diff --git a/cli/azd/extensions/azure.ai.agents/internal/cmd/run.go b/cli/azd/extensions/azure.ai.agents/internal/cmd/run.go
index 272e618a278..84dff13c746 100644
--- a/cli/azd/extensions/azure.ai.agents/internal/cmd/run.go
+++ b/cli/azd/extensions/azure.ai.agents/internal/cmd/run.go
@@ -38,6 +38,7 @@ import (
 const (
 	agentInspectorExtensionID     = "azure.ai.inspector"
 	agentInspectorReadyPollPeriod = 250 * time.Millisecond
+	windowsControlCExitCode       = 0xC000013A
 	// defaultInspectorUIPort mirrors the default UI port of the
 	// azure.ai.inspector extension. The inspector extension remains the source
 	// of truth for the actual default: when --inspector-port is unset we do not
@@ -364,11 +365,12 @@ func runRun(ctx context.Context, flags *runFlags, noPrompt bool) error {
 
 	err = proc.Wait()
 	close(done)
+	wasCanceled := ctx.Err() != nil || isAgentProcessCanceled(err)
 	cancel()
 	<-nextDone
 
 	// Suppress the noisy "signal: interrupt" error on Ctrl+C
-	if ctx.Err() != nil {
+	if wasCanceled {
 		fmt.Println("Agent stopped.")
 		return nil
 	}
@@ -379,6 +381,22 @@ func runRun(ctx context.Context, flags *runFlags, noPrompt bool) error {
 	return nil
 }
 
+func isAgentProcessCanceled(err error) bool {
+	exitErr, ok := errors.AsType[*exec.ExitError](err)
+	if !ok {
+		return false
+	}
+
+	if waitStatus, ok := exitErr.Sys().(syscall.WaitStatus); ok {
+		switch waitStatus.Signal() {
+		case syscall.SIGINT, syscall.SIGTERM:
+			return true
+		}
+	}
+
+	return uint32(exitErr.ExitCode()) == windowsControlCExitCode //nolint:gosec // preserve the Windows exit code bit pattern
+}
+
 func handleInspectorAutoLaunch(
 	ctx context.Context,
 	workflow azdext.WorkflowServiceClient,
diff --git a/cli/azd/extensions/azure.ai.agents/internal/cmd/run_test.go b/cli/azd/extensions/azure.ai.agents/internal/cmd/run_test.go
index f94f6504498..0e8447e139a 100644
--- a/cli/azd/extensions/azure.ai.agents/internal/cmd/run_test.go
+++ b/cli/azd/extensions/azure.ai.agents/internal/cmd/run_test.go
@@ -529,6 +529,109 @@ func TestRunRun_PortCollisionDoesNotClearStoredSession(t *testing.T) {
 	}
 }
 
+func TestRunRun_ReturnsAgentProcessExitError(t *testing.T) {
+	err := runRunWithHelperProcess(t, "exit", "17")
+	if err == nil || !strings.Contains(err.Error(), "agent exited: exit status 17") {
+		t.Fatalf("runRun() error = %v, want agent exit status 17", err)
+	}
+}
+
+func TestRunRun_TreatsInterruptExitAsCancellation(t *testing.T) {
+	if err := runRunWithHelperProcess(t, "interrupt", ""); err != nil {
+		t.Fatalf("runRun() error = %v, want nil for interrupt exit", err)
+	}
+}
+
+func runRunWithHelperProcess(t *testing.T, mode string, exitCode string) error {
+	t.Helper()
+
+	projectDir := t.TempDir()
+	projectServer := &helpersProjectServer{
+		project: &azdext.ProjectConfig{
+			Name: "test-project",
+			Path: projectDir,
+			Services: map[string]*azdext.ServiceConfig{
+				"agent": {
+					Name:         "agent",
+					Host:         AiAgentHost,
+					RelativePath: ".",
+				},
+			},
+		},
+	}
+
+	grpcServer := grpc.NewServer()
+	azdext.RegisterProjectServiceServer(grpcServer, projectServer)
+	azdext.RegisterUserConfigServiceServer(grpcServer, newInvokeUserConfigServer())
+
+	listener, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("listen: %v", err)
+	}
+	go func() { _ = grpcServer.Serve(listener) }()
+	t.Cleanup(func() {
+		grpcServer.Stop()
+		_ = listener.Close()
+	})
+	t.Setenv("AZD_SERVER", listener.Addr().String())
+	t.Setenv("AZD_AGENT_RUN_TEST_HELPER_MODE", mode)
+	t.Setenv("AZD_AGENT_RUN_TEST_EXIT_CODE", exitCode)
+
+	agentListener, err := net.Listen("tcp", "127.0.0.1:0")
+	if err != nil {
+		t.Fatalf("reserve agent port: %v", err)
+	}
+	agentPort := agentListener.Addr().(*net.TCPAddr).Port
+	if err := agentListener.Close(); err != nil {
+		t.Fatalf("release agent port: %v", err)
+	}
+
+	startCommand := fmt.Sprintf(`"%s" -test.run=^TestRunRunHelperProcess$`, os.Args[0])
+	return runRun(t.Context(), &runFlags{
+		name:         "agent",
+		port:         agentPort,
+		startCommand: startCommand,
+		noClient:     true,
+	}, true)
+}
+
+func TestRunRunHelperProcess(t *testing.T) {
+	mode := os.Getenv("AZD_AGENT_RUN_TEST_HELPER_MODE")
+	if mode == "" {
+		return
+	}
+
+	if mode == "interrupt" {
+		if runtime.GOOS == "windows" {
+			exitCode := uint32(windowsControlCExitCode)
+			os.Exit(int(exitCode)) //nolint:gosec // preserve the Windows exit code bit pattern
+		}
+
+		time.AfterFunc(5*time.Second, func() {
+			os.Exit(99)
+		})
+		proc, err := os.FindProcess(os.Getpid())
+		if err != nil {
+			t.Fatalf("find helper process: %v", err)
+		}
+		if err := proc.Signal(os.Interrupt); err != nil {
+			t.Fatalf("interrupt helper process: %v", err)
+		}
+		select {}
+	}
+
+	exitCodeValue := os.Getenv("AZD_AGENT_RUN_TEST_EXIT_CODE")
+	if exitCodeValue == "" {
+		t.Fatalf("missing helper exit code for mode %q", mode)
+	}
+
+	exitCode, err := strconv.Atoi(exitCodeValue)
+	if err != nil {
+		t.Fatalf("parse helper exit code: %v", err)
+	}
+	os.Exit(exitCode)
+}
+
 func TestWarnInspectorPortIssues(t *testing.T) {
 	t.Parallel()