diff --git a/src/reader.cpp b/src/reader.cpp
index 50b022a68..0267be555 100644
--- a/src/reader.cpp
+++ b/src/reader.cpp
@@ -2773,6 +2773,10 @@ void reader_data_t::handle_readline_command(readline_cmd_t c, readline_loop_stat
 
                 set_command_line_and_position(&command_line, L"", 0);
                 s_reset_abandoning_line(&screen, termsize_last().width - command_line.size());
+
+                // Post fish_cancel, allowing it to fire.
+                signal_clear_cancel();
+                event_fire_generic(parser(), L"fish_cancel");
             }
             break;
         }
diff --git a/tests/pexpects/cancel_event.py b/tests/pexpects/cancel_event.py
new file mode 100644
index 000000000..c68909974
--- /dev/null
+++ b/tests/pexpects/cancel_event.py
@@ -0,0 +1,23 @@
+#!/usr/bin/env python3
+import os
+from pexpect_helper import SpawnedProc
+import signal
+
+sp = SpawnedProc()
+send, sendline, sleep, expect_str, expect_prompt = sp.send, sp.sendline, sp.sleep, sp.expect_str, sp.expect_prompt
+expect_prompt()
+
+# Verify that cancel-commandline does what we expect - see #7384.
+send("not executed")
+sleep(0.05)
+os.kill(sp.spawn.pid, signal.SIGINT)
+sp.expect_str("not executed^C")
+expect_prompt(increment=False)
+
+sendline("function cancelhandler --on-event fish_cancel ; echo yay cancelled ; end")
+expect_prompt()
+send("still not executed")
+sleep(0.05)
+os.kill(sp.spawn.pid, signal.SIGINT)
+expect_str("still not executed^C")
+expect_prompt("yay cancelled", increment=False)