diff --git a/src/nvim/insexpand.c b/src/nvim/insexpand.c
index f5799ddfa9..8a1f80776d 100644
--- a/src/nvim/insexpand.c
+++ b/src/nvim/insexpand.c
@@ -6054,6 +6054,7 @@ static int ins_compl_start(void)
   can_si = false;
   can_si_back = false;
   if (stop_arrow() == FAIL) {
+    did_ai = save_did_ai;
     return FAIL;
   }
 
@@ -6148,6 +6149,7 @@ static int ins_compl_start(void)
     API_CLEAR_STRING(compl_pattern);
     API_CLEAR_STRING(compl_orig_text);
     kv_destroy(compl_orig_extmarks);
+    did_ai = save_did_ai;
     return FAIL;
   }
 
@@ -6162,6 +6164,7 @@ static int ins_compl_start(void)
     ui_flush();
   }
 
+  did_ai = save_did_ai;
   return OK;
 }
 
diff --git a/test/old/testdir/test_edit.vim b/test/old/testdir/test_edit.vim
index 4cc529702b..59517726f0 100644
--- a/test/old/testdir/test_edit.vim
+++ b/test/old/testdir/test_edit.vim
@@ -466,6 +466,33 @@ func Test_autoindent_remove_indent()
   call delete('Xarifile')
 endfunc
 
+" Test for autoindent removing indent when insert mode is stopped and
+" autocomplete is enabled.  Some parts of the code is exercised only when
+" interactive mode is used. So use Vim in a terminal.
+func Test_autoindent_remove_indent_with_autocomplete()
+  CheckRunVimInTerminal
+  let buf = RunVimInTerminal('-N Xarifile', {'rows': 6, 'cols' : 20})
+  call TermWait(buf)
+  call term_sendkeys(buf, ":set autoindent autocomplete\n")
+  " leaving insert mode in a new line with indent added by autoindent, should
+  " remove the indent.
+  call term_sendkeys(buf, "i\<Tab>foo\<CR>\<Esc>")
+  " Need to delay for some time, otherwise the code in getchar.c will not be
+  " exercised.
+  call TermWait(buf, 50)
+  " when a line is wrapped and the cursor is at the start of the second line,
+  " leaving insert mode, should move the cursor back to the first line.
+  call term_sendkeys(buf, "o" .. repeat('x', 20) .. "\<Esc>")
+  " Need to delay for some time, otherwise the code in getchar.c will not be
+  " exercised.
+  call TermWait(buf, 50)
+  call term_sendkeys(buf, ":w\n")
+  call TermWait(buf)
+  call StopVimInTerminal(buf)
+  call assert_equal(["\tfoo", '', repeat('x', 20)], readfile('Xarifile'))
+  call delete('Xarifile')
+endfunc
+
 func Test_edit_esc_after_CR_autoindent()
   new
   setlocal autoindent