diff --git a/nns/nns_contract.go b/nns/nns_contract.go
index 8daad18..3f86690 100644
--- a/nns/nns_contract.go
+++ b/nns/nns_contract.go
@@ -687,6 +687,8 @@ func checkCommittee() {
 }
 
 // checkFragment validates root or a part of domain name.
+// 1. Root domain must start with a letter.
+// 2. All other fragments must start and end in a letter or a digit.
 func checkFragment(v string, isRoot bool) bool {
 	maxLength := maxDomainNameFragmentLength
 	if isRoot {
@@ -705,12 +707,12 @@ func checkFragment(v string, isRoot bool) bool {
 			return false
 		}
 	}
-	for i := 1; i < len(v); i++ {
-		if !isAlNum(v[i]) {
+	for i := 1; i < len(v)-1; i++ {
+		if v[i] != '-' && !isAlNum(v[i]) {
 			return false
 		}
 	}
-	return true
+	return isAlNum(v[len(v)-1])
 }
 
 // isAlNum checks whether provided char is a lowercase letter or a number.
diff --git a/tests/nns_test.go b/tests/nns_test.go
index 8d3b1cd..c0feb47 100644
--- a/tests/nns_test.go
+++ b/tests/nns_test.go
@@ -82,6 +82,17 @@ func TestNNSRegister(t *testing.T) {
 		"myemail@nspcc.ru", refresh, retry, expire, ttl)
 
 	c3 := c.WithSigners(accTop, acc)
+	t.Run("domain names with hyphen", func(t *testing.T) {
+		c3.InvokeFail(t, "invalid domain name format", "register",
+			"-testdomain.com", acc.ScriptHash(),
+			"myemail@nspcc.ru", refresh, retry, expire, ttl)
+		c3.InvokeFail(t, "invalid domain name format", "register",
+			"testdomain-.com", acc.ScriptHash(),
+			"myemail@nspcc.ru", refresh, retry, expire, ttl)
+		c3.Invoke(t, true, "register",
+			"test-domain.com", acc.ScriptHash(),
+			"myemail@nspcc.ru", refresh, retry, expire, ttl)
+	})
 	c3.Invoke(t, true, "register",
 		"testdomain.com", acc.ScriptHash(),
 		"myemail@nspcc.ru", refresh, retry, expire, ttl)