diff --git a/src/ng/compile.js b/src/ng/compile.js
index 5026283ef516..29d66da577f9 100644
--- a/src/ng/compile.js
+++ b/src/ng/compile.js
@@ -581,7 +581,7 @@ function $CompileProvider($provide) {
           if (directiveValue == 'element') {
             $template = jqLite(compileNode);
             $compileNode = templateAttrs.$$element =
-                jqLite('<!-- ' + directiveName + ': ' + templateAttrs[directiveName]  + ' -->');
+                jqLite(document.createComment(' ' + directiveName + ': ' + templateAttrs[directiveName] + ' '));
             compileNode = $compileNode[0];
             replaceWith($rootElement, jqLite($template[0]), compileNode);
             childTranscludeFn = compile($template, transcludeFn, terminalPriority);
diff --git a/test/ng/compileSpec.js b/test/ng/compileSpec.js
index 5b644af9f75c..927a4ef77781 100644
--- a/test/ng/compileSpec.js
+++ b/test/ng/compileSpec.js
@@ -2241,5 +2241,15 @@ describe('$compile', function() {
         expect(nodeName_(comment)).toBe('#comment');
       });
     });
+
+
+    it('should safely create transclude comment node and not break with "-->"',
+        inject(function($rootScope) {
+      // see: https://github.com/angular/angular.js/issues/1740
+      element = $compile('<ul><li ng-repeat="item in [\'-->\', \'x\']">{{item}}|</li></ul>')($rootScope);
+      $rootScope.$digest();
+
+      expect(element.text()).toBe('-->|x|');
+    }));
   });
 });