diff --git a/lib/handlebars/compiler/ast.js b/lib/handlebars/compiler/ast.js
index 336492d96..f6229e299 100644
--- a/lib/handlebars/compiler/ast.js
+++ b/lib/handlebars/compiler/ast.js
@@ -1,15 +1,25 @@
 import Exception from "../exception";
 
-export function ProgramNode(statements, inverse) {
+export function ProgramNode(statements, inverseStrip, inverse) {
   this.type = "program";
   this.statements = statements;
-  if(inverse) { this.inverse = new ProgramNode(inverse); }
+  this.strip = {};
+
+  if(inverse) {
+    this.inverse = new ProgramNode(inverse, inverseStrip);
+    this.strip.right = inverseStrip.left;
+  } else if (inverseStrip) {
+    this.strip.left = inverseStrip.right;
+  }
 }
 
-export function MustacheNode(rawParams, hash, unescaped) {
+export function MustacheNode(rawParams, hash, open, strip) {
   this.type = "mustache";
-  this.escaped = !unescaped;
   this.hash = hash;
+  this.strip = strip;
+
+  var escapeFlag = open[3] || open[2];
+  this.escaped = escapeFlag !== '{' && escapeFlag !== '&';
 
   var id = this.id = rawParams[0];
   var params = this.params = rawParams.slice(1);
@@ -28,15 +38,16 @@ export function MustacheNode(rawParams, hash, unescaped) {
   // pass or at runtime.
 }
 
-export function PartialNode(partialName, context) {
+export function PartialNode(partialName, context, strip) {
   this.type         = "partial";
   this.partialName  = partialName;
   this.context      = context;
+  this.strip = strip;
 }
 
 export function BlockNode(mustache, program, inverse, close) {
-  if(mustache.id.original !== close.original) {
-    throw new Exception(mustache.id.original + " doesn't match " + close.original);
+  if(mustache.id.original !== close.path.original) {
+    throw new Exception(mustache.id.original + " doesn't match " + close.path.original);
   }
 
   this.type = "block";
@@ -44,7 +55,15 @@ export function BlockNode(mustache, program, inverse, close) {
   this.program  = program;
   this.inverse  = inverse;
 
-  if (this.inverse && !this.program) {
+  this.strip = {
+    left: mustache.strip.left,
+    right: close.strip.right
+  };
+
+  (program || inverse).strip.left = mustache.strip.right;
+  (inverse || program).strip.right = close.strip.left;
+
+  if (inverse && !program) {
     this.isInverse = true;
   }
 }
diff --git a/lib/handlebars/compiler/compiler.js b/lib/handlebars/compiler/compiler.js
index 50195e3ab..4f232ebce 100644
--- a/lib/handlebars/compiler/compiler.js
+++ b/lib/handlebars/compiler/compiler.js
@@ -72,6 +72,7 @@ Compiler.prototype = {
   guid: 0,
 
   compile: function(program, options) {
+    this.opcodes = [];
     this.children = [];
     this.depths = {list: []};
     this.options = options;
@@ -93,20 +94,30 @@ Compiler.prototype = {
       }
     }
 
-    return this.program(program);
+    return this.accept(program);
   },
 
   accept: function(node) {
-    return this[node.type](node);
+    var strip = node.strip || {},
+        ret;
+    if (strip.left) {
+      this.opcode('strip');
+    }
+
+    ret = this[node.type](node);
+
+    if (strip.right) {
+      this.opcode('strip');
+    }
+
+    return ret;
   },
 
   program: function(program) {
-    var statements = program.statements, statement;
-    this.opcodes = [];
+    var statements = program.statements;
 
     for(var i=0, l=statements.length; i<l; i++) {
-      statement = statements[i];
-      this[statement.type](statement);
+      this.accept(statements[i]);
     }
     this.isSimple = l === 1;
 
diff --git a/lib/handlebars/compiler/javascript-compiler.js b/lib/handlebars/compiler/javascript-compiler.js
index 283c20c44..b04ef1ad3 100644
--- a/lib/handlebars/compiler/javascript-compiler.js
+++ b/lib/handlebars/compiler/javascript-compiler.js
@@ -75,18 +75,17 @@ JavaScriptCompiler.prototype = {
       } else {
         this[opcode.opcode].apply(this, opcode.args);
       }
-    }
 
