diff --git a/pkg/pr/apply_test.go b/pkg/pr/apply_test.go
index 46c07bc7a..e906e9c3f 100644
--- a/pkg/pr/apply_test.go
+++ b/pkg/pr/apply_test.go
@@ -213,6 +213,80 @@ func TestApply(t *testing.T) {
 			},
 			expectedErr: nil,
 		},
+		{
+			name: "should work with multi line regex replacements, example 1",
+			files: map[string]string{
+				filepath.Join(dir, "workload.tf"): `Line 1
+Line 2
+Line 3`,
+			},
+			template: &pr.PrTemplate{
+				Context: map[string]interface{}{},
+				Spec: pr.PrTemplateSpec{
+					Updates: &pr.UpdateSpec{
+						RegexReplacements: []pr.RegexReplacement{
+							{
+								Regex:       `Line (\d+)`,
+								Replacement: "Replaced $1",
+								File:        filepath.Join(dir, "workload.tf"),
+								Templated:   false,
+							},
+						},
+					},
+				},
+			},
+			expectedFiles: map[string]string{
+				filepath.Join(dir, "workload.tf"): `Replaced 1
+Replaced 2
+Replaced 3`,
+			},
+			expectedErr: nil,
+		},
+		{
+			name: "should work with multi line regex replacements, example 2",
+			files: map[string]string{
+				filepath.Join(dir, "workload.tf"): `
+					module "staging" {
+					  source       = "./eks"
+					  START
+					  vpc_name     = "plural-stage"
+					  kubernetes_version = "1.28"
+					  create_db    = false
+                      END
+					  providers = {
+						helm = helm.staging
+					  }
+					}`,
+			},
+			template: &pr.PrTemplate{
+				Context: map[string]interface{}{
+					"version": "1.28",
+				},
+				Spec: pr.PrTemplateSpec{
+					Updates: &pr.UpdateSpec{
+						RegexReplacements: []pr.RegexReplacement{
+							{
+								Regex:       `START.*END`,
+								Replacement: "kubernetes_version = \"{{ context.version }}\"",
+								File:        filepath.Join(dir, "workload.tf"),
+								Templated:   false,
+							},
+						},
+					},
+				},
+			},
+			expectedFiles: map[string]string{
+				filepath.Join(dir, "workload.tf"): `
+					module "staging" {
+					  source       = "./eks"
+					  kubernetes_version = "1.28"
+					  providers = {
+						helm = helm.staging
+					  }
+					}`,
+			},
+			expectedErr: nil,
+		},
 		{
 			name: "should template and overlay with overwrite yaml file",
 			files: map[string]string{
diff --git a/pkg/pr/updates.go b/pkg/pr/updates.go
index c54604dea..1118e9b86 100644
--- a/pkg/pr/updates.go
+++ b/pkg/pr/updates.go
@@ -5,6 +5,7 @@ import (
 	"io/fs"
 	"path/filepath"
 	"regexp"
+	"strings"
 
 	"dario.cat/mergo"
 	"github.com/samber/lo"
@@ -75,13 +76,7 @@ func processRegexReplacements(replacements []RegexReplacement, ctx map[string]in
 			if err != nil {
 				rx = []byte(replacement.Regex)
 			}
-
-			r, err := regexp.Compile(string(rx))
-			if err != nil {
-				return data, err
-			}
-
-			return r.ReplaceAll(data, replaceWith), nil
+			return replaceMultiline(rx, replaceWith, data)
 		}
 
 		dest, err := templateReplacement([]byte(replacement.File), ctx)
@@ -97,6 +92,24 @@ func processRegexReplacements(replacements []RegexReplacement, ctx map[string]in
 	return nil
 }
 
+// replaceMultiline applies regex-based replacements on a multiline string
+func replaceMultiline(pattern, replacement, text []byte) ([]byte, error) {
+	// Replace all newlines with a unique placeholder
+	placeholder := "__NL__"
+	flattenedText := strings.ReplaceAll(string(text), "\n", placeholder)
+
+	// Apply the regex replacement on the flattened text
+	re, err := regexp.Compile(string(pattern))
+	if err != nil {
+		return nil, err
+	}
+	flattenedText = re.ReplaceAllString(flattenedText, string(replacement))
+
+	// Revert the placeholder back to newlines
+	finalText := strings.ReplaceAll(flattenedText, placeholder, "\n")
+	return []byte(finalText), nil
+}
+
 func processYamlOverlays(overlays []YamlOverlay, ctx map[string]interface{}) error {
 	if len(overlays) == 0 {
 		return nil