diff --git a/src/vs/editor/common/model/indentRanges.ts b/src/vs/editor/common/model/indentRanges.ts
index 3a7773f592e769234f85c857b9652baff8b3eb67..21a5311146bc46dec29ddfc5f22ff584a1e253e8 100644
--- a/src/vs/editor/common/model/indentRanges.ts
+++ b/src/vs/editor/common/model/indentRanges.ts
@@ -61,41 +61,47 @@ export function computeRanges(model: ITextModel, offSide: boolean, markers?: Fol
 			// folding pattern match
 			if (m[1]) { // start pattern match
 				// discard all regions until the folding pattern
-				while (previous.indent >= 0 && !previous.marker) {
-					previousRegions.pop();
-					previous = previousRegions[previousRegions.length - 1];
+				let i = previousRegions.length - 1;
+				while (i > 0 && !previousRegions[i].marker) {
+					i--;
 				}
-				if (previous.marker) {
+				if (i > 0) {
+					previousRegions.length = i + 1;
+					previous = previousRegions[i];
+
 					// new folding range from pattern, includes the end line
 					result.push(new IndentRange(line, previous.line, indent, true));
 					previous.marker = false;
 					previous.indent = indent;
 					previous.line = line;
+					continue;
+				} else {
+					// no end marker found, treat line as a regular line
 				}
 			} else { // end pattern match
 				previousRegions.push({ indent: -2, line, marker: true });
+				continue;
 			}
-		} else {
-			if (previous.indent > indent) {
-				// discard all regions with larger indent
-				do {
-					previousRegions.pop();
-					previous = previousRegions[previousRegions.length - 1];
-				} while (previous.indent > indent);
+		}
+		if (previous.indent > indent) {
+			// discard all regions with larger indent
+			do {
+				previousRegions.pop();
+				previous = previousRegions[previousRegions.length - 1];
+			} while (previous.indent > indent);
 
-				// new folding range
-				let endLineNumber = previous.line - 1;
-				if (endLineNumber - line >= minimumRangeSize) {
-					result.push(new IndentRange(line, endLineNumber, indent));
-				}
-			}
-			if (previous.indent === indent) {
-				previous.line = line;
-			} else { // previous.indent < indent
-				// new region with a bigger indent
-				previousRegions.push({ indent, line, marker: false });
+			// new folding range
+			let endLineNumber = previous.line - 1;
+			if (endLineNumber - line >= minimumRangeSize) {
+				result.push(new IndentRange(line, endLineNumber, indent));
 			}
 		}
+		if (previous.indent === indent) {
+			previous.line = line;
+		} else { // previous.indent < indent
+			// new region with a bigger indent
+			previousRegions.push({ indent, line, marker: false });
+		}
 	}
 
 	return result.reverse();
diff --git a/src/vs/editor/test/common/model/indentRanges.test.ts b/src/vs/editor/test/common/model/indentRanges.test.ts
index 8d90c5a26352083e7807eaa8132850c571ada36c..6d09f3f1ce202b6f6c9a7c2f91f2cf2c0926e335 100644
--- a/src/vs/editor/test/common/model/indentRanges.test.ts
+++ b/src/vs/editor/test/common/model/indentRanges.test.ts
@@ -29,125 +29,125 @@ function r(startLineNumber: number, endLineNumber: number, indent: number, marke
 	return { startLineNumber, endLineNumber, indent, marker };
 }
 
-// suite('Indentation Folding', () => {
+suite('Indentation Folding', () => {
 
-// 	test('Fold one level', () => {
-// 		let range = [
-// 			'A',
-// 			'  A',
-// 			'  A',
-// 			'  A'
-// 		];
-// 		assertRanges(range, [r(1, 4, 0)], true);
-// 		assertRanges(range, [r(1, 4, 0)], false);
-// 	});
+	test('Fold one level', () => {
+		let range = [
+			'A',
+			'  A',
+			'  A',
+			'  A'
+		];
+		assertRanges(range, [r(1, 4, 0)], true);
+		assertRanges(range, [r(1, 4, 0)], false);
+	});
 
-// 	test('Fold two levels', () => {
-// 		let range = [
-// 			'A',
-// 			'  A',
-// 			'  A',
-// 			'    A',
-// 			'    A'
-// 		];
-// 		assertRanges(range, [r(1, 5, 0), r(3, 5, 2)], true);
-// 		assertRanges(range, [r(1, 5, 0), r(3, 5, 2)], false);
-// 	});
+	test('Fold two levels', () => {
+		let range = [
+			'A',
+			'  A',
+			'  A',
+			'    A',
+			'    A'
+		];
+		assertRanges(range, [r(1, 5, 0), r(3, 5, 2)], true);
+		assertRanges(range, [r(1, 5, 0), r(3, 5, 2)], false);
+	});
 
