diff --git a/src/md.ts b/src/md.ts
index 2b6932e8ad..47cc032d7c 100644
--- a/src/md.ts
+++ b/src/md.ts
@@ -17,7 +17,7 @@ import { bufToString } from './util.ts'
 
 export function transformMarkdown(buf: Buffer | string): string {
   const out: string[] = []
-  const tabRe = /^(  +|\t)/
+  const tabRe = /^( {4,}| {0,3}\t)/
   const fenceRe =
     /^(?<indent> {0,3})(?<fence>(`{3,20}|~{3,20}))(?:(?<js>js|javascript|ts|typescript)|(?<bash>sh|shell|bash)|.*)$/
 
diff --git a/test/md.test.ts b/test/md.test.ts
index d37b9c9f6e..a081662f60 100644
--- a/test/md.test.ts
+++ b/test/md.test.ts
@@ -23,7 +23,32 @@ describe('transformMarkdown()', () => {
     })
 
     test('preserves tab-indented blocks after a blank line (legacy behavior)', () => {
-      assert.equal(transformMarkdown('  \n    '), '  \n    ')
+      assert.equal(
+        transformMarkdown('\n\tconsole.log("hello")'),
+        '// \n\tconsole.log("hello")'
+      )
+    })
+
+    test('preserves 4-space indented blocks after a blank line', () => {
+      assert.equal(
+        transformMarkdown('\n    console.log("hello")'),
+        '// \n    console.log("hello")'
+      )
+    })
+
+    test('preserves blocks indented with spaces and a tab (equivalent to 4 spaces)', () => {
+      assert.equal(
+        transformMarkdown('\n  \tconsole.log("hello")'),
+        '// \n  \tconsole.log("hello")'
+      )
+    })
+
+    test('does not treat indented list/paragraph text with <4 spaces as code blocks (#1388)', () => {
+      const input =
+        '- item 1\n- item 2\n\n  This template assumes you have pnpm installed.'
+      const expected =
+        '// - item 1\n// - item 2\n// \n//   This template assumes you have pnpm installed.'
+      assert.equal(transformMarkdown(input), expected)
     })
 
     test('does not treat a mid-paragraph fence as a fenced block (legacy behavior)', () => {