diff --git a/block_test.go b/block_test.go
index 5ea69f55..9f0d4513 100644
--- a/block_test.go
+++ b/block_test.go
@@ -179,6 +179,12 @@ func TestCodeInList(t *testing.T) {
 	doTestsParam(t, tests, TestParams{extensions: exts})
 }
 
+func TestBug346(t *testing.T) {
+	tests := readTestFile2(t, "bug346.tests")
+	exts := parser.CommonExtensions
+	doTestsParam(t, tests, TestParams{extensions: exts})
+}
+
 func TestLists(t *testing.T) {
 	tests := readTestFile2(t, "Lists.tests")
 	exts := parser.CommonExtensions
diff --git a/parser/block.go b/parser/block.go
index 12404909..e0b99604 100644
--- a/parser/block.go
+++ b/parser/block.go
@@ -1409,6 +1409,9 @@ func (p *Parser) listItem(data []byte, flags *ast.ListType) int {
 	// process the following lines
 	containsBlankLine := false
 	sublist := 0
+	// track fenced code blocks inside list items so that lines within
+	// the fence are gathered verbatim (not misinterpreted as list items)
+	fenceMarker := ""
 
 gatherlines:
 	for line < len(data) {
@@ -1442,6 +1445,39 @@ gatherlines:
 
 		chunk := data[line+indentIndex : i]
 
+		// track fenced code blocks inside list items;
+		// only track fences that are indented (part of the list item content),
+		// a fence at indent 0 ends the list (handled below)
+		if !isDefinitionList && p.extensions&FencedCode != 0 {
+			if fenceMarker != "" {
+				if indent == 0 {
+					// non-indented line while inside a fence means we
+					// left the list item content -- abandon the fence
+					fenceMarker = ""
+				} else {
+					// inside a fence: check for closing fence
+					_, marker := isFenceLine(chunk, nil, fenceMarker)
+					if marker != "" {
+						fenceMarker = ""
+					}
+					// gather the line verbatim, skip structure detection
+					if containsBlankLine {
+						containsBlankLine = false
+						raw.WriteByte('\n')
+					}
+					raw.Write(chunk)
+					line = i
+					continue
+				}
+			} else if indent > 0 {
+				// not inside a fence: check for opening fence (indented only)
+				_, marker := isFenceLine(chunk, nil, "")
+				if marker != "" {
+					fenceMarker = marker
+				}
+			}
+		}
+
 		// If there is a fence line (marking starting of a code block)
 		// without indent do not process it as part of the list.
 		//
diff --git a/testdata/bug346.tests b/testdata/bug346.tests
new file mode 100644
index 00000000..0b54067b
--- /dev/null
+++ b/testdata/bug346.tests
@@ -0,0 +1,86 @@
+- test1
+
+    ```
+    - test
+    ```
+- test2
+
+    ```
+      - test
+    ```
+- test3
+
+    ```
+        - test
+    ```
++++
+<ul>
+<li><p>test1</p>
+
+<pre><code>- test
+</code></pre></li>
+
+<li><p>test2</p>
+
+<pre><code>  - test
+</code></pre></li>
+
+<li><p>test3</p>
+
+<pre><code>    - test
+</code></pre></li>
+</ul>
++++
+- item
+
+    ```
+    1. not a list
+    ```
++++
+<ul>
+<li><p>item</p>
+
+<pre><code>1. not a list
+</code></pre></li>
+</ul>
++++
+- item
+
+    ```
+    # not a heading
+    ```
++++
+<ul>
+<li><p>item</p>
+
+<pre><code># not a heading
+</code></pre></li>
+</ul>
++++
+- item
+
+    ~~~
+    - dash in tilde fence
+    ~~~
++++
+<ul>
+<li><p>item</p>
+
+<pre><code>- dash in tilde fence
+</code></pre></li>
+</ul>
++++
+- item1
+
+    ```
+    - should be code
+- item2
++++
+<ul>
+<li><p>item1</p>
+
+<p>```
+- should be code</p></li>
+
+<li><p>item2</p></li>
+</ul>