diff --git a/docs/en_US/release_notes_9_16.rst b/docs/en_US/release_notes_9_16.rst
index 4f0740cdff0..45b7b519110 100644
--- a/docs/en_US/release_notes_9_16.rst
+++ b/docs/en_US/release_notes_9_16.rst
@@ -54,3 +54,4 @@ Bug fixes
   | `Issue #9984 <https://github.com/pgadmin-org/pgadmin4/issues/9984>`_ -  Fix the Docker entrypoint mishandling a quoted PGADMIN_CONFIG_CONFIG_DATABASE_URI, which caused a SQLAlchemy parse error and silently skipped PGADMIN_DEFAULT_EMAIL/PASSWORD setup.
   | `Issue #9987 <https://github.com/pgadmin-org/pgadmin4/issues/9987>`_ -  Fix "AttributeError: 'PgAdmin' object has no attribute 'login_manager'" crash when running setup.py user-management commands (add-user, update-user) from the CLI.
   | `Issue #9988 <https://github.com/pgadmin-org/pgadmin4/issues/9988>`_ -  Provide an actionable error when 'openid' is in OAUTH2_SCOPE but OAUTH2_SERVER_METADATA_URL is not set, instead of a cryptic Authlib failure.
+  | `Issue #10059 <https://github.com/pgadmin-org/pgadmin4/issues/10059>`_ -  Fix the generated SQL for editing a SQL-language function/procedure whose body contains the word "return" (e.g. a RETURNING clause), which was wrongly treated as a SQL-standard body and produced a statement without the AS $BODY$ wrapper.
diff --git a/web/pgadmin/browser/server_groups/servers/databases/schemas/functions/__init__.py b/web/pgadmin/browser/server_groups/servers/databases/schemas/functions/__init__.py
index d1f76e24360..92844825089 100644
--- a/web/pgadmin/browser/server_groups/servers/databases/schemas/functions/__init__.py
+++ b/web/pgadmin/browser/server_groups/servers/databases/schemas/functions/__init__.py
@@ -1759,10 +1759,13 @@ def _is_function_def_sql_standard(resp_data):
                          r"^.*(?:\"|\')(?=.*(atomic)).*$"]
 
         # valid regex, these combination a must in definition to detect a
-        # standard sql or pure sql
+        # standard sql or pure sql. The RETURN form must start the body
+        # (as a keyword) so that a plain SQL body which merely contains the
+        # substring "return" (e.g. a "RETURNING" clause or an identifier
+        # like "returned_value") is not mistaken for a SQL-standard body.
         valid_match = [
             r"(?=.*begin)(.+?(\n)+)(?=.*atomic)|(?=.*begin)(?=.*atomic)",
-            r"(?=return)"
+            r"\A\s*return\b"
         ]
 
         is_func_def_sql_std = False
diff --git a/web/pgadmin/browser/server_groups/servers/databases/schemas/functions/tests/test_is_function_def_sql_standard.py b/web/pgadmin/browser/server_groups/servers/databases/schemas/functions/tests/test_is_function_def_sql_standard.py
new file mode 100644
index 00000000000..eca8a4d05f0
--- /dev/null
+++ b/web/pgadmin/browser/server_groups/servers/databases/schemas/functions/tests/test_is_function_def_sql_standard.py
@@ -0,0 +1,73 @@
+##########################################################################
+#
+# pgAdmin 4 - PostgreSQL Tools
+#
+# Copyright (C) 2013 - 2026, The pgAdmin Development Team
+# This software is released under the PostgreSQL Licence
+#
+##########################################################################
+
+from pgadmin.utils.route import BaseTestGenerator
+from .. import FunctionView
+
+
+class TestIsFunctionDefSqlStandard(BaseTestGenerator):
+    """
+    Unit tests for FunctionView._is_function_def_sql_standard.
+
+    This guards against a regression (issue #10059) where a plain SQL
+    function/procedure body that merely contained the substring "return"
+    (e.g. a "RETURNING" clause) was wrongly detected as a SQL-standard
+    body, causing the generated CREATE OR REPLACE statement to drop the
+    "AS $BODY$ ... $BODY$" wrapper and fail with a syntax error.
+    """
+
+    scenarios = [
+        ('SQL-standard BEGIN ATOMIC body is detected', dict(
+            data=dict(lanname='sql',
+                      prosrc='\nBEGIN ATOMIC\n  INSERT INTO t VALUES (1);\nEND'
+                      ),
+            expected=True
+        )),
+        ('SQL-standard RETURN body is detected', dict(
+            data=dict(lanname='sql', prosrc='RETURN $1 + $2'),
+            expected=True
+        )),
+        ('SQL-standard RETURN body with leading whitespace is detected',
+         dict(
+             data=dict(lanname='sql', prosrc='\n  return a;'),
+             expected=True
+         )),
+        ('Plain SQL body with a RETURNING clause is not SQL-standard', dict(
+            data=dict(lanname='sql',
+                      prosrc='INSERT INTO t(a) VALUES (1) RETURNING a;'),
+            expected=False
+        )),
+        ('Plain SQL body referencing a "returned" identifier is not '
+         'SQL-standard', dict(
+             data=dict(lanname='sql',
+                       prosrc='SELECT my_returned_value FROM t;'),
+             expected=False
+         )),
+        ('Plain SQL body is not SQL-standard', dict(
+            data=dict(lanname='sql', prosrc='SELECT 1;'),
+            expected=False
+        )),
+        ('RETURN must start the body, not merely a later line', dict(
+            data=dict(lanname='sql', prosrc='SELECT 1;\nreturn x;'),
+            expected=False
+        )),
+        ('Non-sql language is never SQL-standard', dict(
+            data=dict(lanname='plpgsql',
+                      prosrc='BEGIN\n  RETURN;\nEND;'),
+            expected=False
+        )),
+        ('Empty body is not SQL-standard', dict(
+            data=dict(lanname='sql', prosrc=''),
+            expected=False
+        )),
+    ]
+
+    def runTest(self):
+        result = FunctionView._is_function_def_sql_standard(self.data)
+        self.assertEqual(result, self.expected)