diff --git a/IPython/core/inputtransformer.py b/IPython/core/inputtransformer.py
index 8973ab6..9f46713 100644
--- a/IPython/core/inputtransformer.py
+++ b/IPython/core/inputtransformer.py
@@ -3,6 +3,7 @@ import functools
 import re
 from StringIO import StringIO
 
+from IPython.core.error import UsageError
 from IPython.core.splitinput import LineInfo
 from IPython.utils import tokenize2
 from IPython.utils.openpy import cookie_comment_re
@@ -227,9 +228,20 @@ def _tr_help(line_info):
 def _tr_magic(line_info):
     "Translate lines escaped with: %"
     tpl = '%sget_ipython().magic(%r)'
+    if line_info.line.startswith(ESC_MAGIC2):
+        return line_info.line
     cmd = ' '.join([line_info.ifun, line_info.the_rest]).strip()
     return tpl % (line_info.pre, cmd)
 
+def _tr_cellmagic(line_info):
+    """Translate lines escaped with %%
+    
+    Only happens when cell magics are mid-cell, which is an error.
+    """
+    raise UsageError("Cannot call cell magics (%s%s) mid-cell" % 
+        (ESC_MAGIC2, line_info.ifun)
+    )
+
 def _tr_quote(line_info):
     "Translate lines escaped with: ,"
     return '%s%s("%s")' % (line_info.pre, line_info.ifun,
@@ -250,6 +262,7 @@ tr = { ESC_SHELL  : _tr_system,
        ESC_HELP   : _tr_help,
        ESC_HELP2  : _tr_help,
        ESC_MAGIC  : _tr_magic,
+       ESC_MAGIC2  : _tr_cellmagic,
        ESC_QUOTE  : _tr_quote,
        ESC_QUOTE2 : _tr_quote2,
        ESC_PAREN  : _tr_paren }
diff --git a/IPython/core/interactiveshell.py b/IPython/core/interactiveshell.py
index db88ce5..f7fe355 100644
--- a/IPython/core/interactiveshell.py
+++ b/IPython/core/interactiveshell.py
@@ -2593,10 +2593,14 @@ class InteractiveShell(SingletonConfigurable):
         
         if silent:
             store_history = False
-
-        self.input_transformer_manager.push(raw_cell)
-        cell = self.input_transformer_manager.source_reset()
-
+        
+        try:
+            self.input_transformer_manager.push(raw_cell)
+            cell = self.input_transformer_manager.source_reset()
+        except UsageError:
+            self.showtraceback()
+            return
+        
         # Our own compiler remembers the __future__ environment. If we want to
         # run code with a separate __future__ environment, use the default
         # compiler
diff --git a/IPython/core/splitinput.py b/IPython/core/splitinput.py
index 7b95772..fd8df7c 100644
--- a/IPython/core/splitinput.py
+++ b/IPython/core/splitinput.py
@@ -43,7 +43,7 @@ from IPython.utils.encoding import get_stream_enc
 
 line_split = re.compile("""
              ^(\s*)               # any leading space
-             ([,;/%]|!!?|\?\??)?  # escape character or characters
+             ([,;/]|%%?|!!?|\?\??)?  # escape character or characters
              \s*(%{0,2}[\w\.\*]*)     # function/method, possibly with leading %
                                   # to correctly treat things like '?%magic'
              (.*?$|$)             # rest of line