diff --git a/src/nvim/os/shell.c b/src/nvim/os/shell.c
index 4cc9188d16..71dce1783a 100644
--- a/src/nvim/os/shell.c
+++ b/src/nvim/os/shell.c
@@ -1254,7 +1254,8 @@ static size_t write_output(char *output, size_t remaining, bool eof)
   size_t off = 0;
   while (off < remaining) {
     // CRLF
-    if (output[off] == CAR && output[off + 1] == NL) {
+    // special case: for binary mode, don't remove CR.
+    if (output[off] == CAR && output[off + 1] == NL && !curbuf->b_p_bin) {
       output[off] = NUL;
       ml_append(curwin->w_cursor.lnum++, output, (int)off + 1, false);
       size_t skip = off + 2;
@@ -1262,7 +1263,7 @@ static size_t write_output(char *output, size_t remaining, bool eof)
       remaining -= skip;
       off = 0;
       continue;
-    } else if (output[off] == CAR || output[off] == NL) {
+    } else if ((output[off] == CAR && !curbuf->b_p_bin) || output[off] == NL) {
       // Insert the line
       output[off] = NUL;
       ml_append(curwin->w_cursor.lnum++, output, (int)off + 1, false);
diff --git a/test/functional/vimscript/system_spec.lua b/test/functional/vimscript/system_spec.lua
index 9a0df7acb7..d4e085cf9f 100644
--- a/test/functional/vimscript/system_spec.lua
+++ b/test/functional/vimscript/system_spec.lua
@@ -567,6 +567,25 @@ end)
 describe('shell :!', function()
   before_each(clear)
 
+  it('preserves newlines (including CR) in binary-mode buffer #39424', function()
+    local fname = 'Xbinaryfile'
+    finally(function()
+      os.remove(fname)
+    end)
+
+    t.write_file(fname, '\r\n', true)
+    command('edit ++bin ' .. fname)
+    command('%!cat')
+    command('w')
+    eq('\r\n', t.read_file(fname))
+
+    t.write_file(fname, '\r', true)
+    command('edit ++bin ' .. fname)
+    command('%!cat')
+    command('w')
+    eq('\r', t.read_file(fname))
+  end)
+
   it(':{range}! works when the first char is NUL #34163', function()
     api.nvim_buf_set_lines(0, 0, -1, true, { '\0hello', 'hello' })
     command('%!cat')