diff --git a/src/ng/directive/ngTransclude.js b/src/ng/directive/ngTransclude.js
index f19c251fc3b6..4f48f5ee0bbf 100644
--- a/src/ng/directive/ngTransclude.js
+++ b/src/ng/directive/ngTransclude.js
@@ -13,8 +13,8 @@
  *
  * If the transcluded content is not empty (i.e. contains one or more DOM nodes, including whitespace text nodes), any existing
  * content of this element will be removed before the transcluded content is inserted.
- * If the transcluded content is empty, the existing content is left intact. This lets you provide fallback content in the case
- * that no transcluded content is provided.
+ * If the transcluded content is empty (or only whitespace), the existing content is left intact. This lets you provide fallback
+ * content in the case that no transcluded content is provided.
  *
  * @element ANY
  *
@@ -195,7 +195,7 @@ var ngTranscludeDirective = ['$compile', function($compile) {
         }
 
         function ngTranscludeCloneAttachFn(clone, transcludedScope) {
-          if (clone.length) {
+          if (clone.length && notWhitespace(clone)) {
             $element.append(clone);
           } else {
             useFallbackContent();
@@ -212,6 +212,15 @@ var ngTranscludeDirective = ['$compile', function($compile) {
             $element.append(clone);
           });
         }
+
+        function notWhitespace(nodes) {
+          for (var i = 0, ii = nodes.length; i < ii; i++) {
+            var node = nodes[i];
+            if (node.nodeType !== NODE_TYPE_TEXT || node.nodeValue.trim()) {
+              return true;
+            }
+          }
+        }
       };
     }
   };
diff --git a/test/ng/compileSpec.js b/test/ng/compileSpec.js
index 70112d14a82f..a9659524fd21 100755
--- a/test/ng/compileSpec.js
+++ b/test/ng/compileSpec.js
@@ -8728,6 +8728,60 @@ describe('$compile', function() {
             });
           });
 
+          it('should compile and link the fallback content if only whitespace transcluded content is provided', function() {
+            var linkSpy = jasmine.createSpy('postlink');
+
+            module(function() {
+              directive('inner', function() {
+                return {
+                  restrict: 'E',
+                  template: 'old stuff! ',
+                  link: linkSpy
+                };
+              });
+
+              directive('trans', function() {
+                return {
+                  transclude: true,
+                  template: '<div ng-transclude><inner></inner></div>'
+                };
+              });
+            });
+            inject(function(log, $rootScope, $compile) {
+              element = $compile('<div trans>\n  \n</div>')($rootScope);
+              $rootScope.$apply();
+              expect(sortedHtml(element.html())).toEqual('<div ng-transclude=""><inner>old stuff! </inner></div>');
+              expect(linkSpy).toHaveBeenCalled();
+            });
+          });
+
+          it('should not link the fallback content if only whitespace and comments are provided as transclude content', function() {
+            var linkSpy = jasmine.createSpy('postlink');
+
+            module(function() {
+              directive('inner', function() {
+                return {
+                  restrict: 'E',
+                  template: 'old stuff! ',
+                  link: linkSpy
+                };
+              });
+
+              directive('trans', function() {
+                return {
+                  transclude: true,
+                  template: '<div ng-transclude><inner></inner></div>'
+                };
+              });
+            });
+            inject(function(log, $rootScope, $compile) {
+              element = $compile('<div trans>\n<!-- some comment -->  \n</div>')($rootScope);
+              $rootScope.$apply();
+              expect(sortedHtml(element.html())).toEqual('<div ng-transclude="">\n<!-- some comment -->  \n</div>');
+              expect(linkSpy).not.toHaveBeenCalled();
+            });
+          });
+
           it('should compile and link the fallback content if an optional transclusion slot is not provided', function() {
             var linkSpy = jasmine.createSpy('postlink');