diff --git a/src/EditorFeatures/CSharpTest/Structure/ArrowExpressionClauseStructureTests.cs b/src/EditorFeatures/CSharpTest/Structure/ArrowExpressionClauseStructureTests.cs
index 6c94cfeeaa124..b3d2faa1b6676 100644
--- a/src/EditorFeatures/CSharpTest/Structure/ArrowExpressionClauseStructureTests.cs
+++ b/src/EditorFeatures/CSharpTest/Structure/ArrowExpressionClauseStructureTests.cs
@@ -7,12 +7,13 @@
 using Microsoft.CodeAnalysis.CSharp.Syntax;
 using Microsoft.CodeAnalysis.Structure;
 using Microsoft.CodeAnalysis.Test.Utilities;
+using Roslyn.Test.Utilities;
 using Xunit;
 
 namespace Microsoft.CodeAnalysis.Editor.CSharp.UnitTests.Structure;
 
 [Trait(Traits.Feature, Traits.Features.Outlining)]
-public class ArrowExpressionClauseStructureTests : AbstractCSharpSyntaxNodeStructureTests<ArrowExpressionClauseSyntax>
+public sealed class ArrowExpressionClauseStructureTests : AbstractCSharpSyntaxNodeStructureTests<ArrowExpressionClauseSyntax>
 {
     internal override AbstractSyntaxStructureProvider CreateProvider()
         => new ArrowExpressionClauseStructureProvider();
@@ -22,13 +23,13 @@ public async Task TestArrowExpressionClause_Method1()
     {
         await VerifyBlockSpansAsync(
             """
-                class C
-                {
-                    {|hintspan:void M(){|textspan: $$=> expression
-                        ? trueCase
-                        : falseCase;|}|};
-                }
-                """,
+            class C
+            {
+                {|hintspan:void M(){|textspan: $$=> expression
+                    ? trueCase
+                    : falseCase;|}|};
+            }
+            """,
             Region("textspan", "hintspan", CSharpStructureHelpers.Ellipsis, autoCollapse: true));
     }
 
@@ -196,4 +197,41 @@ void M()
                 """,
             Region("textspan", "hintspan", CSharpStructureHelpers.Ellipsis, autoCollapse: false));
     }
+
+    [Fact, WorkItem("https://github.com/dotnet/roslyn/issues/76820")]
+    public async Task TestArrowExpressionClause_DirectiveOutsideOfArrow()
+    {
+        await VerifyBlockSpansAsync(
+            """
+            class C
+            {
+            #if true
+                {|hintspan:int M(){|textspan: $$=>
+                    0;|}|};
+            #else
+                int M() =>
+                    1;
+            #endif
+            }
+            """,
+            Region("textspan", "hintspan", CSharpStructureHelpers.Ellipsis, autoCollapse: true));
+    }
+
+    [Fact, WorkItem("https://github.com/dotnet/roslyn/issues/76820")]
+    public async Task TestArrowExpressionClause_DirectiveInsideOfArrow()
+    {
+        await VerifyBlockSpansAsync(
+            """
+            class C
+            {
+                {|hintspan:int M(){|textspan: $$=>
+            #if true
+                    0;
+            #else
+                    1;
+            #endif|}|}
+            }
+            """,
+            Region("textspan", "hintspan", CSharpStructureHelpers.Ellipsis, autoCollapse: true));
+    }
 }
diff --git a/src/Features/CSharp/Portable/Structure/Providers/ArrowExpressionClauseStructureProvider.cs b/src/Features/CSharp/Portable/Structure/Providers/ArrowExpressionClauseStructureProvider.cs
index 1f192ca31d718..7b96a7b77c167 100644
--- a/src/Features/CSharp/Portable/Structure/Providers/ArrowExpressionClauseStructureProvider.cs
+++ b/src/Features/CSharp/Portable/Structure/Providers/ArrowExpressionClauseStructureProvider.cs
@@ -2,12 +2,12 @@
 // The .NET Foundation licenses this file to you under the MIT license.
 // See the LICENSE file in the project root for more information.
 
-#nullable disable
-
+using System.Linq;
 using System.Threading;
 using Microsoft.CodeAnalysis.CSharp.Extensions;
 using Microsoft.CodeAnalysis.CSharp.Syntax;
 using Microsoft.CodeAnalysis.PooledObjects;
+using Microsoft.CodeAnalysis.Shared.Extensions;
 using Microsoft.CodeAnalysis.Structure;
 using Microsoft.CodeAnalysis.Text;
 
@@ -22,11 +22,47 @@ protected override void CollectBlockSpans(
         BlockStructureOptions options,
         CancellationToken cancellationToken)
     {
+        var parent = node.GetRequiredParent();
+        var end = GetEndPoint();
         spans.Add(new BlockSpan(
             isCollapsible: true,
-            textSpan: TextSpan.FromBounds(previousToken.Span.End, node.Parent.Span.End),
-            hintSpan: node.Parent.Span,
+            textSpan: TextSpan.FromBounds(previousToken.Span.End, end),
+            hintSpan: TextSpan.FromBounds(parent.Span.Start, end),
             type: BlockTypes.Nonstructural,
-            autoCollapse: !node.IsParentKind(SyntaxKind.LocalFunctionStatement)));
+            autoCollapse: parent.Kind() != SyntaxKind.LocalFunctionStatement));
+
+        int GetEndPoint()
+        {
+            // If we have a directive that starts within the node we're collapsing, but ends outside of it, then we want
+            // to collapse all the directives along with the node itself since we're collapsing the node.
+            var endToken = parent.GetLastToken();
+            var nextToken = endToken.GetNextToken();
+            if (nextToken != default)
+            {
+                foreach (var trivia in nextToken.LeadingTrivia)
+                {
+                    if (trivia.IsDirective)
+                    {
+                        var directive = (DirectiveTriviaSyntax)trivia.GetStructure()!;
+                        var matchingDirectives = directive.GetMatchingConditionalDirectives(cancellationToken);
+
+                        // Check that:
+                        // 1. The first directive is within the node we're collapsing.
+                        // 2. All the directives end before the next construct starts.
+                        //
+                        // In that case, we want to collapse all the directives along with the node itself.
+                        if (matchingDirectives.Length > 0 &&
+                            matchingDirectives[0].Span.Start >= parent.Span.Start &&
+                            matchingDirectives.All(d => d.Span.End <= nextToken.Span.Start))
+                        {
+                            var lastDirective = matchingDirectives.Last();
+                            return lastDirective.Span.End;
+                        }
+                    }
+                }
+            }
+
+            return parent.Span.End;
+        }
     }
 }