diff --git a/src/yamlprocessor/dataprocess.py b/src/yamlprocessor/dataprocess.py
index 15ff443..73e71e2 100755
--- a/src/yamlprocessor/dataprocess.py
+++ b/src/yamlprocessor/dataprocess.py
@@ -409,17 +409,23 @@ def process_data(
                         item, parent_filenames, variable_map))
                 if is_merge and type_of_data != type(include_data):
                     raise TypeError()
-                if is_merge and type_of_data is list:
-                    # For a list, the iterator seems to handle the new items
-                    # perfectly fine. We insert the included list at and after
-                    # the current position. The current item is logically
-                    # replaced by the first item of the inserted list.
+                if (
+                    is_merge
+                    and type_of_data is list
+                    and len(include_data) == 1
+                ):
+                    # For a list, if the incoming is a single element list,
+                    # then it can replace the original with no issue.
+                    item = data[key] = include_data[0]
+                elif is_merge and type_of_data is list:
+                    # For a list, if the incoming is not a single element list,
+                    # the iterator will stop working, so we need to re-process
+                    # the list for correctness.
                     del data[key]
-                    item = None
                     for i, include_item in enumerate(include_data):
                         data.insert(key + i, include_item)
-                        if i == 0:
-                            item = include_item
+                    stack.append([data, parent_filenames, variable_map])
+                    break
                 elif is_merge and type_of_data is dict:
                     # For a dict, the iterator cannot handle size changes, so
                     # we can only iterate over a copy of the original dict. We
diff --git a/src/yamlprocessor/tests/test_dataprocess.py b/src/yamlprocessor/tests/test_dataprocess.py
index be54142..d343f6c 100644
--- a/src/yamlprocessor/tests/test_dataprocess.py
+++ b/src/yamlprocessor/tests/test_dataprocess.py
@@ -460,6 +460,31 @@ def test_main_12(tmp_path, yaml):
     ]
 
 
+def test_main_12_1(tmp_path, yaml):
+    """Test main, merge include file with empty list and variable process.
+
+    Issue 35.
+    """
+    root_data = [
+        {'name': '${MATTER}'},
+        {'INCLUDE': 'void.yaml', 'MERGE': True},
+        {'name': '${MATTER}'},
+    ]
+    void_data = []
+    infilename = tmp_path / 'root.yaml'
+    with infilename.open('w') as infile:
+        yaml.dump(root_data, infile)
+    include_infilename = tmp_path / 'void.yaml'
+    with include_infilename.open('w') as infile:
+        yaml.dump(void_data, infile)
+    outfilename = tmp_path / 'b.yaml'
+    main(['--define=MATTER=stuff', str(infilename), str(outfilename)])
+    assert yaml.load(outfilename.open()) == [
+        {'name': 'stuff'},
+        {'name': 'stuff'},
+    ]
+
+
 def test_main_13(tmp_path, yaml):
     """Test main, merge include files into a map/object."""
     root_data = {