new file mode 100755
--- /dev/null
+++ b/tests/test-diff-ignore-whitespace
@@ -0,0 +1,84 @@
+#!/bin/sh
+
+# GNU diff is the reference for all of these results.
+
+hgdiff() {
+    hg diff "$@" | sed "s/\(\(---\|+++\) [a-zA-Z0-9_/.-]*\).*/\1/"
+}
+
+test_added_blank_lines() {
+    printf '\nhello world\n\ngoodbye world\n\n' >foo
+
+    echo '>>> two diffs showing three added lines <<<'
+    hgdiff
+    hgdiff -b
+
+    echo '>>> no diffs <<<'
+    hgdiff -B
+    hgdiff -Bb
+}
+
+test_added_horizontal_space_first_on_a_line() {
+    printf '\t hello world\ngoodbye world\n' >foo
+
+    echo '>>> four diffs showing added space first on the first line <<<'
+    hgdiff
+    hgdiff -b
+    hgdiff -B
+    hgdiff -Bb
+}
+
+test_added_horizontal_space_last_on_a_line() {
+    printf 'hello world\t \ngoodbye world\n' >foo
+
+    echo '>>> two diffs showing space appended to the first line <<<'
+    hgdiff
+    hgdiff -B
+
+    echo '>>> no diffs <<<'
+    hgdiff -b
+    hgdiff -Bb
+}
+
+test_added_horizontal_space_in_the_middle_of_a_word() {
+    printf 'hello world\ngood bye world\n' >foo
+
+    echo '>>> four diffs showing space inserted into "goodbye" <<<'
+    hgdiff
+    hgdiff -B
+    hgdiff -b
+    hgdiff -Bb
+}
+
+test_increased_horizontal_whitespace_amount() {
+    printf 'hello world\ngoodbye\t\t  \tworld\n' >foo
+
+    echo '>>> two diffs showing changed whitespace amount in the last line <<<'
+    hgdiff
+    hgdiff -B
+
+    echo '>>> no diffs <<<'
+    hgdiff -b
+    hgdiff -Bb
+}
+
+test_added_blank_line_with_horizontal_whitespace() {
+    printf 'hello world\n \t\ngoodbye world\n' >foo
+
+    echo '>>> four diffs showing added blank line w/horizontal space <<<'
+    hgdiff
+    hgdiff -B
+    hgdiff -b
+    hgdiff -Bb
+}
+
+hg init
+printf 'hello world\ngoodbye world\n' >foo
+hg ci -Amfoo -ufoo -d '0 0'
+
+test_added_blank_lines
+test_added_horizontal_space_first_on_a_line
+test_added_horizontal_space_last_on_a_line
+test_added_horizontal_space_in_the_middle_of_a_word
+test_increased_horizontal_whitespace_amount
+test_added_blank_line_with_horizontal_whitespace