diff --git a/src/autocomplete/inline_test.js b/src/autocomplete/inline_test.js
index 019e4b2a483..3fd48d42d5b 100644
--- a/src/autocomplete/inline_test.js
+++ b/src/autocomplete/inline_test.js
@@ -101,8 +101,8 @@ module.exports = {
         inline.show(editor, completions[3], "f");
         editor.renderer.$loop._flush();
         assert.strictEqual(getAllLines(), textBase + "function foo() {");
-        assert.strictEqual(editor.renderer.$ghostTextWidget.text, "        console.log('test');\n    }");
-        assert.strictEqual(editor.renderer.$ghostTextWidget.el.textContent, "        console.log('test');\n    }");
+        assert.strictEqual(editor.renderer.$ghostTextWidget.html, "<div>        console.log('test');</div><div>    }</div>");
+        assert.strictEqual(editor.renderer.$ghostTextWidget.el.innerHTML, "<div>        console.log('test');</div><div>    }</div>");
         done();
     },
     "test: boundary tests": function(done) {
diff --git a/src/css/editor-css.js b/src/css/editor-css.js
index bdcde97a02b..04245a30131 100644
--- a/src/css/editor-css.js
+++ b/src/css/editor-css.js
@@ -656,9 +656,21 @@ module.exports = `
 .ace_ghost_text {
     opacity: 0.5;
     font-style: italic;
+}
+
+.ace_ghost_text > div {
     white-space: pre;
 }
 
+.ghost_text_line_wrapped::after {
+    content: "↩";
+    position: absolute;
+}
+
+.ace_lineWidgetContainer.ace_ghost_text {
+    margin: 0px 4px
+}
+
 .ace_screenreader-only {
     position:absolute;
     left:-10000px;
diff --git a/src/ext/inline_autocomplete_test.js b/src/ext/inline_autocomplete_test.js
index ae97bad367c..af98a6e81e6 100644
--- a/src/ext/inline_autocomplete_test.js
+++ b/src/ext/inline_autocomplete_test.js
@@ -30,7 +30,7 @@ var getAllLines = function() {
         return node.textContent;
     }).join("\n");
     if (editor.renderer.$ghostTextWidget) {
-        return text + "\n" + editor.renderer.$ghostTextWidget.text;
+        return text + "\n" + editor.renderer.$ghostTextWidget.html;
     }
     return text;
 };
@@ -358,7 +358,7 @@ module.exports = {
         typeAndChange("u", "n");
         editor.renderer.$loop._flush();
         assert.strictEqual(autocomplete.isOpen(), true);
-        assert.equal(getAllLines(), "function foo() {\n    console.log('test');\n}");
+        assert.equal(getAllLines(), "function foo() {\n<div>    console.log('test');</div><div>}</div>");
 
         typeAndChange("d");
         editor.renderer.$loop._flush();
diff --git a/src/line_widgets.js b/src/line_widgets.js
index 55db6f6ccc9..8d781db79a8 100644
--- a/src/line_widgets.js
+++ b/src/line_widgets.js
@@ -388,6 +388,7 @@ class LineWidgets {
 
         renderer.$cursorLayer.config = config;
         for (var i = first; i <= last; i++) {
+            /**@type{LineWidget}*/
             var w = lineWidgets[i];
             if (!w || !w.el) continue;
             if (w.hidden) {
diff --git a/src/virtual_renderer.js b/src/virtual_renderer.js
index 622cf09ac06..ce160fd81e8 100644
--- a/src/virtual_renderer.js
+++ b/src/virtual_renderer.js
@@ -1757,9 +1757,10 @@ class VirtualRenderer {
         var insertPosition = position || { row: cursor.row, column: cursor.column };
 
         this.removeGhostText();
-
-        var textLines = text.split("\n");
-        this.addToken(textLines[0], "ghost_text", insertPosition.row, insertPosition.column);
+        
+        var textChunks = this.$calculateWrappedTextChunks(text, insertPosition);
+        this.addToken(textChunks[0].text, "ghost_text", insertPosition.row, insertPosition.column);
+        
         this.$ghostText = {
             text: text,
             position: {
@@ -1767,9 +1768,13 @@ class VirtualRenderer {
                 column: insertPosition. column
             }
         };
-        if (textLines.length > 1) {
+        if (textChunks.length > 1) {
+            var divs = textChunks.slice(1).map(el => {
+                return `<div${el.wrapped ? ' class="ghost_text_line_wrapped"': ""}>${el.text}</div>`;
+            });
+            
             this.$ghostTextWidget = {
-                text: textLines.slice(1).join("\n"),
+                html: divs.join(""),
                 row: insertPosition.row,
                 column: insertPosition.column,
                 className: "ace_ghost_text"
@@ -1780,7 +1785,7 @@ class VirtualRenderer {
             var pixelPosition = this.$cursorLayer.getPixelPosition(insertPosition, true);
             var el = this.container;
             var height = el.getBoundingClientRect().height;
-            var ghostTextHeight = textLines.length * this.lineHeight;
+            var ghostTextHeight = textChunks.length * this.lineHeight;
             var fitsY = ghostTextHeight < (height - pixelPosition.top);
 
