diff --git a/src/ng/compile.js b/src/ng/compile.js
index 1ee0fc6f..fd431849 100644
--- a/src/ng/compile.js
+++ b/src/ng/compile.js
@@ -380,7 +380,7 @@ function $CompileProvider($provide) {
            ? applyDirectivesToNode(directives, nodeList[i], attrs, transcludeFn, $rootElement)
            : null;
 
-       childLinkFn = (nodeLinkFn && nodeLinkFn.terminal)
+       childLinkFn = (nodeLinkFn && nodeLinkFn.terminal || !nodeList[i].childNodes.length)
            ? null
            : compileNodes(nodeList[i].childNodes,
                 nodeLinkFn ? nodeLinkFn.transclude : transcludeFn);