diff --git a/actions/setup/js/render_template.cjs b/actions/setup/js/render_template.cjs
index 162a07c97bd..c90f039c8a6 100644
--- a/actions/setup/js/render_template.cjs
+++ b/actions/setup/js/render_template.cjs
@@ -73,7 +73,11 @@ function renderMarkdownTemplate(markdown) {
     } else {
       removedBlocks++;
       core.info(`[renderMarkdownTemplate]   Action: Removing entire block`);
-      return "";
+      // Keep the leading newline so the line before the block stays separated
+      // from the line after it (the closing tag's trailing newline is already
+      // consumed by the match). Dropping it merges unrelated lines together,
+      // e.g. "Before\n{{#if false}}...{{/if}}\nAfter" -> "BeforeAfter".
+      return leadNL;
     }
   });
 
diff --git a/actions/setup/js/render_template.test.cjs b/actions/setup/js/render_template.test.cjs
index 171686cd50e..819e7f68f4e 100644
--- a/actions/setup/js/render_template.test.cjs
+++ b/actions/setup/js/render_template.test.cjs
@@ -52,6 +52,10 @@ describe("renderMarkdownTemplate", () => {
       const output = renderMarkdownTemplate("Start\n\n{{#if false}}\nBlock 1\n{{/if}}\n\n{{#if false}}\nBlock 2\n{{/if}}\n\n{{#if false}}\nBlock 3\n{{/if}}\n\nEnd");
       (expect(output).not.toMatch(/\n{3,}/), expect(output).toContain("Start"), expect(output).toContain("End"));
     }),
+    it("should not merge the surrounding lines when a single-newline-separated falsy block is removed", () => {
+      const output = renderMarkdownTemplate("Line1\n{{#if false}}\nRemoved\n{{/if}}\nLine2\n");
+      expect(output).toBe("Line1\nLine2\n");
+    }),
     it("should preserve leading spaces with truthy block", () => {
       const output = renderMarkdownTemplate("  {{#if true}}\n  Content with leading spaces\n  {{/if}}");
       expect(output).toBe("  Content with leading spaces\n");