diff --git a/crates/fs/src/fs.rs b/crates/fs/src/fs.rs
index 7fb443160b..c321f8704e 100644
--- a/crates/fs/src/fs.rs
+++ b/crates/fs/src/fs.rs
@@ -1362,7 +1362,8 @@ impl Fs for RealFs {
         let trashed_entry = self
             .trash
             .lock()
-            .remove(trash_id)
+            .get(trash_id)
+            .cloned()
             .ok_or(TrashRestoreError::AlreadyRestored)?;
 
         let restored_item_path = trashed_entry.original_parent.join(&trashed_entry.name);
@@ -1375,7 +1376,9 @@ impl Fs for RealFs {
                 tx.send(res)
             })
             .expect("The OS can spawn a threads");
+
         rx.await.expect("Restore all never panics")?;
+        self.trash.lock().remove(trash_id);
         Ok(restored_item_path)
     }
 }
@@ -3346,7 +3349,7 @@ impl Fs for FakeFs {
     async fn restore(&self, trash_id: TrashId) -> Result<PathBuf, TrashRestoreError> {
         let mut state = self.state.lock();
 
-        let Some((trashed_entry, fake_entry)) = state.trash.lock().remove(trash_id) else {
+        let Some((trashed_entry, fake_entry)) = state.trash.lock().get(trash_id).cloned() else {
             return Err(TrashRestoreError::AlreadyRestored);
         };
 
@@ -3366,6 +3369,7 @@ impl Fs for FakeFs {
 
         match result {
             Ok(_) => {
+                state.trash.lock().remove(trash_id);
                 state.emit_event([(path.clone(), Some(PathEventKind::Created))]);
                 Ok(path)
             }
diff --git a/crates/fs/tests/integration/fs_tests.rs b/crates/fs/tests/integration/fs_tests.rs
index a32c3bda84..06e9facb98 100644
--- a/crates/fs/tests/integration/fs_tests.rs
+++ b/crates/fs/tests/integration/fs_tests.rs
@@ -1126,3 +1126,30 @@ async fn test_realfs_watch_stress_reports_missed_paths(
         missed_paths.len()
     );
 }
+
+#[gpui::test]
+async fn restore_can_be_retried_after_collision(cx: &mut TestAppContext) {
+    let fs = FakeFs::new(cx.background_executor.clone());
+    let path = path!("/root/a.txt");
+    let remove_options = RemoveOptions::default();
+    fs.insert_tree(path!("/root"), json!({ "a.txt": "original"}))
+        .await;
+
+    // We'll first trash the `a.txt` file so we can hold onto its `TrashId`,
+    // allowing us to later attempt restoring it again, ensuring that it didn't
+    // get removed from the trash state, even if restoring failed.
+    let trash_id = fs.trash(path.as_ref(), remove_options).await.unwrap();
+
+    fs.insert_file(path, "conflicting".into()).await;
+    let err = fs.restore(trash_id).await.unwrap_err();
+    assert!(matches!(err, TrashRestoreError::Collision { .. }));
+
+    fs.remove_file(path.as_ref(), remove_options).await.unwrap();
+    let restored_path = fs.restore(trash_id).await.unwrap();
+    assert_eq!(fs.load(restored_path.as_path()).await.unwrap(), "original");
+
+    assert!(matches!(
+        fs.restore(trash_id).await.unwrap_err(),
+        TrashRestoreError::AlreadyRestored
+    ));
+}
diff --git a/crates/project_panel/src/project_panel.rs b/crates/project_panel/src/project_panel.rs
index 670bdd4098..1dcb28933b 100644
--- a/crates/project_panel/src/project_panel.rs
+++ b/crates/project_panel/src/project_panel.rs
@@ -4831,18 +4831,20 @@ impl ProjectPanel {
                     }
                     // update selection
                     if let Some(entry_id) = last_succeed {
-                        project_panel.update_in(cx, |project_panel, window, cx| {
-                            project_panel.selection = Some(SelectedEntry {
-                                worktree_id,
-                                entry_id,
-                            });
-                            // if only one entry was dragged and it was disambiguated, open the rename editor
-                            if item_count == 1 && disambiguation_range.is_some() {
-                                project_panel.rename_impl(disambiguation_range, window, cx);
-                            }
+                        project_panel
+                            .update_in(cx, |project_panel, window, cx| {
+                                project_panel.selection = Some(SelectedEntry {
+                                    worktree_id,
+                                    entry_id,
+                                });
+                                // if only one entry was dragged and it was disambiguated, open the rename editor
+                                if item_count == 1 && disambiguation_range.is_some() {
+                                    project_panel.rename_impl(disambiguation_range, window, cx);
+                                }
 
-                            project_panel.undo_manager.record(changes)
-                        })??;
+                                project_panel.undo_manager.record(changes)
+                            })?
+                            .log_err();
                     }
 
                     std::result::Result::Ok::<(), anyhow::Error>(())