diff --git a/crates/typst-library/src/layout/par.rs b/crates/typst-library/src/layout/par.rs
index ee47b5799..9255124e3 100644
--- a/crates/typst-library/src/layout/par.rs
+++ b/crates/typst-library/src/layout/par.rs
@@ -1015,9 +1015,15 @@ fn linebreak_optimized<'a>(vt: &Vt, p: &'a Preparation<'a>, width: Abs) -> Vec<L
                 // The line is overfull. This is the case if
                 // - justification is on, but we'd need to shrink too much
                 // - justification is off and the line just doesn't fit
-                // Since any longer line will also be overfull, we can deactivate
-                // this breakpoint.
-                active = i + 1;
+                //
+                // If this is the earliest breakpoint in the active set
+                // (active == i), remove it from the active set. If there is an
+                // earlier one (active < i), then the logically shorter line was
+                // in fact longer (can happen with negative spacing) and we
+                // can't trim the active set just yet.
+                if active == i {
+                    active += 1;
+                }
                 MAX_COST
             } else if mandatory || eof {
                 // This is a mandatory break and the line is not overfull, so
diff --git a/tests/ref/bugs/justify-hanging-indent.png b/tests/ref/bugs/justify-hanging-indent.png
new file mode 100644
index 000000000..015cc44e6
Binary files /dev/null and b/tests/ref/bugs/justify-hanging-indent.png differ
diff --git a/tests/typ/bugs/justify-hanging-indent.typ b/tests/typ/bugs/justify-hanging-indent.typ
new file mode 100644
index 000000000..511aa172e
--- /dev/null
+++ b/tests/typ/bugs/justify-hanging-indent.typ
@@ -0,0 +1,6 @@
+// Test that combination of justification and hanging indent doesn't result in
+// an underfull first line.
+
+---
+#set par(hanging-indent: 2.5cm, justify: true)
+#lorem(5)