             // If it fits, no action needed
@@ -1790,7 +1795,7 @@ class VirtualRenderer {
             // if it cannot fully fit, scroll so that the row with the cursor
             // is at the top of the screen.
             if (ghostTextHeight < height) {
-                this.scrollBy(0, (textLines.length - 1) * this.lineHeight);
+                this.scrollBy(0, (textChunks.length - 1) * this.lineHeight);
             } else {
                 this.scrollToRow(insertPosition.row);
             }   
@@ -1798,6 +1803,42 @@ class VirtualRenderer {
         
     }
 
+    /**
+     * Calculates and organizes text into wrapped chunks. Initially splits the text by newline characters, 
+     * then further processes each line based on display tokens and session settings for tab size and wrapping limits.
+     *
+     * @param {string} text
+     * @param {Point} position
+     * @return {{text: string, wrapped: boolean}[]}
+     */
+    $calculateWrappedTextChunks(text, position) {
+        var availableWidth = this.$size.scrollerWidth - this.$padding * 2;
+        var limit = Math.floor(availableWidth / this.characterWidth) - 2;
+        limit = limit <= 0 ? 60 : limit; // this is a hack to prevent the editor from crashing when the window is too small
+
+        var textLines = text.split(/\r?\n/);
+        var textChunks = [];
+        for (var i = 0; i < textLines.length; i++) {
+            var displayTokens = this.session.$getDisplayTokens(textLines[i], position.column);
+            var wrapSplits = this.session.$computeWrapSplits(displayTokens, limit, this.session.$tabSize);
+
+            if (wrapSplits.length > 0) {
+                var start = 0;
+                wrapSplits.push(textLines[i].length);
+
+                for (var j = 0; j < wrapSplits.length; j++) {
+                    let textSlice = textLines[i].slice(start, wrapSplits[j]);
+                    textChunks.push({text: textSlice, wrapped: true});
+                    start = wrapSplits[j];
+                }
+            }
+            else {
+                textChunks.push({text: textLines[i], wrapped: false});
+            }
+        }
+        return textChunks;
+    }
+
     removeGhostText() {
         if (!this.$ghostText) return;
 
diff --git a/src/virtual_renderer_test.js b/src/virtual_renderer_test.js
index 85753b43714..366e4482a41 100644
--- a/src/virtual_renderer_test.js
+++ b/src/virtual_renderer_test.js
@@ -338,7 +338,7 @@ module.exports = {
         editor.renderer.$loop._flush();
         assert.equal(editor.renderer.content.textContent, "abcdefGhost1");
         
-        assert.equal(editor.session.lineWidgets[0].el.textContent, "Ghost2\nGhost3");
+        assert.equal(editor.session.lineWidgets[0].el.innerHTML, "<div>Ghost2</div><div>Ghost3</div>");
 
         editor.removeGhostText();
 
@@ -347,6 +347,25 @@ module.exports = {
         
         assert.equal(editor.session.lineWidgets, null);
     },
+    "test long multiline ghost text": function() {
+        editor.session.setValue("abcdef");
+        editor.renderer.$loop._flush();
+
+        editor.setGhostText("This is a long test text that is longer than 30 characters\n\nGhost3", 
+            {row: 0, column: 6});
+
+        editor.renderer.$loop._flush();
+        assert.equal(editor.renderer.content.textContent, "abcdefThis is a long test text that is longer than ");
+
+        assert.equal(editor.session.lineWidgets[0].el.innerHTML, "<div class=\"ghost_text_line_wrapped\">30 characters</div><div></div><div>Ghost3</div>");
+
+        editor.removeGhostText();
+
+        editor.renderer.$loop._flush();
+        assert.equal(editor.renderer.content.textContent, "abcdef");
+
+        assert.equal(editor.session.lineWidgets, null);
+    },
     "test: brackets highlighting": function (done) {
         var renderer = editor.renderer;
         editor.session.setValue(