-    return this.createFunctionContext(asObject);
-  },
+      // Reset the stripNext flag if it was not set by this operation.
+      if (opcode.opcode !== this.stripNext) {
+        this.stripNext = false;
+      }
+    }
 
-  nextOpcode: function() {
-    var opcodes = this.environment.opcodes;
-    return opcodes[this.i + 1];
-  },
+    // Flush any trailing content that might be pending.
+    this.pushSource('');
 
-  eat: function() {
-    this.i = this.i + 1;
+    return this.createFunctionContext(asObject);
   },
 
   preamble: function() {
@@ -141,7 +140,7 @@ JavaScriptCompiler.prototype = {
     }
 
     if (!this.environment.isSimple) {
-      this.source.push("return buffer;");
+      this.pushSource("return buffer;");
     }
 
     var params = this.isChild ? ["depth0", "data"] : ["Handlebars", "depth0", "helpers", "partials", "data"];
@@ -232,7 +231,7 @@ JavaScriptCompiler.prototype = {
     // Use the options value generated from the invocation
     params[params.length-1] = 'options';
 
-    this.source.push("if (!" + this.lastHelper + ") { " + current + " = blockHelperMissing.call(" + params.join(", ") + "); }");
+    this.pushSource("if (!" + this.lastHelper + ") { " + current + " = blockHelperMissing.call(" + params.join(", ") + "); }");
   },
 
   // [appendContent]
@@ -242,7 +241,28 @@ JavaScriptCompiler.prototype = {
   //
   // Appends the string value of `content` to the current buffer
   appendContent: function(content) {
-    this.source.push(this.appendToBuffer(this.quotedString(content)));
+    if (this.pendingContent) {
+      content = this.pendingContent + content;
+    }
+    if (this.stripNext) {
+      content = content.replace(/^\s+/, '');
+    }
+
+    this.pendingContent = content;
+  },
+
+  // [strip]
+  //
+  // On stack, before: ...
+  // On stack, after: ...
+  //
+  // Removes any trailing whitespace from the prior content node and flags
+  // the next operation for stripping if it is a content node.
+  strip: function() {
+    if (this.pendingContent) {
+      this.pendingContent = this.pendingContent.replace(/\s+$/, '');
+    }
+    this.stripNext = 'strip';
   },
 
   // [append]
@@ -259,9 +279,9 @@ JavaScriptCompiler.prototype = {
     // when we examine local
     this.flushInline();
     var local = this.popStack();
-    this.source.push("if(" + local + " || " + local + " === 0) { " + this.appendToBuffer(local) + " }");
+    this.pushSource("if(" + local + " || " + local + " === 0) { " + this.appendToBuffer(local) + " }");
     if (this.environment.isSimple) {
-      this.source.push("else { " + this.appendToBuffer("''") + " }");
+      this.pushSource("else { " + this.appendToBuffer("''") + " }");
     }
   },
 
@@ -274,7 +294,7 @@ JavaScriptCompiler.prototype = {
   appendEscaped: function() {
     this.context.aliases.escapeExpression = 'this.escapeExpression';
 
-    this.source.push(this.appendToBuffer("escapeExpression(" + this.popStack() + ")"));
+    this.pushSource(this.appendToBuffer("escapeExpression(" + this.popStack() + ")"));
   },
 
   // [getContext]
@@ -498,8 +518,8 @@ JavaScriptCompiler.prototype = {
     var nonHelper = this.nameLookup('depth' + this.lastContext, name, 'context');
     var nextStack = this.nextStack();
 
-    this.source.push('if (' + nextStack + ' = ' + helperName + ') { ' + nextStack + ' = ' + nextStack + '.call(' + helper.callParams + '); }');
-    this.source.push('else { ' + nextStack + ' = ' + nonHelper + '; ' + nextStack + ' = typeof ' + nextStack + ' === functionType ? ' + nextStack + '.call(' + helper.callParams + ') : ' + nextStack + '; }');
+    this.pushSource('if (' + nextStack + ' = ' + helperName + ') { ' + nextStack + ' = ' + nextStack + '.call(' + helper.callParams + '); }');
+    this.pushSource('else { ' + nextStack + ' = ' + nonHelper + '; ' + nextStack + ' = typeof ' + nextStack + ' === functionType ? ' + nextStack + '.call(' + helper.callParams + ') : ' + nextStack + '; }');
   },
 
