diff --git a/highlighters/main/main-highlighter.zsh b/highlighters/main/main-highlighter.zsh
index fa8e32b..f738b6e 100644
--- a/highlighters/main/main-highlighter.zsh
+++ b/highlighters/main/main-highlighter.zsh
@@ -147,6 +147,8 @@ _zsh_highlight_main__type() {
   # ### $aliases_allowed, on the assumption that aliases are the common case.
   integer may_cache=1
 
+  local cmd
+
   # Main logic
   unset REPLY
   if zmodload -e zsh/parameter; then
@@ -165,22 +167,29 @@ _zsh_highlight_main__type() {
       REPLY=function
     elif (( $+builtins[$1] )); then
       REPLY=builtin
-    elif (( $+commands[$1] )); then
-      REPLY=command
+    elif [[ $1 != */* && -x ${cmd::=${commands[$1]-}} ]]; then
+      # There is one case where the following logic incorrectly sets REPLY=command
+      # instead of REPLY=hashed.
+      #
+      #   % hash zsh=$commands[zsh]
+      #   % zsh  # <-- here the type of `zsh` is "command" rather than "hashed"
+      if [[ $cmd == /(|*/)$1 && $path[(Ie)${cmd:h}] != 0 ]]; then
+        REPLY=command
+      else
+        REPLY=hashed
+      fi
     # ZSH_VERSION >= 5.1 allows the use of #q. ZSH_VERSION <= 5.8 allows skipping
     # 'type -w' calls that are necessary for forward compatibility.
     elif [[ $ZSH_VERSION == 5.<1-8>(|.*) ]]; then
-      if [[ $1 == */* && -n $1(#qN-.*) ||
-            $1 == [^/]*/* && $zsyh_user_options[pathdirs] == on && -n ${^path}/$1(#q-N.*) ]]; then
-        REPLY=command
-      elif (( _zsh_highlight_main__rehash )); then
-        builtin rehash
-        _zsh_highlight_main__rehash=0
-        if (( $+commands[$1] )); then
+      if [[ $1 == */* ]]; then
+        if [[ -n $1(#q-.*N) ||
+              $1 != /* && $zsyh_user_options[pathdirs] == on && -n ${^path}/$1(#q-.*N) ]]; then
           REPLY=command
         else
           REPLY=none
         fi
+      elif [[ -n ${^path}/$1(#q-.*N) ]]; then
+        REPLY=command
       else
         REPLY=none
       fi
@@ -198,6 +207,8 @@ _zsh_highlight_main__type() {
       LC_ALL=C builtin type -w -- "$1" 2>/dev/null)##*: }:-none}"
     if [[ $REPLY == 'alias' ]]; then
       may_cache=0
+    elif [[ $REPLY == 'hashed' && ( -n $cmd || $1 == */* ) ]]; then
+      REPLY=none
     fi
   fi
 
@@ -1752,8 +1763,6 @@ _zsh_highlight_main__precmd_hook() {
   _zsh_highlight_main__path_cache=()
   _zsh_highlight_main__arg_cache=()
 
-  _zsh_highlight_main__rehash=1
-
   if [[ $ZSH_VERSION != (5.<9->*|<6->.*) ]]; then
     _zsh_highlight_main_calculate_styles
   fi
@@ -1763,12 +1772,10 @@ autoload -Uz add-zsh-hook
 if add-zsh-hook precmd _zsh_highlight_main__precmd_hook 2>/dev/null; then
   # Initialize caches
   typeset -gA _zsh_highlight_main__command_type_cache _zsh_highlight_main__path_cache _zsh_highlight_main__arg_cache
-  typeset -gi _zsh_highlight_main__rehash=1
 else
   print -r -- >&2 'zsh-syntax-highlighting: Failed to load add-zsh-hook. Some speed optimizations will not be used.'
   # Make sure the caches are unset
   unset _zsh_highlight_main__command_type_cache _zsh_highlight_main__path_cache _zsh_highlight_main__arg_cache
-  unset _zsh_highlight_main__rehash
 fi
 typeset -ga ZSH_HIGHLIGHT_DIRS_BLACKLIST
 
@@ -1874,4 +1881,3 @@ _zsh_highlight_main__fallback_of=(
   process-substitution{-delimiter,}
   back-quoted-argument{-delimiter,}
 )
-
diff --git a/highlighters/main/test-data/hashed-command.zsh b/highlighters/main/test-data/hashed-command.zsh
index 2983ef8..35458b4 100644
--- a/highlighters/main/test-data/hashed-command.zsh
+++ b/highlighters/main/test-data/hashed-command.zsh
@@ -27,9 +27,9 @@
 # vim: ft=zsh sw=2 ts=2 et
 # -------------------------------------------------------------------------------------------------
 
