diff --git a/Lib/netrc.py b/Lib/netrc.py
index a60b8b7..c96db6f 100644
--- a/Lib/netrc.py
+++ b/Lib/netrc.py
@@ -2,7 +2,7 @@
 
 # Module and documentation by Eric S. Raymond, 21 Dec 1998
 
-import os, shlex
+import io, os, shlex
 
 __all__ = ["netrc", "NetrcParseError"]
 
@@ -37,12 +37,14 @@
         lexer.commenters = lexer.commenters.replace('#', '')
         while 1:
             # Look for a machine, default, or macdef top-level keyword
+            saved_lineno = lexer.lineno
             toplevel = tt = lexer.get_token()
             if not tt:
                 break
             elif tt[0] == '#':
-                fp.readline();
-                continue;
+                if lexer.lineno == saved_lineno and len(tt) == 1:
+                    lexer.instream.readline()
+                continue
             elif tt == 'machine':
                 entryname = lexer.get_token()
             elif tt == 'default':
@@ -68,8 +70,8 @@
             self.hosts[entryname] = {}
             while 1:
                 tt = lexer.get_token()
-                if (tt=='' or tt == 'machine' or
-                    tt == 'default' or tt =='macdef'):
+                if (tt.startswith('#') or
+                    tt in {'', 'machine', 'default', 'macdef'}):
                     if password:
                         self.hosts[entryname] = (login, account, password)
                         lexer.push_token(tt)
diff --git a/Lib/test/test_netrc.py b/Lib/test/test_netrc.py
index da7ec05..ef70e37 100644
--- a/Lib/test/test_netrc.py
+++ b/Lib/test/test_netrc.py
@@ -1,54 +1,107 @@
-
-import netrc, os, unittest, sys
+import netrc, os, unittest, sys, textwrap
 from test import support
 
-TEST_NETRC = """
-
- #this is a comment
-#this is a comment
-# this is a comment
-
-machine foo login log1 password pass1 account acct1
-machine bar login log1 password pass# account acct1
-
-macdef macro1
-line1
-line2
-
-macdef macro2
-line3
-line4
-
-default login log2 password pass2
-
-"""
-
 temp_filename = support.TESTFN
 
 class NetrcTestCase(unittest.TestCase):
 
-    def setUp(self):
-        mode = 'w'
-        if sys.platform not in ['cygwin']:
-            mode += 't'
-        fp = open(temp_filename, mode)
-        fp.write(TEST_NETRC)
-        fp.close()
-        self.nrc = netrc.netrc(temp_filename)
-
     def tearDown(self):
         os.unlink(temp_filename)
 
-    def test_case_1(self):
-        self.assertEqual(self.nrc.hosts['foo'], ('log1', 'acct1', 'pass1'))
-        self.assertEqual(self.nrc.hosts['default'], ('log2', None, 'pass2'))
+    def make_nrc(self, test_data):
+        test_data = textwrap.dedent(test_data)
+        mode = 'w'
+        if sys.platform != 'cygwin':
+            mode += 't'
+        with open(temp_filename, mode) as fp:
+            fp.write(test_data)
+        return netrc.netrc(temp_filename)
+
+    def test_default(self):
+        nrc = self.make_nrc("""\
+            machine host1.domain.com login log1 password pass1 account acct1
+            default login log2 password pass2
+            """)
+        self.assertEqual(nrc.hosts['host1.domain.com'],
+                         ('log1', 'acct1', 'pass1'))
+        self.assertEqual(nrc.hosts['default'], ('log2', None, 'pass2'))
 
     def test_macros(self):
-        self.assertEqual(self.nrc.macros, {'macro1':['line1\n', 'line2\n'],
-                                           'macro2':['line3\n', 'line4\n']})
+        nrc = self.make_nrc("""\
+            macdef macro1
+            line1
+            line2
 
-    def test_parses_passwords_with_hash_character(self):
-        self.assertEqual(self.nrc.hosts['bar'], ('log1', 'acct1', 'pass#'))
+            macdef macro2
+            line3
+            line4
+            """)
+        self.assertEqual(nrc.macros, {'macro1': ['line1\n', 'line2\n'],
+                                      'macro2': ['line3\n', 'line4\n']})
+
+    def _test_passwords(self, nrc, passwd):
+        nrc = self.make_nrc(nrc)
+        self.assertEqual(nrc.hosts['host.domain.com'], ('log', 'acct', passwd))
+
+    def test_password_with_leading_hash(self):
+        self._test_passwords("""\
+            machine host.domain.com login log password #pass account acct
+            """, '#pass')
+
+    def test_password_with_trailing_hash(self):
+        self._test_passwords("""\
+            machine host.domain.com login log password pass# account acct
+            """, 'pass#')
+
+    def test_password_with_internal_hash(self):
+        self._test_passwords("""\
+            machine host.domain.com login log password pa#ss account acct
+            """, 'pa#ss')
+
+    def _test_comment(self, nrc, passwd='pass'):
+        nrc = self.make_nrc(nrc)
+        self.assertEqual(nrc.hosts['foo.domain.com'], ('bar', None, passwd))
+        self.assertEqual(nrc.hosts['bar.domain.com'], ('foo', None, 'pass'))
+
+    def test_comment_before_machine_line(self):
+        self._test_comment("""\
+            # comment
+            machine foo.domain.com login bar password pass
+            machine bar.domain.com login foo password pass
+            """)
+
+    def test_comment_before_machine_line_no_space(self):
+        self._test_comment("""\
+            #comment
+            machine foo.domain.com login bar password pass
+            machine bar.domain.com login foo password pass
+            """)
+
+    def test_comment_before_machine_line_hash_only(self):
+        self._test_comment("""\
+            #
+            machine foo.domain.com login bar password pass
+            machine bar.domain.com login foo password pass
+            """)
+
+    def test_comment_at_end_of_machine_line(self):
+        self._test_comment("""\
+            machine foo.domain.com login bar password pass # comment
+            machine bar.domain.com login foo password pass
+            """)
+
+    def test_comment_at_end_of_machine_line_no_space(self):
+        self._test_comment("""\
+            machine foo.domain.com login bar password pass #comment
+            machine bar.domain.com login foo password pass
+            """)
+
+    def test_comment_at_end_of_machine_line_pass_has_hash(self):
+        self._test_comment("""\
+            machine foo.domain.com login bar password #pass #comment
+            machine bar.domain.com login foo password pass
+            """, '#pass')
+
 
 def test_main():
     support.run_unittest(NetrcTestCase)
diff --git a/Misc/ACKS b/Misc/ACKS
index c698d73..e74324f 100644
--- a/Misc/ACKS
+++ b/Misc/ACKS
@@ -564,6 +564,7 @@
 Derek Morr
 James A Morrison
 Mher Movsisyan
+Ruslan Mstoi
 Sjoerd Mullender
 Sape Mullender
 Michael Muller
diff --git a/Misc/NEWS b/Misc/NEWS
index ed70507..6cf2867 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -7,6 +7,11 @@
 
 *Release date: 2011-05-XX*
 
+Library
+-------
+
+- Issue #12009: Fixed regression in netrc file comment handling.
+
 Extension Modules
 -----------------