   // [invokePartial]
@@ -606,7 +626,7 @@ JavaScriptCompiler.prototype = {
 
   register: function(name, val) {
     this.useRegister(name);
-    this.source.push(name + " = " + val + ";");
+    this.pushSource(name + " = " + val + ";");
   },
 
   useRegister: function(name) {
@@ -620,12 +640,23 @@ JavaScriptCompiler.prototype = {
     return this.push(new Literal(item));
   },
 
+  pushSource: function(source) {
+    if (this.pendingContent) {
+      this.source.push(this.appendToBuffer(this.quotedString(this.pendingContent)));
+      this.pendingContent = undefined;
+    }
+
+    if (source) {
+      this.source.push(source);
+    }
+  },
+
   pushStack: function(item) {
     this.flushInline();
 
     var stack = this.incrStack();
     if (item) {
-      this.source.push(stack + " = " + item + ";");
+      this.pushSource(stack + " = " + item + ";");
     }
     this.compileStack.push(stack);
     return stack;
@@ -668,7 +699,7 @@ JavaScriptCompiler.prototype = {
         stack = this.nextStack();
       }
 
-      this.source.push(stack + " = (" + prefix + item + ");");
+      this.pushSource(stack + " = (" + prefix + item + ");");
     }
     return stack;
   },
diff --git a/spec/whitespace-control.js b/spec/whitespace-control.js
new file mode 100644
index 000000000..2088ed8b7
--- /dev/null
+++ b/spec/whitespace-control.js
@@ -0,0 +1,62 @@
+describe('whitespace control', function() {
+  it('should strip whitespace around mustache calls', function() {
+    var hash = {foo: 'bar<'};
+
+    shouldCompileTo(' {{~foo~}} ', hash, 'bar&lt;');
+    shouldCompileTo(' {{~foo}} ', hash, 'bar&lt; ');
+    shouldCompileTo(' {{foo~}} ', hash, ' bar&lt;');
+
+    shouldCompileTo(' {{~&foo~}} ', hash, 'bar<');
+    shouldCompileTo(' {{~{foo}~}} ', hash, 'bar<');
+  });
+
+  describe('blocks', function() {
+    it('should strip whitespace around simple block calls', function() {
+      var hash = {foo: 'bar<'};
+
+      shouldCompileTo(' {{~#if foo~}} bar {{~/if~}} ', hash, 'bar');
+      shouldCompileTo(' {{#if foo~}} bar {{/if~}} ', hash, ' bar ');
+      shouldCompileTo(' {{~#if foo}} bar {{~/if}} ', hash, ' bar ');
+      shouldCompileTo(' {{#if foo}} bar {{/if}} ', hash, '  bar  ');
+    });
+    it('should strip whitespace around inverse block calls', function() {
+      var hash = {};
+
+      shouldCompileTo(' {{~^if foo~}} bar {{~/if~}} ', hash, 'bar');
+      shouldCompileTo(' {{^if foo~}} bar {{/if~}} ', hash, ' bar ');
+      shouldCompileTo(' {{~^if foo}} bar {{~/if}} ', hash, ' bar ');
+      shouldCompileTo(' {{^if foo}} bar {{/if}} ', hash, '  bar  ');
+    });
+    it('should strip whitespace around complex block calls', function() {
+      var hash = {foo: 'bar<'};
+
+      shouldCompileTo('{{#if foo~}} bar {{~^~}} baz {{~/if}}', hash, 'bar');
+      shouldCompileTo('{{#if foo~}} bar {{^~}} baz {{/if}}', hash, 'bar ');
+      shouldCompileTo('{{#if foo}} bar {{~^~}} baz {{~/if}}', hash, ' bar');
+      shouldCompileTo('{{#if foo}} bar {{^~}} baz {{/if}}', hash, ' bar ');
+
+      shouldCompileTo('{{#if foo~}} bar {{~else~}} baz {{~/if}}', hash, 'bar');
+
+      hash = {};
+
+      shouldCompileTo('{{#if foo~}} bar {{~^~}} baz {{~/if}}', hash, 'baz');
+      shouldCompileTo('{{#if foo}} bar {{~^~}} baz {{/if}}', hash, 'baz ');
+      shouldCompileTo('{{#if foo~}} bar {{~^}} baz {{~/if}}', hash, ' baz');
+      shouldCompileTo('{{#if foo~}} bar {{~^}} baz {{/if}}', hash, ' baz ');
+
+      shouldCompileTo('{{#if foo~}} bar {{~else~}} baz {{~/if}}', hash, 'baz');
+    });
+  });
+
+  it('should strip whitespace around partials', function() {
+    shouldCompileToWithPartials('foo {{~> dude~}} ', [{}, {}, {dude: 'bar'}], true, 'foobar');
+    shouldCompileToWithPartials('foo {{> dude~}} ', [{}, {}, {dude: 'bar'}], true, 'foo bar');
+    shouldCompileToWithPartials('foo {{> dude}} ', [{}, {}, {dude: 'bar'}], true, 'foo bar ');
+  });
+
+  it('should only strip whitespace once', function() {
+    var hash = {foo: 'bar'};
+
+    shouldCompileTo(' {{~foo~}} {{foo}} {{foo}} ', hash, 'barbar bar ');
+  });
+});
diff --git a/src/handlebars.l b/src/handlebars.l
index 7593189ef..ddb7fe9ca 100644
--- a/src/handlebars.l
+++ b/src/handlebars.l
@@ -9,6 +9,11 @@ function strip(start, end) {
 
