diff --git a/Mustache.php b/Mustache.php
index a41502b..255a627 100644
--- a/Mustache.php
+++ b/Mustache.php
@@ -258,6 +258,17 @@ class Mustache {
 		return $template;
 	}
 
+	const SECTION_TYPES = '^#/';
+
+	protected function _prepareSectionRegEx($otag, $ctag) {
+		return sprintf(
+			'/(?:(?<=\\n)[ \\t]*)?%s(?<type>[%s])(?<tag_name>.+?)%s\\n?/s',
+			preg_quote($otag, '/'),
+			preg_quote(self::SECTION_TYPES, '/'),
+			preg_quote($ctag, '/')
+		);
+	}
+
 	/**
 	 * Extract a section from $template.
 	 *
@@ -268,9 +279,7 @@ class Mustache {
 	 * @return array $section, $offset, $type, $tag_name and $content
 	 */
 	protected function _findSection($template) {
-		$otag  = preg_quote($this->_otag, '/');
-		$ctag  = preg_quote($this->_ctag, '/');
-		$regex = '/' . $otag . '([\\^\\#\\/])\\s*(.+?)\\s*' . $ctag . '\\s*/ms';
+		$regex = $this->_prepareSectionRegEx($this->_otag, $this->_ctag);
 
 		$section_start = null;
 		$section_type  = null;
@@ -284,8 +293,8 @@ class Mustache {
 
 			$match    = $matches[0][0];
 			$offset   = $matches[0][1];
-			$type     = $matches[1][0];
-			$tag_name = trim($matches[2][0]);
+			$type     = $matches['type'][0];
+			$tag_name = trim($matches['tag_name'][0]);
 
 			$search_offset = $offset + strlen($match);
 
@@ -323,6 +332,14 @@ class Mustache {
 		}
 	}
 
+	protected function _preparePragmaRegEx($otag, $ctag) {
+		return sprintf(
+			'/%s%%\\s*(?<pragma_name>[\\w_-]+)(?<options_string>(?: [\\w]+=[\\w]+)*)\\s*%s\\n?/s',
+			preg_quote($otag, '/'),
+			preg_quote($ctag, '/')
+		);
+	}
+
 	/**
 	 * Initialize pragmas and remove all pragma tags.
 	 *
@@ -338,9 +355,7 @@ class Mustache {
 			return $template;
 		}
 
-		$otag = preg_quote($this->_otag, '/');
-		$ctag = preg_quote($this->_ctag, '/');
-		$regex = '/' . $otag . '%\\s*([\\w_-]+)((?: [\\w]+=[\\w]+)*)\\s*' . $ctag . '\\n?/s';
+		$regex = $this->_preparePragmaRegEx($this->_otag, $this->_ctag);
 		return preg_replace_callback($regex, array($this, '_renderPragma'), $template);
 	}
 
@@ -354,8 +369,8 @@ class Mustache {
 	 */
 	protected function _renderPragma($matches) {
 		$pragma         = $matches[0];
-		$pragma_name    = $matches[1];
-		$options_string = $matches[2];
+		$pragma_name    = $matches['pragma_name'];
+		$options_string = $matches['options_string'];
 
 		if (!in_array($pragma_name, $this->_pragmasImplemented)) {
 			throw new MustacheException('Unknown pragma: ' . $pragma_name, MustacheException::UNKNOWN_PRAGMA);
@@ -422,6 +437,17 @@ class Mustache {
 		return (isset($this->_throwsExceptions[$exception]) && $this->_throwsExceptions[$exception]);
 	}
 
+	const TAG_TYPES = '#^/=!<>\\{&';
+
+	protected function _prepareTagRegex($otag, $ctag) {
+		return sprintf(
+			'/(?:(?<=\\n)[ \\t]*)?%s(?<type>[%s]?)(?<tag_name>.+?)(?:\\1|})?%s(?:\\s*(?=\\n))?/s',
+			preg_quote($otag, '/'),
+			preg_quote(self::TAG_TYPES, '/'),
+			preg_quote($ctag, '/')
+		);
+	}
+
 	/**
 	 * Loop through and render individual Mustache tags.
 	 *
@@ -437,22 +463,25 @@ class Mustache {
 		$otag_orig = $this->_otag;
 		$ctag_orig = $this->_ctag;
 
-		$otag = preg_quote($this->_otag, '/');
-		$ctag = preg_quote($this->_ctag, '/');
-
-		$this->_tagRegEx = '/' . $otag . "([#\^\/=!<>\\{&])?(.+?)\\1?" . $ctag . "+/s";
+		$this->_tagRegEx = $this->_prepareTagRegEx($this->_otag, $this->_ctag);
 
 		$html = '';
 		$matches = array();
 		while (preg_match($this->_tagRegEx, $template, $matches, PREG_OFFSET_CAPTURE)) {
 			$tag      = $matches[0][0];
 			$offset   = $matches[0][1];
-			$modifier = $matches[1][0];
-			$tag_name = trim($matches[2][0]);
+			$modifier = $matches['type'][0];
+			$tag_name = trim($matches['tag_name'][0]);
 
