diff --git a/src/vs/platform/terminal/common/capabilities/commandDetection/promptInputModel.ts b/src/vs/platform/terminal/common/capabilities/commandDetection/promptInputModel.ts
index 328f5f941ef..a9a3f6a90d7 100644
--- a/src/vs/platform/terminal/common/capabilities/commandDetection/promptInputModel.ts
+++ b/src/vs/platform/terminal/common/capabilities/commandDetection/promptInputModel.ts
@@ -113,6 +113,7 @@ export class PromptInputModel extends Disposable implements IPromptInputModel {
 		onCommandStart: Event<ITerminalCommand>,
 		onCommandStartChanged: Event<void>,
 		onCommandExecuted: Event<ITerminalCommand>,
+		onCommandFinished: Event<ITerminalCommand>,
 		@ILogService private readonly _logService: ILogService
 	) {
 		super();
@@ -127,6 +128,7 @@ export class PromptInputModel extends Disposable implements IPromptInputModel {
 		this._register(onCommandStart(e => this._handleCommandStart(e as { marker: IMarker })));
 		this._register(onCommandStartChanged(() => this._handleCommandStartChanged()));
 		this._register(onCommandExecuted(() => this._handleCommandExecuted()));
+		this._register(onCommandFinished(() => this._handleCommandFinished()));
 
 		this._register(this.onDidStartInput(() => this._logCombinedStringIfTrace('PromptInputModel#onDidStartInput')));
 		this._register(this.onDidChangeInput(() => this._logCombinedStringIfTrace('PromptInputModel#onDidChangeInput')));
@@ -261,6 +263,13 @@ export class PromptInputModel extends Disposable implements IPromptInputModel {
 		this._onDidChangeInput.fire(event);
 	}
 
+	private _handleCommandFinished() {
+		// Clear the prompt input value when command finishes to prepare for the next command
+		// This prevents runCommand from detecting leftover text and sending ^C unnecessarily
+		this._value = '';
+		this._onDidChangeInput.fire(this._createStateObject());
+	}
+
 	@throttle(0)
 	private _sync() {
 		try {
diff --git a/src/vs/platform/terminal/common/capabilities/commandDetectionCapability.ts b/src/vs/platform/terminal/common/capabilities/commandDetectionCapability.ts
index e52d286d20e..259fc6ef00c 100644
--- a/src/vs/platform/terminal/common/capabilities/commandDetectionCapability.ts
+++ b/src/vs/platform/terminal/common/capabilities/commandDetectionCapability.ts
@@ -84,7 +84,7 @@ export class CommandDetectionCapability extends Disposable implements ICommandDe
 	) {
 		super();
 		this._currentCommand = new PartialTerminalCommand(this._terminal);
-		this._promptInputModel = this._register(new PromptInputModel(this._terminal, this.onCommandStarted, this.onCommandStartChanged, this.onCommandExecuted, this._logService));
+		this._promptInputModel = this._register(new PromptInputModel(this._terminal, this.onCommandStarted, this.onCommandStartChanged, this.onCommandExecuted, this.onCommandFinished, this._logService));
 
 		// Pull command line from the buffer if it was not set explicitly
 		this._register(this.onCommandExecuted(command => {
diff --git a/src/vs/platform/terminal/test/common/capabilities/commandDetection/promptInputModel.test.ts b/src/vs/platform/terminal/test/common/capabilities/commandDetection/promptInputModel.test.ts
index 64fe94b7ab9..e625ae66a9b 100644
--- a/src/vs/platform/terminal/test/common/capabilities/commandDetection/promptInputModel.test.ts
+++ b/src/vs/platform/terminal/test/common/capabilities/commandDetection/promptInputModel.test.ts
@@ -24,6 +24,7 @@ suite('PromptInputModel', () => {
 	let onCommandStart: Emitter<ITerminalCommand>;
 	let onCommandStartChanged: Emitter<void>;
 	let onCommandExecuted: Emitter<ITerminalCommand>;
+	let onCommandFinished: Emitter<ITerminalCommand>;
 
 	async function writePromise(data: string) {
 		await new Promise<void>(r => xterm.write(data, r));
@@ -37,6 +38,10 @@ suite('PromptInputModel', () => {
 		onCommandExecuted.fire(null!);
 	}
 
