diff --git a/packages/core-data/src/reducer.js b/packages/core-data/src/reducer.js
index f7c54a73da54b3..9a8eacad09aa5c 100644
--- a/packages/core-data/src/reducer.js
+++ b/packages/core-data/src/reducer.js
@@ -309,7 +309,8 @@ export function undo( state = UNDO_INITIAL_STATE, action ) {
 	switch ( action.type ) {
 		case 'EDIT_ENTITY_RECORD':
 		case 'CREATE_UNDO_LEVEL':
-			if ( action.type === 'CREATE_UNDO_LEVEL' ) {
+			const isCreateUndoLevel = action.type === 'CREATE_UNDO_LEVEL';
+			if ( isCreateUndoLevel ) {
 				action = lastEditAction;
 			} else {
 				lastEditAction = action;
@@ -328,7 +329,7 @@ export function undo( state = UNDO_INITIAL_STATE, action ) {
 			// Transient edits don't create an undo level, but are
 			// reachable in the next meaningful edit to which they
 			// are merged. They are defined in the entity's config.
-			if ( ! Object.keys( action.edits ).some( ( key ) => ! action.transientEdits[ key ] ) ) {
+			if ( ! isCreateUndoLevel && ! Object.keys( action.edits ).some( ( key ) => ! action.transientEdits[ key ] ) ) {
 				const nextState = [ ...state ];
 				nextState.flattenedUndo = { ...state.flattenedUndo, ...action.edits };
 				nextState.offset = state.offset;
@@ -339,12 +340,14 @@ export function undo( state = UNDO_INITIAL_STATE, action ) {
 			const nextState = state.slice( 0, state.offset || undefined );
 			nextState.offset = 0;
 			nextState.pop();
-			nextState.push( {
-				kind: action.meta.undo.kind,
-				name: action.meta.undo.name,
-				recordId: action.meta.undo.recordId,
-				edits: { ...state.flattenedUndo, ...action.meta.undo.edits },
-			} );
+			if ( ! isCreateUndoLevel ) {
+				nextState.push( {
+					kind: action.meta.undo.kind,
+					name: action.meta.undo.name,
+					recordId: action.meta.undo.recordId,
+					edits: { ...state.flattenedUndo, ...action.meta.undo.edits },
+				} );
+			}
 			// When an edit is a function it's an optimization to avoid running some expensive operation.
 			// We can't rely on the function references being the same so we opt out of comparing them here.
 			const comparisonUndoEdits = Object.values( action.meta.undo.edits ).filter( ( edit ) => typeof edit !== 'function' );
diff --git a/packages/e2e-tests/specs/__snapshots__/undo.test.js.snap b/packages/e2e-tests/specs/__snapshots__/undo.test.js.snap
index 6c0308f402a826..5d1601b9f0d9a0 100644
--- a/packages/e2e-tests/specs/__snapshots__/undo.test.js.snap
+++ b/packages/e2e-tests/specs/__snapshots__/undo.test.js.snap
@@ -1,19 +1,5 @@
 // Jest Snapshot v1, https://goo.gl/fbAQLP
 
-exports[`undo Should undo to expected level intervals 1`] = `
-"<!-- wp:paragraph -->
-<p>This</p>
-<!-- /wp:paragraph -->
-
-<!-- wp:paragraph -->
-<p>is</p>
-<!-- /wp:paragraph -->
-
-<!-- wp:paragraph -->
-<p>test</p>
-<!-- /wp:paragraph -->"
-`;
-
 exports[`undo should immediately create an undo level on typing 1`] = `
 "<!-- wp:paragraph -->
 <p>1</p>
diff --git a/packages/e2e-tests/specs/undo.test.js b/packages/e2e-tests/specs/undo.test.js
index 6d108c7cfdb466..b5da166dfaedda 100644
--- a/packages/e2e-tests/specs/undo.test.js
+++ b/packages/e2e-tests/specs/undo.test.js
@@ -54,27 +54,84 @@ describe( 'undo', () => {
 		expect( await getEditedPostContent() ).toBe( '' );
 	} );
 
-	it( 'Should undo to expected level intervals', async () => {
+	it( 'Should undo/redo to expected level intervals', async () => {
 		await clickBlockAppender();
 
+		const firstBlock = await getEditedPostContent();
+
 		await page.keyboard.type( 'This' );
+
+		const firstText = await getEditedPostContent();
+
 		await page.keyboard.press( 'Enter' );
+
+		const secondBlock = await getEditedPostContent();
+
 		await page.keyboard.type( 'is' );
+
+		const secondText = await getEditedPostContent();
+
 		await page.keyboard.press( 'Enter' );
+
+		const thirdBlock = await getEditedPostContent();
+
 		await page.keyboard.type( 'test' );
 
-		expect( await getEditedPostContent() ).toMatchSnapshot();
+		const thirdText = await getEditedPostContent();
+
+		await new Promise( ( resolve ) => setTimeout( resolve, 1000 ) );
 
 		await pressKeyWithModifier( 'primary', 'z' ); // Undo 3rd paragraph text.
+
+		expect( await getEditedPostContent() ).toBe( thirdBlock );
+
 		await pressKeyWithModifier( 'primary', 'z' ); // Undo 3rd block.
+
+		expect( await getEditedPostContent() ).toBe( secondText );
+
 		await pressKeyWithModifier( 'primary', 'z' ); // Undo 2nd paragraph text.
+
+		expect( await getEditedPostContent() ).toBe( secondBlock );
+
 		await pressKeyWithModifier( 'primary', 'z' ); // Undo 2nd block.
+
+		expect( await getEditedPostContent() ).toBe( firstText );
+
 		await pressKeyWithModifier( 'primary', 'z' ); // Undo 1st paragraph text.
+
+		expect( await getEditedPostContent() ).toBe( firstBlock );
+
 		await pressKeyWithModifier( 'primary', 'z' ); // Undo 1st block.
 
 		expect( await getEditedPostContent() ).toBe( '' );
 		// After undoing every action, there should be no more undo history.
 		expect( await page.$( '.editor-history__undo[aria-disabled="true"]' ) ).not.toBeNull();
+
+		await pressKeyWithModifier( 'primaryShift', 'z' ); // Redo 1st block.
+
+		expect( await getEditedPostContent() ).toBe( firstBlock );
+		// After redoing one change, the undo button should be enabled again.
+		expect( await page.$( '.editor-history__undo[aria-disabled="true"]' ) ).toBeNull();
+
+		await pressKeyWithModifier( 'primaryShift', 'z' ); // Redo 1st paragraph text.
+
+		expect( await getEditedPostContent() ).toBe( firstText );
+
+		await pressKeyWithModifier( 'primaryShift', 'z' ); // Redo 2nd block.
+
+		expect( await getEditedPostContent() ).toBe( secondBlock );
+
+		await pressKeyWithModifier( 'primaryShift', 'z' ); // Redo 2nd paragraph text.
+
+		expect( await getEditedPostContent() ).toBe( secondText );
+
+		await pressKeyWithModifier( 'primaryShift', 'z' ); // Redo 3rd block.
+
+		expect( await getEditedPostContent() ).toBe( thirdBlock );
+
+		await pressKeyWithModifier( 'primaryShift', 'z' ); // Redo 3rd paragraph text.
+
+		expect( await getEditedPostContent() ).toBe( thirdText );
 	} );
 
 	it( 'should undo for explicit persistence editing post', async () => {