-hash zsh_syntax_highlighting_hash=/doesnotexist
+hash zsh_syntax_highlighting_hash=/usr/bin/env
 BUFFER='zsh_syntax_highlighting_hash'
 
 expected_region_highlight=(
-  "1 28 hashed-command 'zsh/parameter cannot distinguish between hashed and command'"
+  "1 28 hashed-command"
 )
diff --git a/highlighters/main/test-data/invalid-hashed-command.zsh b/highlighters/main/test-data/invalid-hashed-command.zsh
new file mode 100644
index 0000000..d29fc3e
--- /dev/null
+++ b/highlighters/main/test-data/invalid-hashed-command.zsh
@@ -0,0 +1,35 @@
+# -------------------------------------------------------------------------------------------------
+# Copyright (c) 2020 zsh-syntax-highlighting contributors
+# All rights reserved.
+#
+# Redistribution and use in source and binary forms, with or without modification, are permitted
+# provided that the following conditions are met:
+#
+#  * Redistributions of source code must retain the above copyright notice, this list of conditions
+#    and the following disclaimer.
+#  * Redistributions in binary form must reproduce the above copyright notice, this list of
+#    conditions and the following disclaimer in the documentation and/or other materials provided
+#    with the distribution.
+#  * Neither the name of the zsh-syntax-highlighting contributors nor the names of its contributors
+#    may be used to endorse or promote products derived from this software without specific prior
+#    written permission.
+#
+# THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR
+# IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
+# FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDER OR
+# CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL
+# DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE,
+# DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER
+# IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT
+# OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+# -------------------------------------------------------------------------------------------------
+# -*- mode: zsh; sh-indentation: 2; indent-tabs-mode: nil; sh-basic-offset: 2; -*-
+# vim: ft=zsh sw=2 ts=2 et
+# -------------------------------------------------------------------------------------------------
+
+hash zsyh-hashed-command=/doesnotexist
+BUFFER='zsyh-hashed-command'
+
+expected_region_highlight=(
+  "1 19 unknown-token"
+)
diff --git a/highlighters/main/test-data/no-rehash.zsh b/highlighters/main/test-data/no-rehash.zsh
new file mode 100644
index 0000000..13bf569
--- /dev/null
+++ b/highlighters/main/test-data/no-rehash.zsh
@@ -0,0 +1,37 @@
+# -------------------------------------------------------------------------------------------------
+# Copyright (c) 2020 zsh-syntax-highlighting contributors
+# All rights reserved.
+#
+# Redistribution and use in source and binary forms, with or without modification, are permitted
+# provided that the following conditions are met:
+#
+#  * Redistributions of source code must retain the above copyright notice, this list of conditions
+#    and the following disclaimer.
+#  * Redistributions in binary form must reproduce the above copyright notice, this list of
+#    conditions and the following disclaimer in the documentation and/or other materials provided
+#    with the distribution.
+#  * Neither the name of the zsh-syntax-highlighting contributors nor the names of its contributors
+#    may be used to endorse or promote products derived from this software without specific prior
+#    written permission.
+#
+# THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR
+# IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
+# FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDER OR
+# CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL
+# DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE,
+# DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER
+# IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT
+# OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+# -------------------------------------------------------------------------------------------------
+# -*- mode: zsh; sh-indentation: 2; indent-tabs-mode: nil; sh-basic-offset: 2; -*-
+# vim: ft=zsh sw=2 ts=2 et
+# -------------------------------------------------------------------------------------------------
+
+hash zsyh-hashed-command=/usr/bin/env
+BUFFER='doesnotexist; zsyh-hashed-command'
+
+expected_region_highlight=(
+  "1 12 unknown-token"
+  "13 13 commandseparator"
+  "15 33 hashed-command"
+)
diff --git a/highlighters/main/test-data/precommand-killing1.zsh b/highlighters/main/test-data/precommand-killing1.zsh
index 7598346..abb5b88 100644
--- a/highlighters/main/test-data/precommand-killing1.zsh
+++ b/highlighters/main/test-data/precommand-killing1.zsh
@@ -28,7 +28,7 @@
 # vim: ft=zsh sw=2 ts=2 et
 # -------------------------------------------------------------------------------------------------
 
-hash sudo=false
+hash sudo=/usr/bin/env
 touch foo
 
 BUFFER='sudo -e ./foo'
diff --git a/highlighters/main/test-data/precommand-killing2.zsh b/highlighters/main/test-data/precommand-killing2.zsh
index bc6fc86..1f306ae 100644
--- a/highlighters/main/test-data/precommand-killing2.zsh
+++ b/highlighters/main/test-data/precommand-killing2.zsh
@@ -28,7 +28,7 @@
 # vim: ft=zsh sw=2 ts=2 et
 # -------------------------------------------------------------------------------------------------
 