-// 	test('Fold three levels', () => {
-// 		let range = [
-// 			'A',
-// 			'  A',
-// 			'    A',
-// 			'      A',
-// 			'A'
-// 		];
-// 		assertRanges(range, [r(1, 4, 0), r(2, 4, 2), r(3, 4, 4)], true);
-// 		assertRanges(range, [r(1, 4, 0), r(2, 4, 2), r(3, 4, 4)], false);
-// 	});
+	test('Fold three levels', () => {
+		let range = [
+			'A',
+			'  A',
+			'    A',
+			'      A',
+			'A'
+		];
+		assertRanges(range, [r(1, 4, 0), r(2, 4, 2), r(3, 4, 4)], true);
+		assertRanges(range, [r(1, 4, 0), r(2, 4, 2), r(3, 4, 4)], false);
+	});
 
-// 	test('Fold decreasing indent', () => {
-// 		let range = [
-// 			'    A',
-// 			'  A',
-// 			'A'
-// 		];
-// 		assertRanges(range, [], true);
-// 		assertRanges(range, [], false);
-// 	});
+	test('Fold decreasing indent', () => {
+		let range = [
+			'    A',
+			'  A',
+			'A'
+		];
+		assertRanges(range, [], true);
+		assertRanges(range, [], false);
+	});
 
-// 	test('Fold Java', () => {
-// 		assertRanges([
-// 		/* 1*/	'class A {',
-// 		/* 2*/	'  void foo() {',
-// 		/* 3*/	'    console.log();',
-// 		/* 4*/	'    console.log();',
-// 		/* 5*/	'  }',
-// 		/* 6*/	'',
-// 		/* 7*/	'  void bar() {',
-// 		/* 8*/	'    console.log();',
-// 		/* 9*/	'  }',
-// 		/*10*/	'}',
-// 		/*11*/	'interface B {',
-// 		/*12*/	'  void bar();',
-// 		/*13*/	'}',
-// 		], [r(1, 9, 0), r(2, 4, 2), r(7, 8, 2), r(11, 12, 0)], false);
-// 	});
+	test('Fold Java', () => {
+		assertRanges([
+		/* 1*/	'class A {',
+		/* 2*/	'  void foo() {',
+		/* 3*/	'    console.log();',
+		/* 4*/	'    console.log();',
+		/* 5*/	'  }',
+		/* 6*/	'',
+		/* 7*/	'  void bar() {',
+		/* 8*/	'    console.log();',
+		/* 9*/	'  }',
+		/*10*/	'}',
+		/*11*/	'interface B {',
+		/*12*/	'  void bar();',
+		/*13*/	'}',
+		], [r(1, 9, 0), r(2, 4, 2), r(7, 8, 2), r(11, 12, 0)], false);
+	});
 
-// 	test('Fold Javadoc', () => {
-// 		assertRanges([
-// 		/* 1*/	'/**',
-// 		/* 2*/	' * Comment',
-// 		/* 3*/	' */',
-// 		/* 4*/	'class A {',
-// 		/* 5*/	'  void foo() {',
-// 		/* 6*/	'  }',
-// 		/* 7*/	'}',
-// 		], [r(1, 3, 0), r(4, 6, 0)], false);
-// 	});
-// 	test('Fold Whitespace Java', () => {
-// 		assertRanges([
-// 		/* 1*/	'class A {',
-// 		/* 2*/	'',
-// 		/* 3*/	'  void foo() {',
-// 		/* 4*/	'     ',
-// 		/* 5*/	'     return 0;',
-// 		/* 6*/	'  }',
-// 		/* 7*/	'      ',
-// 		/* 8*/	'}',
-// 		], [r(1, 7, 0), r(3, 5, 2)], false);
-// 	});
+	test('Fold Javadoc', () => {
+		assertRanges([
+		/* 1*/	'/**',
+		/* 2*/	' * Comment',
+		/* 3*/	' */',
+		/* 4*/	'class A {',
+		/* 5*/	'  void foo() {',
+		/* 6*/	'  }',
+		/* 7*/	'}',
+		], [r(1, 3, 0), r(4, 6, 0)], false);
+	});
+	test('Fold Whitespace Java', () => {
+		assertRanges([
+		/* 1*/	'class A {',
+		/* 2*/	'',
+		/* 3*/	'  void foo() {',
+		/* 4*/	'     ',
+		/* 5*/	'     return 0;',
+		/* 6*/	'  }',
+		/* 7*/	'      ',
+		/* 8*/	'}',
+		], [r(1, 7, 0), r(3, 5, 2)], false);
+	});
 
