diff --git a/src/nvim/ex_cmds2.c b/src/nvim/ex_cmds2.c
index 22dd51b249..cfd71a114e 100644
--- a/src/nvim/ex_cmds2.c
+++ b/src/nvim/ex_cmds2.c
@@ -223,12 +223,11 @@ void dialog_changed(buf_T *buf, bool checkall)
       }
     }
 
-    // restore to empty when write failed
+    // restore to empty when write failed or was cancelled
     if (empty_bufname) {
       buf->b_fname = NULL;
       XFREE_CLEAR(buf->b_ffname);
       XFREE_CLEAR(buf->b_sfname);
-      unchanged(buf, true, false);
     }
   } else if (ret == VIM_NO) {
     unchanged(buf, true, false);
diff --git a/test/old/testdir/test_buffer.vim b/test/old/testdir/test_buffer.vim
index 997a952a14..e71907ff39 100644
--- a/test/old/testdir/test_buffer.vim
+++ b/test/old/testdir/test_buffer.vim
@@ -344,6 +344,28 @@ func Test_goto_buf_with_confirm()
   close!
 endfunc
 
+" Test for issue #20132: when saving an unnamed buffer fails the modified
+" flag must be kept, otherwise the buffer is silently discarded.
+func Test_dialog_changed_keep_modified_on_write_fail()
+  CheckUnix
+  CheckNotGui
+  CheckFeature dialog_con
+  CheckNotFeature dialog_con_gui
+  CheckNotRoot
+
+  call writefile(['existing'], 'Untitled', 'D')
+  call setfperm('Untitled', 'r--r--r--')
+
+  new
+  call setline(1, 'test')
+  call feedkeys('y', 'L')
+  silent! confirm bdel
+  call assert_true(&modified)
+  call assert_equal(['existing'], readfile('Untitled'))
+
+  bw!
+endfunc
+
 " Test for splitting buffer with 'switchbuf'
 func Test_buffer_switchbuf()
   new Xswitchbuf