } from '../parser/jsonParser07';
  * @param doc
  */
 export function getDollarSchema(doc: SingleYAMLDocument | JSONDocument): string | undefined {
-  if (doc instanceof SingleYAMLDocument && doc.root && doc.root.type === 'object') {
+  if (doc.root && doc.root.type === 'object') {
     let dollarSchema = doc.root.properties['$schema'];
     dollarSchema = typeof dollarSchema === 'string' ? dollarSchema.trim() : undefined;
     if (typeof dollarSchema === 'string') {
diff --git a/test/fixtures/sample-dollar-schema.json b/test/fixtures/sample-dollar-schema.json
new file mode 100644
index 000000000..22f9ecb73
--- /dev/null
+++ b/test/fixtures/sample-dollar-schema.json
@@ -0,0 +1,8 @@
+{
+    "$schema": "http://json-schema.org/draft-07/schema",
+    "properties": {
+        "dollar-schema": {
+            "type":"string"
+        }
+    }
+}
diff --git a/test/schema.test.ts b/test/schema.test.ts
index 1747b1c40..4ab901ebe 100644
--- a/test/schema.test.ts
+++ b/test/schema.test.ts
@@ -590,6 +590,8 @@ describe('JSON Schema', () => {
     // eslint-disable-next-line @typescript-eslint/no-var-requires
     const schemaModelineSample = path.join(__dirname, './fixtures/sample-modeline.json');
     // eslint-disable-next-line @typescript-eslint/no-var-requires
+    const schemaDollarSample = path.join(__dirname, './fixtures/sample-dollar-schema.json');
+    // eslint-disable-next-line @typescript-eslint/no-var-requires
     const schemaDefaultSnippetSample = require(path.join(__dirname, './fixtures/defaultSnippets-const-if-else.json'));
     const languageSettingsSetup = new ServiceSetup().withCompletion();
 
@@ -615,12 +617,42 @@ describe('JSON Schema', () => {
         });
       languageService.configure(languageSettingsSetup.languageSettings);
       languageService.registerCustomSchemaProvider((uri: string) => Promise.resolve(uri));
-      const testTextDocument = setupTextDocument(`# yaml-language-server: $schema=${schemaModelineSample}\n\n`);
+      const testTextDocument = setupTextDocument(
+        `# yaml-language-server: $schema=${schemaModelineSample}\n$schema: ${schemaDollarSample}\n\n`
+      );
       const result = await languageService.doComplete(testTextDocument, Position.create(1, 0), false);
       assert.strictEqual(result.items.length, 1);
       assert.strictEqual(result.items[0].label, 'modeline');
     });
 
+    it('Explicit $schema takes precedence over all other lower priority schemas', async () => {
+      languageSettingsSetup
+        .withSchemaFileMatch({
+          fileMatch: ['test.yaml'],
+          uri: TEST_URI,
+          priority: SchemaPriority.SchemaStore,
+          schema: schemaStoreSample,
+        })
+        .withSchemaFileMatch({
+          fileMatch: ['test.yaml'],
+          uri: TEST_URI,
+          priority: SchemaPriority.SchemaAssociation,
+          schema: schemaAssociationSample,
+        })
+        .withSchemaFileMatch({
+          fileMatch: ['test.yaml'],
+          uri: TEST_URI,
+          priority: SchemaPriority.Settings,
+          schema: schemaSettingsSample,
+        });
+      languageService.configure(languageSettingsSetup.languageSettings);
+      languageService.registerCustomSchemaProvider((uri: string) => Promise.resolve(uri));
+      const testTextDocument = setupTextDocument(`$schema: ${schemaDollarSample}\n\n`);
+      const result = await languageService.doComplete(testTextDocument, Position.create(1, 0), false);
+      assert.strictEqual(result.items.length, 1);
+      assert.strictEqual(result.items[0].label, 'dollar-schema');
+    });
+
     it('Manually setting schema takes precendence over all other lower priority schemas', async () => {
       languageSettingsSetup
         .withSchemaFileMatch({