diff --git a/markdown/core.py b/markdown/core.py
index 370cb7ec..5b6c1eea 100644
--- a/markdown/core.py
+++ b/markdown/core.py
@@ -303,12 +303,15 @@ def is_block_level(self, tag: Any) -> bool:
         """
         Check if the given `tag` is a block level HTML tag.
 
-        Returns `True` for any string listed in `Markdown.block_level_elements`. A `tag` which is
-        not a string always returns `False`.
+        Returns `True` for any string listed in `Markdown.block_level_elements`.
+        Also returns `True` for valid custom element names (tag names that contain
+        a hyphen; see https://html.spec.whatwg.org/#valid-custom-element-name).
+        A `tag` which is not a string always returns `False`.
 
         """
         if isinstance(tag, str):
-            return tag.lower().rstrip('/') in self.block_level_elements
+            tag = tag.lower().rstrip('/')
+            return tag in self.block_level_elements or '-' in tag
         # Some ElementTree tags are not strings, so return False.
         return False
 
diff --git a/markdown/extensions/md_in_html.py b/markdown/extensions/md_in_html.py
index 32a9c11a..7c36790c 100644
--- a/markdown/extensions/md_in_html.py
+++ b/markdown/extensions/md_in_html.py
@@ -34,6 +34,17 @@
     from markdown import Markdown
 
 
+class _BlockLevelTagSet(set):
+    """A set of block-level tags that also treats custom element names as members.
+
+    Custom elements are required to contain a hyphen in their names.
+    See https://html.spec.whatwg.org/#valid-custom-element-name.
+    """
+
+    def __contains__(self, item: object) -> bool:
+        return super().__contains__(item) or (isinstance(item, str) and '-' in item)
+
+
 class HTMLExtractorExtra(HTMLExtractor):
     """
     Override `HTMLExtractor` and create `etree` `Elements` for any elements which should have content parsed as
@@ -52,9 +63,13 @@ def __init__(self, md: Markdown, *args, **kwargs):
 
         super().__init__(md, *args, **kwargs)
 
-        # Block-level tags in which the content gets parsed as blocks
-        self.block_tags = set(self.block_level_tags) - (self.span_tags | self.raw_tags | self.empty_tags)
-        self.span_and_blocks_tags = self.block_tags | self.span_tags
+        # Block-level tags in which the content gets parsed as blocks.
+        # Custom element names (tags with a hyphen) are treated as block-level.
+        self.block_level_tags = _BlockLevelTagSet(self.block_level_tags)
+        self.block_tags = _BlockLevelTagSet(
+            set(self.block_level_tags) - (self.span_tags | self.raw_tags | self.empty_tags)
+        )
+        self.span_and_blocks_tags = _BlockLevelTagSet(self.block_tags | self.span_tags)
 
     def reset(self):
         """Reset this instance.  Loses all unprocessed data."""
diff --git a/tests/test_syntax/blocks/test_html_blocks.py b/tests/test_syntax/blocks/test_html_blocks.py
index ecc10f45..b6745a1d 100644
--- a/tests/test_syntax/blocks/test_html_blocks.py
+++ b/tests/test_syntax/blocks/test_html_blocks.py
@@ -133,6 +133,30 @@ def test_raw_uppercase_multiline(self):
             )
         )
 
+    def test_raw_custom_element(self):
+        # Custom element names contain a hyphen and are treated as block-level.
+        # https://github.com/Python-Markdown/markdown/issues/1246
+        self.assertMarkdownRenders(
+            self.dedent(
+                """
+                <a-b>
+
+                asdf
+
+                </a-b>
+                """
+            ),
+            self.dedent(
+                """
+                <a-b>
+
+                asdf
+
+                </a-b>
+                """
+            )
+        )
+
     def test_multiple_raw_single_line(self):
         self.assertMarkdownRenders(
             '<p>*foo*</p><div>*bar*</div>',
diff --git a/tests/test_syntax/extensions/test_md_in_html.py b/tests/test_syntax/extensions/test_md_in_html.py
index 903766fc..20147a7d 100644
--- a/tests/test_syntax/extensions/test_md_in_html.py
+++ b/tests/test_syntax/extensions/test_md_in_html.py
@@ -1556,6 +1556,48 @@ def test_noname_tag(self):
             )
         )
 
+    def test_custom_element_markdown_attr(self):
+        # Custom element names contain a hyphen and are treated as block-level.
+        # https://github.com/Python-Markdown/markdown/issues/1246
+        self.assertMarkdownRenders(
+            self.dedent(
+                """
+                <a-b markdown>
+
+                asdf
+
+                </a-b>
+                """
+            ),
+            self.dedent(
+                """
+                <a-b>
+                <p>asdf</p>
+                </a-b>
+                """
+            )
+        )
+
+    def test_custom_element_md1(self):
+        # https://github.com/Python-Markdown/markdown/issues/1246
+        self.assertMarkdownRenders(
+            '<a-b markdown="1">*foo*</a-b>',
+            self.dedent(
+                """
+                <a-b>
+                <p><em>foo</em></p>
+                </a-b>
+                """
+            )
+        )
+
+    def test_custom_element_inline(self):
+        # Inline custom elements (not at the start of a block) remain span-level.
+        self.assertMarkdownRenders(
+            'hello <my-icon></my-icon> world',
+            '<p>hello <my-icon></my-icon> world</p>'
+        )
+
 
 def load_tests(loader, tests, pattern):
     """ Ensure `TestHTMLBlocks` doesn't get run twice by excluding it here. """