diff --git a/pyxform/xls2json.py b/pyxform/xls2json.py
index fe1dedab..59ded054 100644
--- a/pyxform/xls2json.py
+++ b/pyxform/xls2json.py
@@ -355,7 +355,9 @@ def get_entity_declaration(workbook_dict: Dict, warnings: List) -> Dict:
     entities_sheet = workbook_dict.get(constants.ENTITIES, [])
 
     if len(entities_sheet) == 0:
-        similar = find_sheet_misspellings(key=constants.ENTITIES, keys=workbook_dict.keys())
+        similar = find_sheet_misspellings(
+            key=constants.ENTITIES, keys=workbook_dict.keys()
+        )
         if similar is not None:
             warnings.append(similar + _MSG_SUPPRESS_SPELLING)
         return {}
@@ -365,6 +367,20 @@ def get_entity_declaration(workbook_dict: Dict, warnings: List) -> Dict:
         )
 
     entity = entities_sheet[0]
+    dataset = entity["dataset"]
+
+    if dataset.startswith(ENTITIES_RESERVED_PREFIX):
+        raise PyXFormError(
+            f"Invalid dataset name: '{dataset}' starts with reserved prefix {ENTITIES_RESERVED_PREFIX}."
+        )
+
+    if not is_valid_xml_tag(dataset):
+        if isinstance(dataset, bytes):
+            dataset = dataset.encode("utf-8")
+
+        raise PyXFormError(
+            f"Invalid dataset name: '{dataset}'. Dataset names {XML_IDENTIFIER_ERROR_MESSAGE}"
+        )
 
     if not ("label" in entity):
         raise PyXFormError("The entities sheet is missing the required label column.")
@@ -375,7 +391,7 @@ def get_entity_declaration(workbook_dict: Dict, warnings: List) -> Dict:
         "name": "entity",
         "type": "entity",
         "parameters": {
-            "dataset": entities_sheet[0]["dataset"],
+            "dataset": dataset,
             "create": creation_condition,
             "label": entity["label"],
         },
diff --git a/tests/test_entities.py b/tests/test_entities.py
index 40026f80..2b99db69 100644
--- a/tests/test_entities.py
+++ b/tests/test_entities.py
@@ -51,6 +51,40 @@ def test_dataset_in_entities_sheet__adds_dataset_attribute_to_entity(self):
             ],
         )
 
+    def test_dataset_with_reserved_prefix__errors(self):
+        self.assertPyxformXform(
+            name="data",
+            md="""
+            | survey   |         |       |       |
+            |          | type    | name  | label |
+            |          | text    | a     | A     |
+            | entities |         |       |       |
+            |          | dataset | label |       |
+            |          | __sweet | a     |       |
+            """,
+            errored=True,
+            error__contains=[
+                "Invalid dataset name: '__sweet' starts with reserved prefix __."
+            ],
+        )
+
+    def test_dataset_with_invalid_xml_name__errors(self):
+        self.assertPyxformXform(
+            name="data",
+            md="""
+            | survey   |         |       |       |
+            |          | type    | name  | label |
+            |          | text    | a     | A     |
+            | entities |         |       |       |
+            |          | dataset | label |       |
+            |          | $sweet  | a     |       |
+            """,
+            errored=True,
+            error__contains=[
+                "Invalid dataset name: '$sweet'. Dataset names must begin with a letter, colon, or underscore. Other characters can include numbers, dashes, and periods."
+            ],
+        )
+
     def test_worksheet_name_close_to_entities__produces_warning(self):
         self.assertPyxformXform(
             name="data",
@@ -62,7 +96,9 @@ def test_worksheet_name_close_to_entities__produces_warning(self):
             |          | dataset | label |       |
             |          | trees   | a     |       |
             """,
-            warnings__contains=["When looking for a sheet named 'entities', the following sheets with similar names were found: 'entitoes'."]
+            warnings__contains=[
+                "When looking for a sheet named 'entities', the following sheets with similar names were found: 'entitoes'."
+            ],
         )
 
     def test_dataset_in_entities_sheet__defaults_to_always_creating(self):