diff --git a/internal/hcl/diff.go b/internal/hcl/diff.go
index 64a1ecab1..2788f60e9 100644
--- a/internal/hcl/diff.go
+++ b/internal/hcl/diff.go
@@ -62,13 +62,15 @@ func diffLines(filename string, beforeLines, afterLines source.Lines) document.C
 
 	for _, group := range m.GetGroupedOpCodes(context) {
 		for _, c := range group {
-			beforeStart, beforeEnd := c.I1, c.I2
-			afterStart, afterEnd := c.J1, c.J2
-
 			if c.Tag == OpEqual {
 				continue
 			}
 
+			// lines to pick from the original document (to delete/replace/insert to)
+			beforeStart, beforeEnd := c.I1, c.I2
+			// lines to pick from the new document (to replace ^ with)
+			afterStart, afterEnd := c.J1, c.J2
+
 			if c.Tag == OpReplace {
 				var rng *hcl.Range
 				var newBytes []byte
@@ -121,6 +123,10 @@ func diffLines(filename string, beforeLines, afterLines source.Lines) document.C
 				if beforeStart == beforeEnd {
 					line := beforeLines[beforeStart]
 					insertRng = line.Range.Ptr()
+
+					// We're inserting to the beginning of the line
+					// which we represent as 0-length range in HCL
+					insertRng.End = insertRng.Start
 				} else {
 					for i, line := range beforeLines[beforeStart:beforeEnd] {
 						if i == 0 {
diff --git a/internal/hcl/diff_test.go b/internal/hcl/diff_test.go
index d3cd0ff4c..247366f26 100644
--- a/internal/hcl/diff_test.go
+++ b/internal/hcl/diff_test.go
@@ -178,6 +178,43 @@ ccc`,
 				},
 			},
 		},
+		{
+			name: "insertion to existing line",
+			beforeCfg: `resource "aws_lambda_function" "f" {
+    environment {
+        variables = {
+            a = "b"
+        }
+    }
+}
+`,
+			afterCfg: `resource "aws_lambda_function" "f" {
+  environment {
+    variables = {
+      a = "b"
+    }
+  }
+}
+`,
+			expectedChanges: document.Changes{
+				&fileChange{
+					newText: "  environment {\n    variables = {\n      a = \"b\"\n",
+					rng: &hcl.Range{
+						Filename: "test.tf",
+						Start:    hcl.Pos{Line: 2, Column: 1, Byte: 37},
+						End:      hcl.Pos{Line: 6, Column: 1, Byte: 107},
+					},
+				},
+				&fileChange{
+					newText: "  }\n",
+					rng: &hcl.Range{
+						Filename: "test.tf",
+						Start:    hcl.Pos{Line: 7, Column: 1, Byte: 113},
+						End:      hcl.Pos{Line: 7, Column: 1, Byte: 113},
+					},
+				},
+			},
+		},
 		{
 			"empty to newline",
 			``,
diff --git a/internal/langserver/handlers/formatting_test.go b/internal/langserver/handlers/formatting_test.go
index d9e9bcba7..1d18a3406 100644
--- a/internal/langserver/handlers/formatting_test.go
+++ b/internal/langserver/handlers/formatting_test.go
@@ -277,3 +277,126 @@ func TestLangServer_formatting_variables(t *testing.T) {
 			]
 		}`)
 }
+
+func TestLangServer_formatting_diffBug(t *testing.T) {
+	tmpDir := TempDir(t)
+
+	cfg := `resource "aws_lambda_function" "f" {
+    environment {
+        variables = {
+            a = "b"
+        }
+    }
+}
+`
+	formattedCfg := `resource "aws_lambda_function" "f" {
+  environment {
+    variables = {
+      a = "b"
+    }
+  }
+}
+`
+
+	ls := langserver.NewLangServerMock(t, NewMockSession(&MockSessionInput{
+		TerraformCalls: &exec.TerraformMockCalls{
+			PerWorkDir: map[string][]*mock.Call{
+				tmpDir.Path(): {
+					{
+						Method:        "Version",
+						Repeatability: 1,
+						Arguments: []interface{}{
+							mock.AnythingOfType(""),
+						},
+						ReturnArguments: []interface{}{
+							version.Must(version.NewVersion("0.12.0")),
+							nil,
+							nil,
+						},
+					},
+					{
+						Method:        "GetExecPath",
+						Repeatability: 1,
+						ReturnArguments: []interface{}{
+							"",
+						},
+					},
+					{
+						Method:        "Format",
+						Repeatability: 1,
+						Arguments: []interface{}{
+							mock.AnythingOfType("*context.valueCtx"),
+							[]byte(cfg),
+						},
+						ReturnArguments: []interface{}{
+							[]byte(formattedCfg),
+							nil,
+						},
+					},
+				},
+			},
+		},
+	}))
+	stop := ls.Start(t)
+	defer stop()
+
+	ls.Call(t, &langserver.CallRequest{
+		Method: "initialize",
+		ReqParams: fmt.Sprintf(`{
+	    "capabilities": {},
+	    "rootUri": %q,
+	    "processId": 12345
+	}`, tmpDir.URI)})
+	ls.Notify(t, &langserver.CallRequest{
+		Method:    "initialized",
+		ReqParams: "{}",
+	})
+	ls.Call(t, &langserver.CallRequest{
+		Method: "textDocument/didOpen",
+		ReqParams: fmt.Sprintf(`{
+		"textDocument": {
+			"version": 0,
+			"languageId": "terraform",
+			"text": `+fmt.Sprintf("%q", cfg)+`,
+			"uri": "%s/main.tf"
+		}
+	}`, tmpDir.URI)})
+	ls.CallAndExpectResponse(t, &langserver.CallRequest{
+		Method: "textDocument/formatting",
+		ReqParams: fmt.Sprintf(`{
+			"textDocument": {
+				"uri": "%s/main.tf"
+			}
+		}`, tmpDir.URI)}, `{
+			"jsonrpc": "2.0",
+			"id": 3,
+			"result": [
+				{
+					"range": {
+						"start": {
+							"line": 1,
+							"character": 0
+						},
+						"end": {
+							"line": 5,
+							"character": 0
+						}
+					},
+					"newText": "  environment {\n    variables = {\n      a = \"b\"\n"
+				},
+				{
+					"range": {
+						"start": {
+							"line": 6,
+							"character": 0
+						},
+						"end": {
+							"line": 6,
+							"character": 0
+						}
+					},
+					"newText":"  }\n"
+				}
+			]
+		}`)
+}