diff --git a/flang/lib/Parser/prescan.cpp b/flang/lib/Parser/prescan.cpp
index 3a9a475c365ee..865c149380d85 100644
--- a/flang/lib/Parser/prescan.cpp
+++ b/flang/lib/Parser/prescan.cpp
@@ -97,17 +97,7 @@ void Prescanner::Prescan(ProvenanceRange range) {
   while (!IsAtEnd()) {
     Statement();
   }
-  if (inFixedForm_ != beganInFixedForm) {
-    std::string dir{"!dir$ "};
-    if (beganInFixedForm) {
-      dir += "fixed";
-    } else {
-      dir += "free";
-    }
-    dir += '\n';
-    TokenSequence tokens{dir, allSources_.AddCompilerInsertion(dir).start()};
-    tokens.Emit(cooked_);
-  }
+  inFixedForm_ = beganInFixedForm;
 }
 
 void Prescanner::Statement() {
@@ -324,10 +314,11 @@ void Prescanner::Statement() {
       }
       NormalizeCompilerDirectiveCommentMarker(*preprocessed);
       preprocessed->ToLowerCase();
-      SourceFormChange(preprocessed->ToString());
-      CheckAndEmitLine(
-          preprocessed->ClipComment(*this, true /* skip first ! */),
-          newlineProvenance);
+      if (!SourceFormChange(preprocessed->ToString())) {
+        CheckAndEmitLine(
+            preprocessed->ClipComment(*this, true /* skip first ! */),
+            newlineProvenance);
+      }
       break;
     case LineClassification::Kind::Source:
       if (inFixedForm_) {
@@ -370,14 +361,16 @@ void Prescanner::Statement() {
         }
       }
       tokens.ToLowerCase();
-      SourceFormChange(tokens.ToString());
+      if (!SourceFormChange(tokens.ToString())) {
+        CheckAndEmitLine(tokens, newlineProvenance);
+      }
     } else { // Kind::Source
       tokens.ToLowerCase();
       if (inFixedForm_) {
         EnforceStupidEndStatementRules(tokens);
       }
+      CheckAndEmitLine(tokens, newlineProvenance);
     }
-    CheckAndEmitLine(tokens, newlineProvenance);
   }
   directiveSentinel_ = nullptr;
 }
@@ -1774,11 +1767,15 @@ Prescanner::LineClassification Prescanner::ClassifyLine(
   return classification;
 }
 
-void Prescanner::SourceFormChange(std::string &&dir) {
+bool Prescanner::SourceFormChange(std::string &&dir) {
   if (dir == "!dir$ free") {
     inFixedForm_ = false;
+    return true;
   } else if (dir == "!dir$ fixed") {
     inFixedForm_ = true;
+    return true;
+  } else {
+    return false;
   }
 }
 
diff --git a/flang/lib/Parser/prescan.h b/flang/lib/Parser/prescan.h
index c181c03273ccc..fc38adb926530 100644
--- a/flang/lib/Parser/prescan.h
+++ b/flang/lib/Parser/prescan.h
@@ -225,7 +225,7 @@ class Prescanner {
   LineClassification ClassifyLine(const char *) const;
   LineClassification ClassifyLine(
       TokenSequence &, Provenance newlineProvenance) const;
-  void SourceFormChange(std::string &&);
+  bool SourceFormChange(std::string &&);
   bool CompilerDirectiveContinuation(TokenSequence &, const char *sentinel);
   bool SourceLineContinuation(TokenSequence &);
 
diff --git a/flang/test/Preprocessing/fixed-free.f b/flang/test/Preprocessing/fixed-free.f
new file mode 100644
index 0000000000000..95f63a4d71e4c
--- /dev/null
+++ b/flang/test/Preprocessing/fixed-free.f
@@ -0,0 +1,8 @@
+!RUN: %flang -E %s 2>&1 | FileCheck %s
+!RUN: %flang -fc1 -fsyntax-only %s 2>&1 | FileCheck --allow-empty %s
+!CHECK-NOT: dir$
+!CHECK-NOT: error:
+!dir$ fixed
+        continue
+!dir$ free
+        end