diff --git a/src/browser/services/SelectionService.test.ts b/src/browser/services/SelectionService.test.ts
index 67158def..9213e8f8 100644
--- a/src/browser/services/SelectionService.test.ts
+++ b/src/browser/services/SelectionService.test.ts
@@ -496,5 +496,19 @@ describe('SelectionService', () => {
       assert.isFalse(selectionService.areCoordsInSelection([2, 1], [2, 0], [2, 1]));
     });
   });
+
+  describe('onSelectionChange', () => {
+    it('should not fire when setting model properties directly', () => {
+      buffer.lines.set(0, stringToRow('foo bar'));
+
+      let eventFired = false;
+      selectionService.onSelectionChange(() => { eventFired = true; });
+
+      selectionService.model.selectionStart = [0, 0];
+      selectionService.model.selectionEnd = undefined;
+
+      assert.isFalse(eventFired);
+    });
+  });
 });
 
diff --git a/src/browser/services/SelectionService.ts b/src/browser/services/SelectionService.ts
index 39d666de..6abd5fb9 100644
--- a/src/browser/services/SelectionService.ts
+++ b/src/browser/services/SelectionService.ts
@@ -532,6 +532,9 @@ export class SelectionService extends Disposable implements ISelectionService {
    * @param event The mouse event.
    */
   private _handleSingleClick(event: MouseEvent): void {
+    // Track if there was a selection before clearing
+    const hadSelection = this.hasSelection;
+
     this._model.selectionStartLength = 0;
     this._model.isSelectAllActive = false;
     this._activeSelectionMode = this.shouldColumnSelect(event) ? SelectionMode.COLUMN : SelectionMode.NORMAL;
@@ -543,6 +546,11 @@ export class SelectionService extends Disposable implements ISelectionService {
     }
     this._model.selectionEnd = undefined;
 
+    // Fire selection change event if a selection was cleared
+    if (hadSelection) {
+      this._fireOnSelectionChange(this._model.finalSelectionStart, this._model.finalSelectionEnd, false);
+    }
+
     // Ensure the line exists
     const line = this._bufferService.buffer.lines.get(this._model.selectionStart[1]);
     if (!line) {
diff --git a/test/playwright/Terminal.test.ts b/test/playwright/Terminal.test.ts
index f03d687d..5deea6d1 100644
--- a/test/playwright/Terminal.test.ts
+++ b/test/playwright/Terminal.test.ts
@@ -374,6 +374,53 @@ test.describe('API Integration Tests', () => {
       await pollFor(ctx.page, `window.callCount`, 2);
     });
 
+    test('onSelectionChange should fire on mousedown when clearing selection', async () => {
+      await openTerminal(ctx);
+      await ctx.proxy.write('foo bar baz');
+      await ctx.page.evaluate(`
+        window.callCount = 0;
+        window.term.onSelectionChange(() => window.callCount++);
+      `);
+      await ctx.page.evaluate(`window.term.selectAll()`);
+      await pollFor(ctx.page, `window.callCount`, 1);
+
+      const termCoords: any = await ctx.page.evaluate(`
+        (function() {
+          const rect = window.term.element.getBoundingClientRect();
+          const dim = window.term.dimensions;
+          return { left: rect.left, top: rect.top, cellWidth: dim.css.cell.width, cellHeight: dim.css.cell.height };
+        })();
+      `);
+      const x = termCoords.left + termCoords.cellWidth * 5;
+      const y = termCoords.top + termCoords.cellHeight * 0.5;
+      await ctx.page.mouse.click(x, y);
+
+      await pollFor(ctx.page, `window.callCount`, 2);
+    });
+
+    test('onSelectionChange should not fire on mousedown when no prior selection', async () => {
+      await openTerminal(ctx);
+      await ctx.proxy.write('foo bar baz');
+      await ctx.page.evaluate(`
+        window.callCount = 0;
+        window.term.onSelectionChange(() => window.callCount++);
+      `);
+      await pollFor(ctx.page, `window.callCount`, 0);
+
+      const termCoords: any = await ctx.page.evaluate(`
+        (function() {
+          const rect = window.term.element.getBoundingClientRect();
+          const dim = window.term.dimensions;
+          return { left: rect.left, top: rect.top, cellWidth: dim.css.cell.width, cellHeight: dim.css.cell.height };
+        })();
+      `);
+      const x = termCoords.left + termCoords.cellWidth * 5;
+      const y = termCoords.top + termCoords.cellHeight * 0.5;
+      await ctx.page.mouse.click(x, y);
+
+      await pollFor(ctx.page, `window.callCount`, 0);
+    });
+
     test('onRender', async () => {
       await openTerminal(ctx);
       await timeout(20); // Ensure all init events are fired