diff --git a/lib/handlebars/runtime.js b/lib/handlebars/runtime.js
index 1c084ce3..3884e88c 100644
--- a/lib/handlebars/runtime.js
+++ b/lib/handlebars/runtime.js
@@ -237,7 +237,8 @@ export function invokePartial(partial, context, options) {
     options.data = createFrame(options.data);
     // Wrapper function to get access to currentPartialBlock from the closure
     let fn = options.fn;
-    partialBlock = options.data['partial-block'] = function partialBlockWrapper(context, options) {
+    partialBlock = options.data['partial-block'] = function partialBlockWrapper(context, options = {}) {
+
       // Restore the partial-block from the closure for the execution of the block
       // i.e. the part inside the block of the partial call.
       options.data = createFrame(options.data);
diff --git a/spec/regressions.js b/spec/regressions.js
index 6aca9088..1678d80c 100644
--- a/spec/regressions.js
+++ b/spec/regressions.js
@@ -282,4 +282,13 @@ describe('Regressions', function() {
     var string = '{{#each list}}{{#unless ./prop}}parent={{../value}} {{/unless}}{{/each}}';
     shouldCompileTo(string, { value: 'parent', list: [ null, 'a'] }, 'parent=parent parent=parent ', '');
   });
+
+  it('GH-1341: 4.0.7 release breaks {{#if @partial-block}} usage', function() {
+    var string = 'template {{>partial}} template';
+    var partials = {
+      partialWithBlock: '{{#if @partial-block}} block {{> @partial-block}} block {{/if}}',
+      partial: '{{#> partialWithBlock}} partial {{/partialWithBlock}}'
+    };
+    shouldCompileToWithPartials(string, [{}, {}, partials], true, 'template  block  partial  block  template');
+  });
 });