 			$html .= substr($template, 0, $offset);
+
+			$next_offset = $offset + strlen($tag);
+			if ((substr($html, -1) == "\n") && (substr($template, $next_offset, 1) == "\n")) {
+				$next_offset++;
+			}
+			$template = substr($template, $next_offset);
+
 			$html .= $this->_renderTag($modifier, $tag_name);
-			$template = substr($template, $offset + strlen($tag));
 		}
 
 		$this->_otag = $otag_orig;
@@ -501,6 +530,10 @@ class Mustache {
 				return $this->_renderPartial($tag_name);
 				break;
 			case '{':
+				// strip the trailing } ...
+				if ($tag_name[(strlen($tag_name) - 1)] == '}') {
+					$tag_name = substr($tag_name, 0, -1);
+				}
 			case '&':
 				if ($this->_hasPragma(self::PRAGMA_UNESCAPED)) {
 					return $this->_renderEscaped($tag_name);
@@ -571,13 +604,12 @@ class Mustache {
 	 * @return string
 	 */
 	protected function _changeDelimiter($tag_name) {
-		$tags = explode(' ', $tag_name);
-		$this->_otag = $tags[0];
-		$this->_ctag = $tags[1];
+		list($otag, $ctag) = explode(' ', $tag_name);
+		$this->_otag = $otag;
+		$this->_ctag = $ctag;
+
+		$this->_tagRegEx = $this->_prepareTagRegEx($this->_otag, $this->_ctag);
 
-		$otag  = preg_quote($this->_otag, '/');
-		$ctag  = preg_quote($this->_ctag, '/');
-		$this->_tagRegEx = '/' . $otag . "([#\^\/=!<>\\{&])?(.+?)\\1?" . $ctag . "+/s";
 		return '';
 	}
 
diff --git a/README.markdown b/README.markdown
index 18e72d4..ac39899 100644
--- a/README.markdown
+++ b/README.markdown
@@ -83,7 +83,6 @@ Known Issues
 
  * Sections don't respect delimiter changes -- `delimiters` example currently fails with an
    "unclosed section" exception.
- * Mustache isn't always very good at whitespace.
 