+	function fireCommandFinished() {
+		onCommandFinished.fire(null!);
+	}
+
 	function setContinuationPrompt(prompt: string) {
 		promptInputModel.setContinuationPrompt(prompt);
 	}
@@ -68,7 +73,8 @@ suite('PromptInputModel', () => {
 		onCommandStart = store.add(new Emitter());
 		onCommandStartChanged = store.add(new Emitter());
 		onCommandExecuted = store.add(new Emitter());
-		promptInputModel = store.add(new PromptInputModel(xterm, onCommandStart.event, onCommandStartChanged.event, onCommandExecuted.event, new NullLogService));
+		onCommandFinished = store.add(new Emitter());
+		promptInputModel = store.add(new PromptInputModel(xterm, onCommandStart.event, onCommandStartChanged.event, onCommandExecuted.event, onCommandFinished.event, new NullLogService));
 	});
 
 	test('basic input and execute', async () => {
@@ -138,6 +144,21 @@ suite('PromptInputModel', () => {
 		});
 	});
 
+	test('should clear value when command finishes', async () => {
+		await writePromise('$ ');
+		fireCommandStart();
+		await assertPromptInput('|');
+
+		await writePromise('echo hello');
+		await assertPromptInput('echo hello|');
+
+		fireCommandExecuted();
+		strictEqual(promptInputModel.value, 'echo hello');
+
+		fireCommandFinished();
+		strictEqual(promptInputModel.value, '');
+	});
+
 	test('cursor navigation', async () => {
 		await writePromise('$ ');
 		fireCommandStart();
diff --git a/src/vs/workbench/contrib/terminal/test/browser/xterm/recordings/rich/macos_zsh_omz_echo_3_times.ts b/src/vs/workbench/contrib/terminal/test/browser/xterm/recordings/rich/macos_zsh_omz_echo_3_times.ts
index 984e205d9a5..fb03eb65f07 100644
--- a/src/vs/workbench/contrib/terminal/test/browser/xterm/recordings/rich/macos_zsh_omz_echo_3_times.ts
+++ b/src/vs/workbench/contrib/terminal/test/browser/xterm/recordings/rich/macos_zsh_omz_echo_3_times.ts
@@ -137,10 +137,6 @@ export const events = [
 		"type": "output",
 		"data": ""
 	},
-	{
-		"type": "promptInputChange",
-		"data": "echo a"
-	},
 	{
 		"type": "output",
 		"data": "\u001b]633;P;Cwd=/Users/tyriar/playground/test1\u0007\u001b]633;EnvSingleStart;0;448d50d0-70fe-4ab5-842e-132f3b1c159a;\u0007\u001b]633;EnvSingleEnd;448d50d0-70fe-4ab5-842e-132f3b1c159a;\u0007\r\u001b[0m\u001b[27m\u001b[24m\u001b[J\u001b]633;A\u0007tyriar@Mac test1 % \u001b]633;B\u0007\u001b[K\u001b[?2004h"
@@ -245,10 +241,6 @@ export const events = [
 		"type": "output",
 		"data": ""
 	},
-	{
-		"type": "promptInputChange",
-		"data": "echo b"
-	},
 	{
 		"type": "output",
 		"data": "\u001b]633;P;Cwd=/Users/tyriar/playground/test1\u0007\u001b]633;EnvSingleStart;0;448d50d0-70fe-4ab5-842e-132f3b1c159a;\u0007\u001b]633;EnvSingleEnd;448d50d0-70fe-4ab5-842e-132f3b1c159a;\u0007\r\u001b[0m\u001b[27m\u001b[24m\u001b[J\u001b]633;A\u0007tyriar@Mac test1 % \u001b]633;B\u0007\u001b[K\u001b[?2004h"
@@ -357,10 +349,6 @@ export const events = [
 		"type": "output",
 		"data": ""
 	},
-	{
-		"type": "promptInputChange",
-		"data": "echo c"
-	},
 	{
 		"type": "output",
 		"data": "\u001b]633;P;Cwd=/Users/tyriar/playground/test1\u0007\u001b]633;EnvSingleStart;0;448d50d0-70fe-4ab5-842e-132f3b1c159a;\u0007\u001b]633;EnvSingleEnd;448d50d0-70fe-4ab5-842e-132f3b1c159a;\u0007\r\u001b[0m\u001b[27m\u001b[24m\u001b[J\u001b]633;A\u0007tyriar@Mac test1 % \u001b]633;B\u0007\u001b[K\u001b[?2004h"