diff --git a/src/vs/workbench/contrib/terminal/browser/terminalTypeAheadAddon.ts b/src/vs/workbench/contrib/terminal/browser/terminalTypeAheadAddon.ts
index e30a8f384bf97a52e059cccb32394b3ad138709a..5e15cd18e0e6913389d422413a1f54d1f6147a59 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalTypeAheadAddon.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalTypeAheadAddon.ts
@@ -79,8 +79,12 @@ class Cursor implements ICoordinate {
 		this._baseY = buffer.baseY;
 	}
 
+	public getLine() {
+		return this.buffer.getLine(this._y + this._baseY);
+	}
+
 	public getCell(loadInto?: IBufferCell) {
-		return this.buffer.getLine(this._y + this._baseY)?.getCell(this._x, loadInto);
+		return this.getLine()?.getCell(this._x, loadInto);
 	}
 
 	public moveTo(coordinate: ICoordinate) {
@@ -403,17 +407,22 @@ class BackspacePrediction implements IPrediction {
 		pos: ICoordinate;
 		oldAttributes: string;
 		oldChar: string;
+		eol: boolean;
 	};
 
 	constructor(private readonly terminal: Terminal) { }
 
 	public apply(_: IBuffer, cursor: Cursor) {
+		// at eol if everything to the right is whitespace (zsh will emit a "clear line" code in this case)
+		// todo: can be optimized if `getTrimmedLength` is exposed from xterm
+		const eol = !cursor.getLine()?.translateToString(true, cursor.x);
+		const move = cursor.shift(-1);
 		const cell = cursor.getCell();
 		this.appliedAt = cell
-			? { pos: cursor.coordinate, oldAttributes: attributesToSeq(cell), oldChar: cell.getChars() }
-			: { pos: cursor.coordinate, oldAttributes: '', oldChar: '' };
+			? { eol, pos: cursor.coordinate, oldAttributes: attributesToSeq(cell), oldChar: cell.getChars() }
+			: { eol, pos: cursor.coordinate, oldAttributes: '', oldChar: '' };
 
-		return cursor.shift(-1) + DELETE_CHAR;
+		return move + DELETE_CHAR;
 	}
 
 	public rollback(cursor: Cursor) {
@@ -434,8 +443,7 @@ class BackspacePrediction implements IPrediction {
 	}
 
 	public matches(input: StringReader) {
-		const isEOL = this.appliedAt?.oldChar === '';
-		if (isEOL) {
+		if (this.appliedAt?.eol) {
 			const r1 = input.eatGradually(`\b${CSI}K`);
 			if (r1 !== MatchResult.Failure) {
 				return r1;
diff --git a/src/vs/workbench/contrib/terminal/test/browser/terminalTypeahead.test.ts b/src/vs/workbench/contrib/terminal/test/browser/terminalTypeahead.test.ts
index 0f152766dde63877f3c79063aa2cb4c7c40f86a0..2d91a7f5093c38f17a4db03554420b425555cc43 100644
--- a/src/vs/workbench/contrib/terminal/test/browser/terminalTypeahead.test.ts
+++ b/src/vs/workbench/contrib/terminal/test/browser/terminalTypeahead.test.ts
@@ -213,6 +213,16 @@ suite('Workbench - Terminal Typeahead', () => {
 			assert.strictEqual(addon.stats?.accuracy, 1);
 		});
 
+		test('restores old character after invalid backspace', () => {
+			const t = createMockTerminal({ lines: ['hel|lo'] });
+			addon.activate(t.terminal);
+			(addon as any).lastRow = { y: 1, startingX: 1 };
+			t.onData('\x7F');
+			t.expectWritten(`${CSI}2;4H${CSI}X`);
+			expectProcessed('x', `${CSI}?25l${CSI}0ml${CSI}2;4H${CSI}0mx${CSI}?25h`);
+			assert.strictEqual(addon.stats?.accuracy, 0);
+		});
+
 		test('waits for validation before deleting to left of cursor', () => {
 			const t = createMockTerminal({ lines: ['hello|'] });
 			addon.activate(t.terminal);
@@ -332,6 +342,10 @@ function createMockTerminal({ lines, cursorAttrs }: {
 						return {
 							length: s.length,
 							getCell: (x: number) => mockCell(s[x - 1] || ''),
+							translateToString: (trim: boolean, start = 0, end = s.length) => {
+								const out = s.slice(start, end);
+								return trim ? out.trimRight() : out;
+							},
 						};
 					},
 				}