diff --git a/crates/oxc_minifier/src/ast_passes/peephole_substitute_alternate_syntax.rs b/crates/oxc_minifier/src/ast_passes/peephole_substitute_alternate_syntax.rs
index b3fcc910a..40e863a7a 100644
--- a/crates/oxc_minifier/src/ast_passes/peephole_substitute_alternate_syntax.rs
+++ b/crates/oxc_minifier/src/ast_passes/peephole_substitute_alternate_syntax.rs
@@ -121,6 +121,26 @@ impl<'a> Traverse<'a> for PeepholeSubstituteAlternateSyntax {
                     self.changed = true;
                 }
             }
+            // `() => { return foo })` -> `() => foo`
+            Expression::ArrowFunctionExpression(arrow_expr) => {
+                if !arrow_expr.expression
+                    && arrow_expr.body.directives.is_empty()
+                    && arrow_expr.body.statements.len() == 1
+                {
+                    if let Some(body) = arrow_expr.body.statements.first_mut() {
+                        if let Statement::ReturnStatement(ret_stmt) = body {
+                            let return_stmt_arg =
+                                ret_stmt.argument.as_mut().map(|arg| ctx.ast.move_expression(arg));
+
+                            if let Some(return_stmt_arg) = return_stmt_arg {
+                                *body = ctx.ast.statement_expression(SPAN, return_stmt_arg);
+                                arrow_expr.expression = true;
+                                self.changed = true;
+                            }
+                        }
+                    }
+                }
+            }
             _ => {}
         }
     }
@@ -963,4 +983,10 @@ mod test {
         test("1/x * (y/1 * (1/z))", "1/x * (y/1) * (1/z)");
         test_same("1/x * (y/1) * (1/z)");
     }
+
+    #[test]
+    fn test_fold_arrow_function_return() {
+        test("const foo = () => { return 'baz' }", "const foo = () => 'baz'");
+        test_same("const foo = () => { foo; return 'baz' }");
+    }
 }
diff --git a/tasks/minsize/minsize.snap b/tasks/minsize/minsize.snap
index 8ca5db9ce..375432cb7 100644
--- a/tasks/minsize/minsize.snap
+++ b/tasks/minsize/minsize.snap
@@ -12,7 +12,7 @@ Original   | Minified   | esbuild    | Gzip       | esbuild
 
 555.77 kB  | 276.49 kB  | 270.13 kB  | 91.15 kB   | 90.80 kB   | d3.js     
 
-1.01 MB    | 467.63 kB  | 458.89 kB  | 126.75 kB  | 126.71 kB  | bundle.min.js
+1.01 MB    | 467.60 kB  | 458.89 kB  | 126.74 kB  | 126.71 kB  | bundle.min.js
 
 1.25 MB    | 662.86 kB  | 646.76 kB  | 164.00 kB  | 163.73 kB  | three.js