diff --git a/aioesphomeapi/client.py b/aioesphomeapi/client.py
index ddbf736..ff4db77 100644
--- a/aioesphomeapi/client.py
+++ b/aioesphomeapi/client.py
@@ -349,7 +349,7 @@ class APIClient:
         """Execute a coroutine and reset the _connection if it fails."""
         try:
             await coro
-        except Exception:  # pylint: disable=broad-except
+        except (Exception, asyncio.CancelledError):  # pylint: disable=broad-except
             self._connection = None
             raise
 
diff --git a/tests/test_client.py b/tests/test_client.py
index 92a6440..e6251c1 100644
--- a/tests/test_client.py
+++ b/tests/test_client.py
@@ -1,6 +1,7 @@
 from __future__ import annotations
 
 import asyncio
+import contextlib
 import itertools
 import logging
 from functools import partial
@@ -212,6 +213,37 @@ async def test_finish_connection_wraps_exceptions_as_unhandled_api_error() -> No
             await cli.finish_connection(False)
 
 
+@pytest.mark.asyncio
+async def test_connection_released_if_connecting_is_cancelled() -> None:
+    """Verify connection is unset if connecting is cancelled."""
+    cli = APIClient("1.2.3.4", 1234, None)
+    loop = asyncio.get_event_loop()
+
+    with patch.object(loop, "sock_connect", side_effect=partial(asyncio.sleep, 1)):
+        start_task = asyncio.create_task(cli.start_connection())
+        await asyncio.sleep(0)
+        assert cli._connection is not None
+
+    start_task.cancel()
+    with contextlib.suppress(BaseException):
+        await start_task
+    assert cli._connection is None
+
+    with patch(
+        "aioesphomeapi.client.APIConnection", PatchableAPIConnection
+    ), patch.object(loop, "sock_connect"):
+        await cli.start_connection()
+        await asyncio.sleep(0)
+
+    assert cli._connection is not None
+    task = asyncio.create_task(cli.finish_connection(False))
+    await asyncio.sleep(0)
+    task.cancel()
+    with contextlib.suppress(BaseException):
+        await task
+    assert cli._connection is None
+
+
 @pytest.mark.asyncio
 async def test_request_while_handshaking(event_loop) -> None:
     """Test trying a request while handshaking raises."""