 %}
 
+LEFT_STRIP    "~"
+RIGHT_STRIP   "~"
+
+LOOKAHEAD           [=~}\s\/.]
+LITERAL_LOOKAHEAD   [~}\s]
 
 /*
 ID is the inverse of control characters.
@@ -19,7 +24,7 @@ Control characters ranges:
   [\[-\^`]      [, \, ], ^, `,                          Exceptions in range: _
   [\{-~]        {, |, }, ~
 */
-ID    [^\s!"#%-,\.\/;->@\[-\^`\{-~]+/[=}\s\/.]
+ID    [^\s!"#%-,\.\/;->@\[-\^`\{-~]+/{LOOKAHEAD}
 
 %%
 
@@ -46,30 +51,30 @@ ID    [^\s!"#%-,\.\/;->@\[-\^`\{-~]+/[=}\s\/.]
 
 <com>[\s\S]*?"--}}"              strip(0,4); this.popState(); return 'COMMENT';
 
-<mu>"{{>"                        return 'OPEN_PARTIAL';
-<mu>"{{#"                        return 'OPEN_BLOCK';
-<mu>"{{/"                        return 'OPEN_ENDBLOCK';
-<mu>"{{^"                        return 'OPEN_INVERSE';
-<mu>"{{"\s*"else"                return 'OPEN_INVERSE';
-<mu>"{{{"                        return 'OPEN_UNESCAPED';
-<mu>"{{&"                        return 'OPEN';
+<mu>"{{"{LEFT_STRIP}?">"         return 'OPEN_PARTIAL';
+<mu>"{{"{LEFT_STRIP}?"#"         return 'OPEN_BLOCK';
+<mu>"{{"{LEFT_STRIP}?"/"         return 'OPEN_ENDBLOCK';
+<mu>"{{"{LEFT_STRIP}?"^"         return 'OPEN_INVERSE';
+<mu>"{{"{LEFT_STRIP}?\s*"else"   return 'OPEN_INVERSE';
+<mu>"{{"{LEFT_STRIP}?"{"         return 'OPEN_UNESCAPED';
+<mu>"{{"{LEFT_STRIP}?"&"         return 'OPEN';
 <mu>"{{!--"                      this.popState(); this.begin('com');
 <mu>"{{!"[\s\S]*?"}}"            strip(3,5); this.popState(); return 'COMMENT';
-<mu>"{{"                         return 'OPEN';
+<mu>"{{"{LEFT_STRIP}?            return 'OPEN';
 
