diff --git a/crates/engine/src/guard.rs b/crates/engine/src/guard.rs
index 57cc575fa..41b028f08 100644
--- a/crates/engine/src/guard.rs
+++ b/crates/engine/src/guard.rs
@@ -36,6 +36,7 @@ impl Session {
     /// Run command `id` (`f`) inside the guard.
     pub(crate) fn guarded(&mut self, id: &str, f: impl FnOnce(&mut Session) -> Result<Value>) -> Result<Value> {
         let before = self.active().map(|d| (d.uid, d.doc.clone(), d.selection.clone(), d.revision));
+        let in_undo_step = self.in_undo_step;
         match catch_unwind(AssertUnwindSafe(|| f(self))) {
             Ok(r) => r,
             Err(payload) => {
@@ -54,8 +55,8 @@ impl Session {
                 {
                     log::error!("crash recovery save after `{id}` failed: {e}");
                 }
-                // The command never got to say that it is done.
-                self.in_undo_step = false;
+                // The command never got to say that it is done; a command that ran it goes on.
+                self.in_undo_step = in_undo_step;
                 log::error!("command `{id}` panicked: {msg}");
                 Err(EngineError::Internal(id.to_string(), msg))
             }
@@ -103,4 +104,24 @@ mod tests {
         s.execute("frame.create", &json!({"rect": [36, 36, 200, 200]})).unwrap();
         assert_eq!(s.active().unwrap().history.undo.len(), 1);
     }
+
+    /// A command that panics inside an undoable one leaves that one running: what it runs next
+    /// is still part of its undo step.
+    #[test]
+    fn a_panic_in_a_command_run_by_another_leaves_the_outer_undo_step() {
+        let mut s = Session::new();
+        s.execute("file.new", &json!({})).unwrap();
+        // An undoable command that runs one that panics, carries on and runs another.
+        s.guarded("test.outer", |s| {
+            s.in_undo_step = true;
+            assert!(s.guarded("test.panic", |_| panic!("boom")).is_err());
+            let made = s.execute("frame.create", &json!({"rect": [36, 36, 200, 200]}));
+            s.in_undo_step = false;
+            made
+        })
+        .unwrap();
+        let st = s.active().unwrap();
+        assert_eq!(st.doc.spreads[0].items.len(), 1);
+        assert_eq!(st.history.undo.len(), 0, "the frame is left to the outer command's step");
+    }
 }