diff --git a/pkg/application/files.go b/pkg/application/files.go
index 30be7c6e7ce..26c40f61268 100644
--- a/pkg/application/files.go
+++ b/pkg/application/files.go
@@ -16,7 +16,9 @@ package application
 
 import (
 	"bytes"
+	"errors"
 	"fmt"
+	"io"
 	"os"
 	"path/filepath"
 
@@ -77,15 +79,18 @@ func (m mergeProcessor) Process(appRoot string) error {
 
 	logrus.Debugf("will do merge processor on the file : %s", target)
 
-	contents, err := os.ReadFile(filepath.Clean(target))
+	f, err := os.Open(filepath.Clean(target))
 	if err != nil {
 		return err
 	}
 
-	for _, section := range bytes.Split(contents, []byte("---\n")) {
+	dec := yaml.NewDecoder(f)
+	for {
 		destDataMap := make(map[string]interface{})
-
-		err = yaml.Unmarshal(section, &destDataMap)
+		err = dec.Decode(destDataMap)
+		if errors.Is(err, io.EOF) {
+			break
+		}
 		if err != nil {
 			return fmt.Errorf("failed to unmarshal config data: %v", err)
 		}
@@ -103,7 +108,7 @@ func (m mergeProcessor) Process(appRoot string) error {
 		result = append(result, out)
 	}
 
-	err = osUtils.NewCommonWriter(target).WriteFile(bytes.Join(result, []byte("---\n")))
+	err = osUtils.NewCommonWriter(target).WriteFile(bytes.Join(result, []byte("\n---\n")))
 	if err != nil {
 		return fmt.Errorf("failed to write to file %s with raw mode: %v", target, err)
 	}
diff --git a/pkg/application/files_test.go b/pkg/application/files_test.go
new file mode 100644
index 00000000000..d73154daaef
--- /dev/null
+++ b/pkg/application/files_test.go
@@ -0,0 +1,94 @@
+// Copyright © 2023 Alibaba Group Holding Ltd.
+//
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at
+//
+//     http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
+
+package application
+
+import (
+	"os"
+	"path/filepath"
+	"testing"
+
+	"github.com/google/go-cmp/cmp"
+	v2 "github.com/sealerio/sealer/types/api/v2"
+)
+
+func Test_mergeProcessor_Process(t *testing.T) {
+	tests := []struct {
+		source   string
+		patch    string
+		expected string
+		wantErr  bool
+	}{
+		{
+			source:   "a: b\nb: c",
+			patch:    "b: d",
+			expected: "a: b\nb: d\n",
+			wantErr:  false,
+		},
+		{
+			source:   "a: b\n## ---\nb: c",
+			patch:    "b: d",
+			expected: "a: b\nb: d\n",
+			wantErr:  false,
+		},
+		{
+			source:   "a: b\n---\nb: c",
+			patch:    "b: d",
+			expected: "a: b\nb: d\n\n---\nb: d\n",
+			wantErr:  false,
+		},
+	}
+	// prepare a tmp dir to write test files
+	appRoot, err := os.MkdirTemp("", "sealer-unit-test")
+	if err != nil {
+		t.Fatal(err)
+	}
+	defer func() {
+		_ = os.RemoveAll(appRoot)
+	}()
+
+	testFile := filepath.Join(appRoot, "test.yaml")
+	for _, tt := range tests {
+		// prepare source file
+		f, err := os.Create(testFile)
+		if err != nil {
+			t.Fatal(err)
+		}
+		_, err = f.WriteString(tt.source)
+		if err != nil {
+			t.Fatal(err)
+		}
+
+		r := mergeProcessor{
+			AppFile: v2.AppFile{
+				Path:     "test.yaml",
+				Strategy: v2.MergeStrategy,
+				Data:     tt.patch,
+			},
+		}
+
+		if err := r.Process(appRoot); err != nil && !tt.wantErr {
+			t.Errorf("mergeProcessor.Process() error = %v", err)
+		} else {
+			output, err := os.ReadFile(testFile)
+			if err != nil {
+				t.Fatal(err)
+			}
+
+			if diff := cmp.Diff(string(output), tt.expected); diff != "" {
+				t.Errorf("test failed expected=%s; output=%s; diff=%s", tt.expected, string(output), diff)
+			}
+		}
+	}
+}