 <mu>"="                          return 'EQUALS';
-<mu>"."/[}\/ ]                   return 'ID';
 <mu>".."                         return 'ID';
+<mu>"."/{LOOKAHEAD}              return 'ID';
 <mu>[\/.]                        return 'SEP';
 <mu>\s+                          /*ignore whitespace*/
-<mu>"}}}"                        this.popState(); return 'CLOSE_UNESCAPED';
-<mu>"}}"                         this.popState(); return 'CLOSE';
+<mu>"}"{RIGHT_STRIP}?"}}"        this.popState(); return 'CLOSE_UNESCAPED';
+<mu>{RIGHT_STRIP}?"}}"           this.popState(); return 'CLOSE';
 <mu>'"'("\\"["]|[^"])*'"'        yytext = strip(1,2).replace(/\\"/g,'"'); return 'STRING';
 <mu>"'"("\\"[']|[^'])*"'"        yytext = strip(1,2).replace(/\\'/g,"'"); return 'STRING';
 <mu>"@"                          return 'DATA';
-<mu>"true"/[}\s]                 return 'BOOLEAN';
-<mu>"false"/[}\s]                return 'BOOLEAN';
-<mu>\-?[0-9]+/[}\s]              return 'INTEGER';
+<mu>"true"/{LITERAL_LOOKAHEAD}   return 'BOOLEAN';
+<mu>"false"/{LITERAL_LOOKAHEAD}  return 'BOOLEAN';
+<mu>\-?[0-9]+/{LITERAL_LOOKAHEAD} return 'INTEGER';
 
 <mu>{ID}                         return 'ID';
 
diff --git a/src/handlebars.yy b/src/handlebars.yy
index d2f24c45d..0afd2cbbc 100644
--- a/src/handlebars.yy
+++ b/src/handlebars.yy
@@ -2,6 +2,17 @@
 
 %ebnf
 
+%{
+
+function stripFlags(open, close) {
+  return {
+    left: open[2] === '~',
+    right: close[0] === '~' || close[1] === '~'
+  };
+}
+
+%}
+
 %%
 
 root
@@ -9,9 +20,9 @@ root
   ;
 
 program
-  : simpleInverse statements -> new yy.ProgramNode([], $2)
-  | statements simpleInverse statements -> new yy.ProgramNode($1, $3)
-  | statements simpleInverse -> new yy.ProgramNode($1, [])
+  : simpleInverse statements -> new yy.ProgramNode([], $1, $2)
+  | statements simpleInverse statements -> new yy.ProgramNode($1, $2, $3)
+  | statements simpleInverse -> new yy.ProgramNode($1, $2, [])
   | statements -> new yy.ProgramNode($1)
   | simpleInverse -> new yy.ProgramNode([])
   | "" -> new yy.ProgramNode([])
@@ -32,32 +43,31 @@ statement
   ;
 
 openBlock
-  : OPEN_BLOCK inMustache CLOSE -> new yy.MustacheNode($2[0], $2[1])
+  : OPEN_BLOCK inMustache CLOSE -> new yy.MustacheNode($2[0], $2[1], $1, stripFlags($1, $3))
   ;
 
 openInverse
-  : OPEN_INVERSE inMustache CLOSE -> new yy.MustacheNode($2[0], $2[1])
+  : OPEN_INVERSE inMustache CLOSE -> new yy.MustacheNode($2[0], $2[1], $1, stripFlags($1, $3))
   ;
 
 closeBlock
-  : OPEN_ENDBLOCK path CLOSE -> $2
+  : OPEN_ENDBLOCK path CLOSE -> {path: $2, strip: stripFlags($1, $3)}
   ;
 
 mustache
-  : OPEN inMustache CLOSE {
-    // Parsing out the '&' escape token at this level saves ~500 bytes after min due to the removal of one parser node.
-    $$ = new yy.MustacheNode($2[0], $2[1], $1[2] === '&');
-  }
-  | OPEN_UNESCAPED inMustache CLOSE_UNESCAPED -> new yy.MustacheNode($2[0], $2[1], true)
+  // Parsing out the '&' escape token at AST level saves ~500 bytes after min due to the removal of one parser node.
+  // This also allows for handler unification as all mustache node instances can utilize the same handler
+  : OPEN inMustache CLOSE -> new yy.MustacheNode($2[0], $2[1], $1, stripFlags($1, $3))
+  | OPEN_UNESCAPED inMustache CLOSE_UNESCAPED -> new yy.MustacheNode($2[0], $2[1], $1, stripFlags($1, $3))
   ;
 
 
 partial
-  : OPEN_PARTIAL partialName path? CLOSE -> new yy.PartialNode($2, $3)
+  : OPEN_PARTIAL partialName path? CLOSE -> new yy.PartialNode($2, $3, stripFlags($1, $4))
   ;
 
 simpleInverse
-  : OPEN_INVERSE CLOSE { }
+  : OPEN_INVERSE CLOSE -> stripFlags($1, $2)
   ;
 
 inMustache