diff --git a/lib/std/zig/parse.zig b/lib/std/zig/parse.zig
index 36da59ed82..7a6404fbb2 100644
--- a/lib/std/zig/parse.zig
+++ b/lib/std/zig/parse.zig
@@ -2656,6 +2656,10 @@ const Parser = struct {
                         p.tok_i += 2;
                         return p.parseWhileTypeExpr();
                     },
+                    .l_brace => {
+                        p.tok_i += 2;
+                        return p.parseBlock();
+                    },
                     else => return p.addNode(.{
                         .tag = .identifier,
                         .main_token = p.nextToken(),
diff --git a/lib/std/zig/parser_test.zig b/lib/std/zig/parser_test.zig
index d8aea5ed9d..4ec527fd6c 100644
--- a/lib/std/zig/parser_test.zig
+++ b/lib/std/zig/parser_test.zig
@@ -4179,6 +4179,17 @@ test "zig fmt: proper indent line comment after multi-line single expr while loo
     );
 }
 
+test "zig fmt: function with labeled block as return type" {
+    try testCanonical(
+        \\fn foo() t: {
+        \\    break :t bar;
+        \\} {
+        \\    baz();
+        \\}
+        \\
+    );
+}
+
 test "zig fmt: line comment after multiline single expr if statement with multiline string" {
     try testCanonical(
         \\test {