-// 	test('Fold Whitespace Python', () => {
-// 		assertRanges([
-// 		/* 1*/	'def a:',
-// 		/* 2*/	'  pass',
-// 		/* 3*/	'   ',
-// 		/* 4*/	'  def b:',
-// 		/* 5*/	'    pass',
-// 		/* 6*/	'  ',
-// 		/* 7*/	'      ',
-// 		/* 8*/	'def c: # since there was a deintent here'
-// 		], [r(1, 5, 0), r(4, 5, 2)], true);
-// 	});
+	test('Fold Whitespace Python', () => {
+		assertRanges([
+		/* 1*/	'def a:',
+		/* 2*/	'  pass',
+		/* 3*/	'   ',
+		/* 4*/	'  def b:',
+		/* 5*/	'    pass',
+		/* 6*/	'  ',
+		/* 7*/	'      ',
+		/* 8*/	'def c: # since there was a deintent here'
+		], [r(1, 5, 0), r(4, 5, 2)], true);
+	});
 
-// 	test('Fold Tabs', () => {
-// 		assertRanges([
-// 		/* 1*/	'class A {',
-// 		/* 2*/	'\t\t',
-// 		/* 3*/	'\tvoid foo() {',
-// 		/* 4*/	'\t \t//hello',
-// 		/* 5*/	'\t    return 0;',
-// 		/* 6*/	'  \t}',
-// 		/* 7*/	'      ',
-// 		/* 8*/	'}',
-// 		], [r(1, 7, 0), r(3, 5, 4)], false);
-// 	});
-// });
+	test('Fold Tabs', () => {
+		assertRanges([
+		/* 1*/	'class A {',
+		/* 2*/	'\t\t',
+		/* 3*/	'\tvoid foo() {',
+		/* 4*/	'\t \t//hello',
+		/* 5*/	'\t    return 0;',
+		/* 6*/	'  \t}',
+		/* 7*/	'      ',
+		/* 8*/	'}',
+		], [r(1, 7, 0), r(3, 5, 4)], false);
+	});
+});
 
 let markers: FoldingMarkers = {
-	start: /^\s*#region/,
-	end: /^\s*#endregion/
+	start: /^\s*#region\b/,
+	end: /^\s*#endregion\b/
 };
 
 suite('Folding with regions', () => {
@@ -216,9 +216,9 @@ suite('Folding with regions', () => {
 		/* 2*/	'#region',
 		/* 3*/	'  // comment',
 		/* 4*/	'}',
-		], [], false, markers);
+		], [r(2, 3, 0)], false, markers);
 	});
-	test('Incomplete Regions', () => {
+	test('Incomplete Regions 2', () => {
 		assertRanges([
 		/* 1*/	'',
 		/* 2*/	'#region',
@@ -291,4 +291,29 @@ suite('Folding with regions', () => {
 		/* 8*/	'',
 		], [r(1, 7, 0, true), r(3, 5, 0, true)], true, markers);
 	});
+	test('Issue 35981', () => {
+		assertRanges([
+		/* 1*/	'function thisFoldsToEndOfPage() {',
+		/* 2*/	'  const variable = []',
+		/* 3*/	'    // #region',
+		/* 4*/	'    .reduce((a, b) => a,[]);',
+		/* 5*/	'}',
+		/* 6*/	'',
+		/* 7*/	'function thisFoldsProperly() {',
+		/* 8*/	'  const foo = "bar"',
+		/* 9*/	'}',
+		], [r(1, 4, 0), r(2, 4, 2), r(7, 8, 0)], false, markers);
+	});
+	test('Misspelled Markers', () => {
+		assertRanges([
+		/* 1*/	'#Region',
+		/* 2*/	'#endregion',
+		/* 3*/	'#regionsandmore',
+		/* 4*/	'#endregion',
+		/* 5*/	'#region',
+		/* 6*/	'#end region',
+		/* 7*/	'#region',
+		/* 8*/	'#endregionff',
+		], [], true, markers);
+	});
 });
\ No newline at end of file