 
 See Also
diff --git a/examples/complex/complex.mustache b/examples/complex/complex.mustache
index 4bf1687..807c201 100644
--- a/examples/complex/complex.mustache
+++ b/examples/complex/complex.mustache
@@ -1,16 +1,16 @@
 <h1>{{header}}</h1>
 {{#notEmpty}}
-  <ul>
-  {{#item}}
-    {{#current}}
-      <li><strong>{{name}}</strong></li>
-    {{/current}}
-    {{^current}}
-      <li><a href="{{url}}">{{name}}</a></li>
-    {{/current}}
-  {{/item}}
-  </ul>
+<ul>
+{{#item}}
+{{#current}}
+    <li><strong>{{name}}</strong></li>
+{{/current}}
+{{^current}}
+    <li><a href="{{url}}">{{name}}</a></li>
+{{/current}}
+{{/item}}
+</ul>
 {{/notEmpty}}
 {{#isEmpty}}
-  <p>The list is empty.</p>
+<p>The list is empty.</p>
 {{/isEmpty}}
\ No newline at end of file
diff --git a/examples/complex/complex.txt b/examples/complex/complex.txt
index eb78d45..facee6d 100644
--- a/examples/complex/complex.txt
+++ b/examples/complex/complex.txt
@@ -1,6 +1,6 @@
 <h1>Colors</h1>
 <ul>
-  <li><strong>red</strong></li>
+    <li><strong>red</strong></li>
     <li><a href="#Green">green</a></li>
     <li><a href="#Blue">blue</a></li>
-    </ul>
+</ul>
diff --git a/examples/double_section/double_section.mustache b/examples/double_section/double_section.mustache
index f5ad673..c831645 100644
--- a/examples/double_section/double_section.mustache
+++ b/examples/double_section/double_section.mustache
@@ -1,7 +1,7 @@
 {{#t}}
-  * first
+* first
 {{/t}}
 * {{two}}
 {{#t}}
-  * third
+* third
 {{/t}}
\ No newline at end of file
diff --git a/examples/grand_parent_context/grand_parent_context.mustache b/examples/grand_parent_context/grand_parent_context.mustache
index e6c07a2..6d03ddf 100644
--- a/examples/grand_parent_context/grand_parent_context.mustache
+++ b/examples/grand_parent_context/grand_parent_context.mustache
@@ -1,10 +1,7 @@
 {{grand_parent_id}}
 {{#parent_contexts}}
-{{grand_parent_id}}
-{{parent_id}}
-{{#child_contexts}}
-{{grand_parent_id}}
-{{parent_id}}
-{{child_id}}
-{{/child_contexts}}
+  {{parent_id}} ({{grand_parent_id}})
+  {{#child_contexts}}
+    {{child_id}} ({{parent_id}} << {{grand_parent_id}})
+  {{/child_contexts}}
 {{/parent_contexts}}
diff --git a/examples/grand_parent_context/grand_parent_context.txt b/examples/grand_parent_context/grand_parent_context.txt
index 64996ad..2687f84 100644
--- a/examples/grand_parent_context/grand_parent_context.txt
+++ b/examples/grand_parent_context/grand_parent_context.txt
@@ -1,17 +1,7 @@
 grand_parent1
-grand_parent1
-parent1
-grand_parent1
-parent1
-parent1-child1
-grand_parent1
-parent1
-parent1-child2
-grand_parent1
-parent2
-grand_parent1
-parent2
-parent2-child1
-grand_parent1
-parent2
-parent2-child2
+  parent1 (grand_parent1)
+    parent1-child1 (parent1 << grand_parent1)
+    parent1-child2 (parent1 << grand_parent1)
+  parent2 (grand_parent1)
+    parent2-child1 (parent2 << grand_parent1)
+    parent2-child2 (parent2 << grand_parent1)
diff --git a/examples/inverted_double_section/inverted_double_section.mustache b/examples/inverted_double_section/inverted_double_section.mustache
index f65109c..acc3ae0 100644
--- a/examples/inverted_double_section/inverted_double_section.mustache
+++ b/examples/inverted_double_section/inverted_double_section.mustache
@@ -1,7 +1,7 @@
 {{^t}}
-  * first
+* first
 {{/t}}
 * {{two}}
 {{^t}}
-  * third
+* third
 {{/t}}
\ No newline at end of file
diff --git a/examples/sections_spaces/SectionsSpaces.php b/examples/sections_spaces/SectionsSpaces.php
deleted file mode 100644
index 9b5adb8..0000000
--- a/examples/sections_spaces/SectionsSpaces.php
+++ /dev/null
@@ -1,14 +0,0 @@
-<?php
-
-class SectionsSpaces extends Mustache {
-	public $start = "It worked the first time.";
-
-	public function middle() {
-		return array(
-			array('item' => "And it worked the second time."),
-			array('item' => "As well as the third."),
-		);
-	}
-
-	public $final = "Then, surprisingly, it worked the final time.";
-}
\ No newline at end of file
diff --git a/examples/sections_spaces/sections_spaces.mustache b/examples/sections_spaces/sections_spaces.mustache
deleted file mode 100644
index 67e2606..0000000
--- a/examples/sections_spaces/sections_spaces.mustache
+++ /dev/null
@@ -1,9 +0,0 @@
- * {{ start }}
-{{# middle }}
- * {{ item }}
-{{/ middle }}
- * {{ final }}
-
- * {{ start }}
-{{# middle }} * {{ item }}{{/ middle }}
- * {{ final }}
\ No newline at end of file
diff --git a/examples/sections_spaces/sections_spaces.txt b/examples/sections_spaces/sections_spaces.txt
deleted file mode 100644
index a7ca703..0000000
--- a/examples/sections_spaces/sections_spaces.txt
+++ /dev/null
@@ -1,9 +0,0 @@
- * It worked the first time.
- * And it worked the second time.
- * As well as the third.
- * Then, surprisingly, it worked the final time.
-
- * It worked the first time.
- * And it worked the second time.
- * As well as the third.
- * Then, surprisingly, it worked the final time.
\ No newline at end of file
diff --git a/test/MustachePragmaImplicitIteratorTest.php b/test/MustachePragmaImplicitIteratorTest.php
index 9a88359..507620d 100644
--- a/test/MustachePragmaImplicitIteratorTest.php
+++ b/test/MustachePragmaImplicitIteratorTest.php
@@ -11,7 +11,11 @@ class MustachePragmaImplicitIteratorTest extends PHPUnit_Framework_TestCase {
 		$m = $this->getMock('Mustache', array('_renderPragma'), array('{{%IMPLICIT-ITERATOR}}'));
 		$m->expects($this->exactly(1))
 			->method('_renderPragma')
-			->with(array('{{%IMPLICIT-ITERATOR}}', 'IMPLICIT-ITERATOR', null));
+			->with(array(
+				0 => '{{%IMPLICIT-ITERATOR}}',
+				1 => 'IMPLICIT-ITERATOR', 'pragma_name' => 'IMPLICIT-ITERATOR',
+				2 => null, 'options_string' => null
+			));
 		$m->render();
 	}
 
diff --git a/test/MustacheTest.php b/test/MustacheTest.php
index 69a2029..504b2d4 100644
--- a/test/MustacheTest.php
+++ b/test/MustacheTest.php
@@ -37,7 +37,6 @@ class MustacheTest extends PHPUnit_Framework_TestCase {
 
 	protected $knownIssues = array(
 		'Delimiters'     => "Known issue: sections don't respect delimiter changes",
-		'SectionsSpaces' => "Known issue: Mustache fails miserably at whitespace",
 	);
 
 	/**