diff --git a/src/display/inline.rs b/src/display/inline.rs
index d04eed8dd9..2c66c8c024 100644
--- a/src/display/inline.rs
+++ b/src/display/inline.rs
@@ -1,5 +1,7 @@
 //! Inline, or "unified" diff display.
 
+use line_numbers::LineNumber;
+
 use crate::constants::Side;
 use crate::display::context::{
     calculate_after_context, calculate_before_context, opposite_positions,
@@ -11,6 +13,50 @@ use crate::options::DisplayOptions;
 use crate::parse::syntax::MatchedPos;
 use crate::summary::FileFormat;
 
+/// Expand `hunk.lines` to include any unchanged lines that fall between
+/// changed lines on the same side. Without this, inline display drops
+/// in-hunk context, which can hide section headings and similar
+/// structural lines (issue #978).
+fn fill_in_hunk_gaps(
+    lines: &[(Option<LineNumber>, Option<LineNumber>)],
+) -> Vec<(Option<LineNumber>, Option<LineNumber>)> {
+    let mut filled = Vec::with_capacity(lines.len());
+
+    let mut prev_lhs: Option<LineNumber> = None;
+    let mut prev_rhs: Option<LineNumber> = None;
+
+    for (lhs_line, rhs_line) in lines {
+        let lhs_gap: Vec<LineNumber> = match (prev_lhs, *lhs_line) {
+            (Some(prev), Some(curr)) if prev.0 + 1 < curr.0 => {
+                (prev.0 + 1..curr.0).map(LineNumber::from).collect()
+            }
+            _ => vec![],
+        };
+        let rhs_gap: Vec<LineNumber> = match (prev_rhs, *rhs_line) {
+            (Some(prev), Some(curr)) if prev.0 + 1 < curr.0 => {
+                (prev.0 + 1..curr.0).map(LineNumber::from).collect()
+            }
+            _ => vec![],
+        };
+
+        let pair_count = lhs_gap.len().max(rhs_gap.len());
+        for i in 0..pair_count {
+            filled.push((lhs_gap.get(i).copied(), rhs_gap.get(i).copied()));
+        }
+
+        filled.push((*lhs_line, *rhs_line));
+
+        if lhs_line.is_some() {
+            prev_lhs = *lhs_line;
+        }
+        if rhs_line.is_some() {
+            prev_rhs = *rhs_line;
+        }
+    }
+
+    filled
+}
+
 pub(crate) fn print(
     lhs_src: &str,
     rhs_src: &str,
@@ -77,7 +123,7 @@ pub(crate) fn print(
             )
         );
 
-        let hunk_lines = hunk.lines.clone();
+        let hunk_lines = fill_in_hunk_gaps(&hunk.lines);
 
         let before_lines = calculate_before_context(
             &hunk_lines,
@@ -112,11 +158,12 @@ pub(crate) fn print(
 
         for (lhs_line, _) in &hunk_lines {
             if let Some(lhs_line) = lhs_line {
+                let is_novel = hunk.novel_lhs.contains(lhs_line);
                 print!(
                     "{}   {}",
                     apply_line_number_color(
                         &format_line_num(*lhs_line),
-                        true,
+                        is_novel,
                         Side::Left,
                         display_options,
                     ),
@@ -126,11 +173,12 @@ pub(crate) fn print(
         }
         for (_, rhs_line) in &hunk_lines {
             if let Some(rhs_line) = rhs_line {
+                let is_novel = hunk.novel_rhs.contains(rhs_line);
                 print!(
                     "   {}{}",
                     apply_line_number_color(
                         &format_line_num(*rhs_line),
-                        true,
+                        is_novel,
                         Side::Right,
                         display_options,
                     ),
@@ -156,3 +204,92 @@ pub(crate) fn print(
         println!();
     }
 }
+
+#[cfg(test)]
+mod tests {
+    use super::*;
+
+    fn ln(n: u32) -> LineNumber {
+        n.into()
+    }
+
+    #[test]
+    fn fill_in_hunk_gaps_empty() {
+        assert!(fill_in_hunk_gaps(&[]).is_empty());
+    }
+
+    #[test]
+    fn fill_in_hunk_gaps_no_gap() {
+        let input = vec![(Some(ln(0)), Some(ln(0))), (Some(ln(1)), Some(ln(1)))];
+        assert_eq!(fill_in_hunk_gaps(&input), input);
+    }
+
+    #[test]
+    fn fill_in_hunk_gaps_lhs_only_change_then_unchanged() {
+        // LHS has a removed line at 0, unchanged lines at 1, 2 (both
+        // sides), then an RHS-only added line at index 1. Filling the
+        // gap inside the hunk should insert the unchanged lines that
+        // sit between novel changes.
+        let input = vec![(Some(ln(0)), None), (Some(ln(3)), Some(ln(3)))];
+        let filled = fill_in_hunk_gaps(&input);
+        assert_eq!(
+            filled,
+            vec![
+                (Some(ln(0)), None),
+                (Some(ln(1)), None),
+                (Some(ln(2)), None),
+                (Some(ln(3)), Some(ln(3))),
+            ]
+        );
+    }
+
+    #[test]
+    fn fill_in_hunk_gaps_section_header_between_changes() {
+        // Mimics issue #978: a hunk that contains LHS-only and RHS-only
+        // changes separated by lines that are unchanged on both sides.
+        // The unchanged lines are not in the input. After filling, each
+        // side's gap is rebuilt so the inline display can print them as
+        // in-hunk context.
+        let input = vec![
+            (Some(ln(4)), None),
+            (None, Some(ln(4))),
+            (Some(ln(7)), None),
+            (None, Some(ln(7))),
+        ];
+        let filled = fill_in_hunk_gaps(&input);
+        assert_eq!(
+            filled,
+            vec![
+                (Some(ln(4)), None),
+                (None, Some(ln(4))),
+                (Some(ln(5)), None),
+                (Some(ln(6)), None),
+                (Some(ln(7)), None),
+                (None, Some(ln(5))),
+                (None, Some(ln(6))),
+                (None, Some(ln(7))),
+            ]
+        );
+    }
+
+    #[test]
+    fn fill_in_hunk_gaps_unequal_gap_lengths() {
+        // The RHS gap (lines 1..6 = 5 lines) is longer than the LHS gap
+        // (lines 1..3 = 2 lines). The filler pairs them up and pads the
+        // shorter side with None.
+        let input = vec![(Some(ln(0)), Some(ln(0))), (Some(ln(3)), Some(ln(6)))];
+        let filled = fill_in_hunk_gaps(&input);
+        assert_eq!(
+            filled,
+            vec![
+                (Some(ln(0)), Some(ln(0))),
+                (Some(ln(1)), Some(ln(1))),
+                (Some(ln(2)), Some(ln(2))),
+                (None, Some(ln(3))),
+                (None, Some(ln(4))),
+                (None, Some(ln(5))),
+                (Some(ln(3)), Some(ln(6))),
+            ]
+        );
+    }
+}