diff --git a/src/ng/directive/ngOptions.js b/src/ng/directive/ngOptions.js
index 26f2f0cf1904..04a0094c6bb3 100644
--- a/src/ng/directive/ngOptions.js
+++ b/src/ng/directive/ngOptions.js
@@ -408,7 +408,7 @@ var ngOptionsDirective = ['$compile', '$parse', function($compile, $parse) {
         }
       }
 
-      var providedEmptyOption = !!emptyOption;
+      var providedEmptyOption = emptyOption;
 
       var unknownOption = jqLite(optionTemplate.cloneNode(false));
       unknownOption.val('?');
@@ -618,10 +618,19 @@ var ngOptionsDirective = ['$compile', '$parse', function($compile, $parse) {
         var emptyOption_ = emptyOption && emptyOption[0];
         var unknownOption_ = unknownOption && unknownOption[0];
 
+        // If the compiled empty option was replaced by a comment because
+        // it had an "element" transclusion directive on it (such as ngIf)
+        // then compare against the pre-compiled empty element instead
+        if (emptyOption && emptyOption_.nodeType === NODE_TYPE_COMMENT) {
+          emptyOption_ = providedEmptyOption[0];
+        }
+
         if (emptyOption_ || unknownOption_) {
           while (current &&
                 (current === emptyOption_ ||
-                current === unknownOption_)) {
+                current === unknownOption_ ||
+                current.nodeType === NODE_TYPE_COMMENT ||
+                current.value === '')) {
             current = current.nextSibling;
           }
         }
diff --git a/test/ng/directive/ngOptionsSpec.js b/test/ng/directive/ngOptionsSpec.js
index c5dac4b72914..09b4dd26e943 100644
--- a/test/ng/directive/ngOptionsSpec.js
+++ b/test/ng/directive/ngOptionsSpec.js
@@ -2144,6 +2144,52 @@ describe('ngOptions', function() {
     });
 
 
+    it('should be possible to use ngIf in the blank option', function() {
+      var option;
+      createSingleSelect('<option ng-if="isBlank" value="">blank</option>');
+
+      scope.$apply(function() {
+        scope.values = [{name: 'A'}];
+        scope.isBlank = true;
+      });
+
+      expect(element.find('option').length).toBe(2);
+      option = element.find('option').eq(0);
+      expect(option.val()).toBe('');
+      expect(option.text()).toBe('blank');
+
+      scope.$apply(function() {
+        scope.isBlank = false;
+      });
+
+      expect(element.find('option').length).toBe(1);
+      option = element.find('option').eq(0);
+      expect(option.text()).toBe('A');
+    });
+
+
+    it('should be possible to use ngIf in the blank option when values are available upon linking',
+      function() {
+        var options;
+
+        scope.values = [{name: 'A'}];
+        createSingleSelect('<option ng-if="isBlank" value="">blank</option>');
+
+        scope.$apply('isBlank = true');
+
+        options = element.find('option');
+        expect(options.length).toBe(2);
+        expect(options.eq(0).val()).toBe('');
+        expect(options.eq(0).text()).toBe('blank');
+
+        scope.$apply('isBlank = false');
+
+        options = element.find('option');
+        expect(options.length).toBe(1);
+        expect(options.eq(0).text()).toBe('A');
+      }
+    );
+
     it('should not throw when a directive compiles the blank option before ngOptions is linked', function() {
       expect(function() {
         createSelect({