diff --git a/packages/components/CHANGELOG.md b/packages/components/CHANGELOG.md
index 791def47c89700..17f005c805cec6 100644
--- a/packages/components/CHANGELOG.md
+++ b/packages/components/CHANGELOG.md
@@ -8,6 +8,7 @@
 -   `FormTokenField`: Do not suggest the selected one even if `{ value: string }` is passed ([#41216](https://github.com/WordPress/gutenberg/pull/41216)).
 -   `CustomGradientBar`: Fix insertion and control point positioning to more closely follow cursor. ([#41492](https://github.com/WordPress/gutenberg/pull/41492))
 -   `FormTokenField`: Added Padding to resolve close button overlap issue ([#41556](https://github.com/WordPress/gutenberg/pull/41556)).
+-   `Autocomplete`: Prevent autocompletion entries (such as user mentions) from breaking subsequent newlines in the same block ([#41749](https://github.com/WordPress/gutenberg/pull/41749)).
 
 ### Enhancements
 
diff --git a/packages/components/src/autocomplete/index.js b/packages/components/src/autocomplete/index.js
index c2fefc6af7e136..670beb2ae8798c 100644
--- a/packages/components/src/autocomplete/index.js
+++ b/packages/components/src/autocomplete/index.js
@@ -12,6 +12,7 @@ import {
 	useState,
 	useRef,
 	useMemo,
+	useCallback,
 } from '@wordpress/element';
 import {
 	ENTER,
@@ -183,40 +184,46 @@ function useAutocomplete( {
 		setAutocompleterUI( null );
 	}
 
-	function announce( options ) {
-		if ( ! debouncedSpeak ) {
-			return;
-		}
-		if ( !! options.length ) {
-			debouncedSpeak(
-				sprintf(
-					/* translators: %d: number of results. */
-					_n(
-						'%d result found, use up and down arrow keys to navigate.',
-						'%d results found, use up and down arrow keys to navigate.',
+	const announce = useCallback(
+		( options ) => {
+			if ( ! debouncedSpeak ) {
+				return;
+			}
+			if ( !! options.length ) {
+				debouncedSpeak(
+					sprintf(
+						/* translators: %d: number of results. */
+						_n(
+							'%d result found, use up and down arrow keys to navigate.',
+							'%d results found, use up and down arrow keys to navigate.',
+							options.length
+						),
 						options.length
 					),
-					options.length
-				),
-				'assertive'
-			);
-		} else {
-			debouncedSpeak( __( 'No results.' ), 'assertive' );
-		}
-	}
+					'assertive'
+				);
+			} else {
+				debouncedSpeak( __( 'No results.' ), 'assertive' );
+			}
+		},
+		[ debouncedSpeak ]
+	);
 
 	/**
 	 * Load options for an autocompleter.
 	 *
 	 * @param {Array} options
 	 */
-	function onChangeOptions( options ) {
-		setSelectedIndex(
-			options.length === filteredOptions.length ? selectedIndex : 0
-		);
-		setFilteredOptions( options );
-		announce( options );
-	}
+	const onChangeOptions = useCallback(
+		( options ) => {
+			setSelectedIndex(
+				options.length === filteredOptions.length ? selectedIndex : 0
+			);
+			setFilteredOptions( options );
+			announce( options );
+		},
+		[ announce, filteredOptions.length, selectedIndex ]
+	);
 
 	function handleKeyDown( event ) {
 		backspacing.current = event.keyCode === BACKSPACE;