diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapEngine.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapEngine.java
index 7c36a57ee28d..6805f8df4360 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapEngine.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/SoftWrapEngine.java
@@ -79,7 +79,8 @@ public final class SoftWrapEngine {
     var customWraps = myEditor.getCustomWrapModel().getWrapsInRange(startOffset, maxEndOffset);
 
     var grid = myEditor.getCharacterGrid();
-    if (grid != null && inlineInlays.isEmpty() && afterLineEndInlays.isEmpty() && customWraps.isEmpty()) {
+    if (grid != null && inlineInlays.isEmpty() && afterLineEndInlays.isEmpty() && customWraps.isEmpty()
+        && !SoftWrapHelper.hasCollapsedOffsetsIn(myEditor.getFoldingModel(), startOffset, maxEndOffset)) {
       generateGridSoftWraps(grid, startOffset, minEndOffset, maxEndOffset);
       return;
     }
diff --git a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapHelper.java b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapHelper.java
index 1fc175da3ab6..584e6f5bea7f 100644
--- a/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapHelper.java
+++ b/platform/platform-impl/src/com/intellij/openapi/editor/impl/softwrap/SoftWrapHelper.java
@@ -4,11 +4,13 @@ package com.intellij.openapi.editor.impl.softwrap;
 import com.intellij.openapi.editor.CustomWrapModel;
 import com.intellij.openapi.editor.Document;
 import com.intellij.openapi.editor.Editor;
+import com.intellij.openapi.editor.FoldRegion;
 import com.intellij.openapi.editor.SoftWrap;
 import com.intellij.openapi.editor.SoftWrapModel;
 import com.intellij.openapi.editor.VisualPosition;
 import com.intellij.openapi.editor.event.DocumentEvent;
 import com.intellij.openapi.editor.event.DocumentListener;
+import com.intellij.openapi.editor.ex.FoldingModelEx;
 import com.intellij.openapi.editor.ex.util.EditorUtil;
 import com.intellij.openapi.editor.impl.CaretImpl;
 import com.intellij.openapi.editor.impl.EditorImpl;
@@ -131,4 +133,18 @@ public final class SoftWrapHelper {
       storage.removeCustomWrapsInRange(srcOffset, srcOffset + event.getNewLength() + /* end-inclusive */ 1);
     }
   }
+
+  /**
+   * Answers whether there are any offsets collapsed by fold regions inside {@code [startOffset; endOffset)}.
+   * <p>
+   * Since soft-wraps may be placed at either edge of a collapsed fold region,
+   * this method will not return {@code true} due to a collapsed fold region
+   * where {@code region.endOffset == startOffset} or where {@code region.startOffset == endOffset}.
+   */
+  public static boolean hasCollapsedOffsetsIn(@NotNull FoldingModelEx foldingModel, int startOffset, int endOffset) {
+    FoldRegion[] topLevel = foldingModel.fetchTopLevel();
+    if (topLevel == null) return false;
+    int idx = foldingModel.getLastCollapsedRegionBefore(startOffset) + 1;
+    return idx < topLevel.length && topLevel[idx].getStartOffset() < endOffset;
+  }
 }
diff --git a/platform/platform-tests/testSrc/com/intellij/openapi/editor/impl/EditorCharacterGridSizeTest.java b/platform/platform-tests/testSrc/com/intellij/openapi/editor/impl/EditorCharacterGridSizeTest.java
index 161352614f91..4e548fcacf0d 100644
--- a/platform/platform-tests/testSrc/com/intellij/openapi/editor/impl/EditorCharacterGridSizeTest.java
+++ b/platform/platform-tests/testSrc/com/intellij/openapi/editor/impl/EditorCharacterGridSizeTest.java
@@ -37,4 +37,14 @@ public class EditorCharacterGridSizeTest extends AbstractEditorTest {
 
     assertTrue("preferred=" + preferredWidth(), preferredWidth() < CONTENT_WIDTH);
   }
+
+  // IJPL-251582: The grid mode optimized soft-wrapping must not place soft-wraps inside collapsed fold regions.
+  public void testGridEditorWithSoftWrapOptimizationsDoesNotWrapInsideCollapsedFoldRegion() {
+    initText(LONG_LINE.substring(0, 20));
+    configureSoftWraps(10, false);
+    addCollapsedFoldRegion(8, 14, "..."); // covers the grid column boundary at offset 11
+    enableGridMode();
+
+    verifySoftWrapPositions(8);
+  }
 }