diff --git a/services/web/frontend/js/features/ide-react/components/modals/diff-viewer.tsx b/services/web/frontend/js/features/ide-react/components/modals/diff-viewer.tsx
index d1cbe70273..6ab2d18500 100644
--- a/services/web/frontend/js/features/ide-react/components/modals/diff-viewer.tsx
+++ b/services/web/frontend/js/features/ide-react/components/modals/diff-viewer.tsx
@@ -1,5 +1,5 @@
 import { memo, useCallback, useMemo } from 'react'
-import { diffWordsWithSpace } from 'diff'
+import { diffWordsWithSpace, structuredPatch } from 'diff'
 
 type DiffViewerProps = {
   baseContent: string
@@ -7,36 +7,70 @@ type DiffViewerProps = {
 }
 
 // Renders an inline diff between two document versions using <ins> and <del>
-// tags. This mirrors the DOM-based rendering approach used by the workbench
-// CodeDiff component (modules/workbench/frontend/js/components/code-diff.tsx).
+// tags. Only affected lines are shown (plus one line of context above/below),
+// with a separator between non-adjacent sections.
 // TODO: refactor both to share a common diff renderer from a shared location.
 function DiffViewer({ baseContent, targetContent }: DiffViewerProps) {
-  const changes = useMemo(
-    () => diffWordsWithSpace(baseContent, targetContent),
-    [baseContent, targetContent]
-  )
+  const hunks = useMemo(() => {
+    const patch = structuredPatch('', '', baseContent, targetContent, '', '', {
+      context: 1,
+    })
+
+    if (patch.hunks.length === 0) {
+      return [diffWordsWithSpace(baseContent, targetContent)]
+    }
+
+    return patch.hunks.map(hunk => {
+      const baseLines: string[] = []
+      const targetLines: string[] = []
+
+      for (const line of hunk.lines) {
+        const content = line.slice(1)
+        if (line[0] === '-') {
+          baseLines.push(content)
+        } else if (line[0] === '+') {
+          targetLines.push(content)
+        } else if (line[0] === ' ') {
+          baseLines.push(content)
+          targetLines.push(content)
+        }
+      }
+
+      return diffWordsWithSpace(baseLines.join('\n'), targetLines.join('\n'))
+    })
+  }, [baseContent, targetContent])
 
   const createDiff = useCallback(
     (element: HTMLDivElement) => {
       if (!element) return
       element.replaceChildren()
 
-      for (const change of changes) {
-        if (change.added) {
-          const ins = document.createElement('ins')
-          ins.textContent = change.value
-          element.append(ins)
-        } else if (change.removed) {
-          const del = document.createElement('del')
-          del.textContent = change.value
-          element.append(del)
-        } else {
-          const text = document.createTextNode(change.value)
-          element.append(text)
+      for (let i = 0; i < hunks.length; i++) {
+        if (i > 0) {
+          const separator = document.createElement('div')
+          separator.className = 'diff-separator'
+          separator.setAttribute('aria-hidden', 'true')
+          separator.textContent = '⋮'
+          element.append(separator)
+        }
+
+        for (const change of hunks[i]) {
+          if (change.added) {
+            const ins = document.createElement('ins')
+            ins.textContent = change.value
+            element.append(ins)
+          } else if (change.removed) {
+            const del = document.createElement('del')
+            del.textContent = change.value
+            element.append(del)
+          } else {
+            const text = document.createTextNode(change.value)
+            element.append(text)
+          }
         }
       }
     },
-    [changes]
+    [hunks]
   )
 
   return <div className="diff-container" ref={createDiff} />
diff --git a/services/web/frontend/stylesheets/pages/editor/ide.scss b/services/web/frontend/stylesheets/pages/editor/ide.scss
index efabeea1cb..1f3b0fc720 100644
--- a/services/web/frontend/stylesheets/pages/editor/ide.scss
+++ b/services/web/frontend/stylesheets/pages/editor/ide.scss
@@ -207,6 +207,13 @@ $editor-toggler-bg-dark-color: color.adjust(
       color: var(--red-50);
       text-decoration: line-through;
     }
+
+    .diff-separator {
+      text-align: center;
+      color: var(--content-secondary);
+      padding: var(--spacing-01) 0;
+      user-select: none;
+    }
   }
 }