-hash sudo=false
+hash sudo=/usr/bin/env
 
 BUFFER='sudo -e /does/not/exist'
 
diff --git a/highlighters/main/test-data/relative-hashed-command.zsh b/highlighters/main/test-data/relative-hashed-command.zsh
new file mode 100644
index 0000000..7993a0a
--- /dev/null
+++ b/highlighters/main/test-data/relative-hashed-command.zsh
@@ -0,0 +1,46 @@
+# -------------------------------------------------------------------------------------------------
+# Copyright (c) 2020 zsh-syntax-highlighting contributors
+# All rights reserved.
+#
+# Redistribution and use in source and binary forms, with or without modification, are permitted
+# provided that the following conditions are met:
+#
+#  * Redistributions of source code must retain the above copyright notice, this list of conditions
+#    and the following disclaimer.
+#  * Redistributions in binary form must reproduce the above copyright notice, this list of
+#    conditions and the following disclaimer in the documentation and/or other materials provided
+#    with the distribution.
+#  * Neither the name of the zsh-syntax-highlighting contributors nor the names of its contributors
+#    may be used to endorse or promote products derived from this software without specific prior
+#    written permission.
+#
+# THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR
+# IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
+# FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDER OR
+# CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL
+# DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE,
+# DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER
+# IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT
+# OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+# -------------------------------------------------------------------------------------------------
+# -*- mode: zsh; sh-indentation: 2; indent-tabs-mode: nil; sh-basic-offset: 2; -*-
+# vim: ft=zsh sw=2 ts=2 et
+# -------------------------------------------------------------------------------------------------
+
+if [[ $OSTYPE == msys ]]; then
+  skip_test='Cannot chmod +x in msys2'
+else
+  mkdir foo
+  print >foo/bar
+  chmod +x foo/bar
+  hash zsyh-hashed-command=foo/bar
+  hash subdir/zsyh-hashed-command=foo/bar
+
+  BUFFER='zsyh-hashed-command; subdir/zsyh-hashed-command'
+
+  expected_region_highlight=(
+    "1 19 hashed-command"
+    "20 20 commandseparator"
+    "22 47 unknown-token"
+  )
+fi
diff --git a/highlighters/main/test-data/removed-command.zsh b/highlighters/main/test-data/removed-command.zsh
new file mode 100644
index 0000000..b28cde4
--- /dev/null
+++ b/highlighters/main/test-data/removed-command.zsh
@@ -0,0 +1,45 @@
+# -------------------------------------------------------------------------------------------------
+# Copyright (c) 2020 zsh-syntax-highlighting contributors
+# All rights reserved.
+#
+# Redistribution and use in source and binary forms, with or without modification, are permitted
+# provided that the following conditions are met:
+#
+#  * Redistributions of source code must retain the above copyright notice, this list of conditions
+#    and the following disclaimer.
+#  * Redistributions in binary form must reproduce the above copyright notice, this list of
+#    conditions and the following disclaimer in the documentation and/or other materials provided
+#    with the distribution.
+#  * Neither the name of the zsh-syntax-highlighting contributors nor the names of its contributors
+#    may be used to endorse or promote products derived from this software without specific prior
+#    written permission.
+#
+# THIS SOFTWARE IS PROVIDED BY THE COPYRIGHT HOLDERS AND CONTRIBUTORS "AS IS" AND ANY EXPRESS OR
+# IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
+# FITNESS FOR A PARTICULAR PURPOSE ARE DISCLAIMED. IN NO EVENT SHALL THE COPYRIGHT HOLDER OR
+# CONTRIBUTORS BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL
+# DAMAGES (INCLUDING, BUT NOT LIMITED TO, PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES; LOSS OF USE,
+# DATA, OR PROFITS; OR BUSINESS INTERRUPTION) HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, WHETHER
+# IN CONTRACT, STRICT LIABILITY, OR TORT (INCLUDING NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY OUT
+# OF THE USE OF THIS SOFTWARE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
+# -------------------------------------------------------------------------------------------------
+# -*- mode: zsh; sh-indentation: 2; indent-tabs-mode: nil; sh-basic-offset: 2; -*-
+# vim: ft=zsh sw=2 ts=2 et
+# -------------------------------------------------------------------------------------------------
+
+if [[ $OSTYPE == msys ]]; then
+  skip_test='Cannot chmod +x in msys2'
+else
+  mkdir foo
+  print >foo/zsyh-new-command
+  chmod +x foo/zsyh-new-command
+  path+=($PWD/foo)
+  : $+commands[zsyh-new-command]
+  rm foo/zsyh-new-command
+
+  BUFFER='zsyh-new-command'
+
+  expected_region_highlight=(
+    "1 16 unknown-token"
+  )
+fi
diff --git a/highlighters/main/test-data/sudo-longopt.zsh b/highlighters/main/test-data/sudo-longopt.zsh
index ef768bf..612fcb1 100644
--- a/highlighters/main/test-data/sudo-longopt.zsh
+++ b/highlighters/main/test-data/sudo-longopt.zsh
@@ -28,7 +28,7 @@
 # vim: ft=zsh sw=2 ts=2 et
 # -------------------------------------------------------------------------------------------------
 
-hash sudo='false'
+hash sudo=/usr/bin/env
 BUFFER='sudo --askpass ls'
 
 expected_region_highlight=(