diff --git a/src/parse_execution.cpp b/src/parse_execution.cpp
index 82f0735fe..4f297732e 100644
--- a/src/parse_execution.cpp
+++ b/src/parse_execution.cpp
@@ -226,12 +226,9 @@ process_type_t parse_execution_context_t::process_type_for_command(
 }
 
 maybe_t<end_execution_reason_t> parse_execution_context_t::check_end_execution() const {
-    if (ctx.check_cancel() || shell_is_exiting()) {
+    if (this->cancel_signal || ctx.check_cancel() || shell_is_exiting()) {
         return end_execution_reason_t::cancelled;
     }
-    if (nullptr == parser) {
-        return none();
-    }
     const auto &ld = parser->libdata();
     if (ld.returning) {
         return end_execution_reason_t::control_flow;
@@ -1343,6 +1340,14 @@ end_execution_reason_t parse_execution_context_t::run_1_job(const ast::job_t &jo
             remove_job(*this->parser, job.get());
         }
 
+        // Check if the job's group got a SIGINT or SIGQUIT.
+        // If so we need to mark that ourselves so as to cancel the rest of the execution.
+        // See #7259.
+        int cancel_sig = job->group->get_cancel_signal();
+        if (cancel_sig == SIGINT || cancel_sig == SIGQUIT) {
+            this->cancel_signal = cancel_sig;
+        }
+
         // Update universal variables on external conmmands.
         // TODO: justify this, why not on every command?
         if (job_contained_external_command) {
diff --git a/src/parse_execution.h b/src/parse_execution.h
index acb32fa28..4af3f95d1 100644
--- a/src/parse_execution.h
+++ b/src/parse_execution.h
@@ -45,6 +45,10 @@ class parse_execution_context_t {
     size_t cached_lineno_offset = 0;
     int cached_lineno_count = 0;
 
+    /// If a process dies due to a SIGINT or SIGQUIT, then store the corresponding signal here.
+    /// Note this latches to SIGINT or SIGQUIT; it is never cleared.
+    int cancel_signal{0};
+
     /// The block IO chain.
     /// For example, in `begin; foo ; end < file.txt` this would have the 'file.txt' IO.
     io_chain_t block_io{};
@@ -160,6 +164,9 @@ class parse_execution_context_t {
     /// Returns the source offset, or -1.
     int get_current_source_offset() const;
 
+    /// \return the signal that triggered cancellation, or 0 if none.
+    int get_cancel_signal() const { return cancel_signal; }
+
     /// Returns the source string.
     const wcstring &get_source() const { return pstree->src; }
 
diff --git a/src/parser.cpp b/src/parser.cpp
index 8150b81ca..1c5b5ce17 100644
--- a/src/parser.cpp
+++ b/src/parser.cpp
@@ -699,12 +699,21 @@ eval_res_t parser_t::eval_node(const parsed_source_ref_t &ps, const T &node,
     const size_t new_exec_count = libdata().exec_count;
     const size_t new_status_count = libdata().status_count;
 
+    // Check if the execution context stopped due to a signal from a job it created.
+    // This may come about if the context created a new job group.
+    // TODO: there are way too many signals flying around, we need to rationalize this.
+    int signal_from_exec = execution_context->get_cancel_signal();
+
     exc.restore();
     this->pop_block(scope_block);
 
     job_reap(*this, false);  // reap again
 
-    if (int sig = check_cancel_signal()) {
+    if (signal_from_exec) {
+        // A job spawned by the execution context got SIGINT or SIGQUIT, which stopped all
+        // execution.
+        return proc_status_t::from_signal(signal_from_exec);
+    } else if (int sig = check_cancel_signal()) {
         // We were signalled.
         return proc_status_t::from_signal(sig);
     } else {
diff --git a/tests/pexpects/sigint.py b/tests/pexpects/sigint.py
new file mode 100644
index 000000000..05113031c
--- /dev/null
+++ b/tests/pexpects/sigint.py
@@ -0,0 +1,25 @@
+#!/usr/bin/env python3
+from pexpect_helper import SpawnedProc
+
+sp = SpawnedProc()
+sendline, sleep, expect_prompt, expect_str = (
+    sp.sendline,
+    sp.sleep,
+    sp.expect_prompt,
+    sp.expect_str,
+)
+
+# Ensure that if child processes SIGINT, we exit our loops.
+# This is an interactive test because the parser is expected to
+# recover from SIGINT in interactive mode.
+# Test for #7259.
+
+expect_prompt()
+sendline("while true; sh -c 'echo Here we go; sleep .25; kill -s INT $$'; end")
+sleep(0.30)
+expect_str("Here we go")
+expect_prompt()
+
+sendline("echo it worked")
+expect_str("it worked")
+expect_prompt()