diff --git a/core-blocks/quote/editor.scss b/core-blocks/quote/editor.scss
index e36feff5126ac9..68eb9e9ca38068 100644
--- a/core-blocks/quote/editor.scss
+++ b/core-blocks/quote/editor.scss
@@ -1,6 +1,10 @@
 .wp-block-quote {
 	margin: 0;
 
+	// compensate nested blocks for collapsing margins
+	padding-top: 1px;
+	padding-bottom: 1px;
+
 	cite {
 		display: block;
 	}
@@ -9,4 +13,4 @@
 .wp-block-quote:not(.is-large) {
 	border-left: 4px solid $black;
 	padding-left: 1em;
-}
+}
\ No newline at end of file
diff --git a/editor/components/block-list/style.scss b/editor/components/block-list/style.scss
index 174bdf080298b4..39cef9560e91a9 100644
--- a/editor/components/block-list/style.scss
+++ b/editor/components/block-list/style.scss
@@ -111,10 +111,19 @@
 		padding-right: $block-side-ui-padding;
 	}
 
-	// Don't add side padding for nested blocks, @todo see if this can be scoped better
+	// Don't add side padding for nested blocks, and compensate for block padding
 	.editor-block-list__block & {
+		// compensate for side UI
 		padding-left: 0;
 		padding-right: 0;
+
+		// compensate for block padding horizontally
+		margin-left: -$block-padding;
+		margin-right: -$block-padding;
+
+		// compensate for block padding and collapsing margins vertically
+		margin-top: -$block-padding + 1px;
+		margin-top: -$block-padding + 1px;
 	}
 }