diff --git a/src/vs/workbench/contrib/chat/browser/actions/chatExecuteActions.ts b/src/vs/workbench/contrib/chat/browser/actions/chatExecuteActions.ts
index a9e08c350c5..0fd03576d08 100644
--- a/src/vs/workbench/contrib/chat/browser/actions/chatExecuteActions.ts
+++ b/src/vs/workbench/contrib/chat/browser/actions/chatExecuteActions.ts
@@ -39,6 +39,7 @@ import { getEditingSessionContext } from '../chatEditing/chatEditingActions.js';
 import { ctxHasEditorModification, ctxHasRequestInProgress, ctxIsGlobalEditingSession } from '../chatEditing/chatEditingEditorContextKeys.js';
 import { ACTION_ID_NEW_CHAT, CHAT_CATEGORY, clearChatSessionPreservingType, handleCurrentEditingSession, handleModeSwitch } from './chatActions.js';
 import { CreateRemoteAgentJobAction } from './chatContinueInAction.js';
+import { CTX_HOVER_MODE } from '../../../inlineChat/common/inlineChat.js';
 
 export interface IVoiceChatExecuteActionContext {
 	readonly disableTimeout?: boolean;
@@ -859,6 +860,7 @@ export class CancelAction extends Action2 {
 				when: ContextKeyExpr.and(
 					ctxIsGlobalEditingSession.negate(),
 					ctxHasRequestInProgress,
+					CTX_HOVER_MODE.negate(),
 				),
 				order: 4,
 				group: 'navigation',
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChat.contribution.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChat.contribution.ts
index def506dfd1a..2220f7d1474 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChat.contribution.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChat.contribution.ts
@@ -29,6 +29,7 @@ registerEditorContribution(InlineChatController.ID, InlineChatController, Editor
 registerAction2(InlineChatActions.KeepSessionAction2);
 registerAction2(InlineChatActions.UndoSessionAction2);
 registerAction2(InlineChatActions.UndoAndCloseSessionAction2);
+registerAction2(InlineChatActions.CancelSessionAction);
 
 // --- browser
 
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts
index 882525d9900..3007bac0d91 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts
@@ -386,6 +386,31 @@ export class UndoAndCloseSessionAction2 extends KeepOrUndoSessionAction {
 	}
 }
 
+export class CancelSessionAction extends KeepOrUndoSessionAction {
+
+	constructor() {
+		super(false, {
+			id: 'inlineChat2.cancel',
+			title: localize2('cancel', "Cancel"),
+			precondition: ContextKeyExpr.and(CTX_INLINE_CHAT_VISIBLE, ctxHasRequestInProgress),
+			keybinding: [{
+				when: ContextKeyExpr.or(
+					EditorContextKeys.focus,
+					ChatContextKeys.inputHasFocus,
+				),
+				weight: KeybindingWeight.WorkbenchContrib + 1,
+				primary: KeyCode.Escape,
+			}],
+			menu: [{
+				id: MenuId.ChatEditorInlineExecute,
+				group: 'navigation',
+				order: 100,
+				when: ctxHasRequestInProgress
+			}]
+		});
+	}
+}
+
 export class SubmitInlineChatInputAction extends AbstractInlineChatAction {
 
 	constructor() {
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts
index 8fd374d6ac3..8cbb1326de4 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatController.ts
@@ -151,6 +151,7 @@ export class InlineChatController implements IEditorContribution {
 		@ILanguageModelsService private readonly _languageModelService: ILanguageModelsService,
 		@ILogService private readonly _logService: ILogService,
 		@IChatEditingService private readonly _chatEditingService: IChatEditingService,
+		@IChatService private readonly _chatService: IChatService,
 	) {
 		const editorObs = observableCodeEditor(_editor);
 
@@ -599,6 +600,7 @@ export class InlineChatController implements IEditorContribution {
 		if (!session) {
 			return;
 		}
+		this._chatService.cancelCurrentRequestForSession(session.chatModel.sessionResource);
 		await session.editingSession.reject();
 		session.dispose();
 	}
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
index 2a997e1555f..486d0bc4442 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
@@ -36,7 +36,6 @@ import { IConfigurationService } from '../../../../platform/configuration/common
 import { getSimpleEditorOptions } from '../../codeEditor/browser/simpleEditorOptions.js';
 import { PlaceholderTextContribution } from '../../../../editor/contrib/placeholderText/browser/placeholderTextContribution.js';
 import { IInlineChatSession2 } from './inlineChatSessionService.js';
-import { CancelChatActionId } from '../../chat/browser/actions/chatExecuteActions.js';
 import { assertType } from '../../../../base/common/types.js';
 
 /**
@@ -476,7 +475,7 @@ export class InlineChatSessionOverlayWidget extends Disposable {
 			},
 			menuOptions: { renderShortTitle: true },
 			actionViewItemProvider: (action, options) => {
-				const primaryActions = [CancelChatActionId, 'inlineChat2.keep'];
+				const primaryActions = ['inlineChat2.cancel', 'inlineChat2.keep'];
 				const labeledActions = primaryActions.concat(['inlineChat2.undo']);
 
 				if (!labeledActions.includes(action.id)) {