diff --git a/CHANGELOG.md b/CHANGELOG.md
index 179e368..139df1d 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,6 +1,6 @@
 # Changes
 
-## [1.8.5] - 2025-02-11
+## [1.8.5] - 2025-02-12
 
 * Fix handle for REFUSED_STREAM reset
 
diff --git a/src/dispatcher.rs b/src/dispatcher.rs
index acfc602..177b47c 100644
--- a/src/dispatcher.rs
+++ b/src/dispatcher.rs
@@ -7,7 +7,7 @@ use ntex_util::{spawn, HashMap};
 
 use crate::connection::{Connection, RecvHalfConnection};
 use crate::control::{Control, ControlAck};
-use crate::error::{ConnectionError, OperationError, StreamErrorInner};
+use crate::error::{ConnectionError, OperationError, StreamError, StreamErrorInner};
 use crate::frame::{Frame, GoAway, Ping, Reason, Reset, StreamId};
 use crate::{codec::Codec, message::Message, stream::StreamRef};
 
@@ -71,14 +71,18 @@ where
             }
             Err(Either::Right(err)) => {
                 let (stream, kind) = err.into_inner();
-                log::error!(
-                    "{}: Failed to handle message, err: {:?} stream: {:?}",
-                    stream.tag(),
-                    kind,
-                    stream
-                );
 
-                stream.set_failed_stream(kind.into());
+                if !matches!(kind, StreamError::Reset(_)) {
+                    log::error!(
+                        "{}: Failed to handle frame, err: {:?} stream: {:?}",
+                        stream.tag(),
+                        kind,
+                        stream
+                    );
+                } else {
+                    stream.set_failed_stream(kind.into());
+                }
+
                 self.connection
                     .encode(Reset::new(stream.id(), kind.reason()));
                 publish(Message::error(kind, &stream), stream, &self.inner, ctx).await
diff --git a/src/stream.rs b/src/stream.rs
index 68acabc..4117123 100644
--- a/src/stream.rs
+++ b/src/stream.rs
@@ -183,14 +183,7 @@ impl StreamState {
         self.review_state();
     }
 
-    fn set_failed(&self) {
-        self.insert_flag(StreamFlags::FAILED);
-        self.send_cap.wake();
-        self.send_reset.wake();
-    }
-
     fn reset_stream(&self, reason: Option<Reason>) {
-        self.set_failed();
         self.recv.set(HalfState::Closed(reason));
         self.send.set(HalfState::Closed(None));
         if let Some(reason) = reason {
@@ -200,7 +193,6 @@ impl StreamState {
     }
 
     fn remote_reset_stream(&self, reason: Reason) {
-        self.set_failed();
         self.recv.set(HalfState::Closed(None));
         self.send.set(HalfState::Closed(Some(reason)));
         self.error.set(Some(OperationError::RemoteReset(reason)));
@@ -208,7 +200,6 @@ impl StreamState {
     }
 
     fn failed(&self, err: OperationError) {
-        self.set_failed();
         if !self.recv.get().is_closed() {
             self.recv.set(HalfState::Closed(None));
         }
@@ -216,6 +207,7 @@ impl StreamState {
             self.send.set(HalfState::Closed(None));
         }
         self.error.set(Some(err));
+        self.insert_flag(StreamFlags::FAILED);
         self.review_state();
     }
 
@@ -246,11 +238,12 @@ impl StreamState {
 
             if let HalfState::Closed(reason) = self.send.get() {
                 // stream is closed
-                if reason.is_some() {
+                if let Some(reason) = reason {
                     log::trace!(
-                        "{}: {:?} is closed with local reset, dropping stream",
+                        "{}: {:?} is closed with remote reset {:?}, dropping stream",
                         self.tag(),
-                        self.id
+                        self.id,
+                        reason
                     );
                 } else {
                     log::trace!(
@@ -259,6 +252,7 @@ impl StreamState {
                         self.id
                     );
                 }
+                self.send_cap.wake();
                 self.con.drop_stream(self.id);
             }
         }
diff --git a/tests/connection.rs b/tests/connection.rs
index 1e801c1..35f30c9 100644
--- a/tests/connection.rs
+++ b/tests/connection.rs
@@ -326,6 +326,42 @@ async fn test_goaway_on_overflow() {
     assert!(io.recv(&codec).await.unwrap().is_none());
 }
 
+#[ntex::test]
+async fn test_stream_cancel() {
+    let srv = start_server();
+    let addr = srv.addr();
+
+    let io = connect(addr).await;
+    let codec = Codec::default();
+    let _ = io.with_write_buf(|buf| buf.extend_from_slice(&PREFACE));
+
+    let settings = frame::Settings::default();
+    io.encode(settings.into(), &codec).unwrap();
+
+    // settings & window
+    let _ = io.recv(&codec).await;
+    let _ = io.recv(&codec).await;
+    let _ = io.recv(&codec).await;
+
+    let id = frame::StreamId::CLIENT;
+    let pseudo = frame::PseudoHeaders {
+        method: Some(Method::GET),
+        scheme: Some("HTTPS".into()),
+        authority: Some("localhost".into()),
+        path: Some("/".into()),
+        ..Default::default()
+    };
+
+    let hdrs = frame::Headers::new(id, pseudo.clone(), HeaderMap::new(), false);
+    io.send(hdrs.into(), &codec).await.unwrap();
+    io.send(frame::Reset::new(id, frame::Reason::CANCEL).into(), &codec)
+        .await
+        .unwrap();
+
+    let reset = get_reset(io.recv(&codec).await.unwrap().unwrap());
+    assert!(reset.reason() == frame::Reason::CANCEL);
+}
+
 #[ntex::test]
 async fn test_goaway_on_reset() {
     let srv = start_server();