diff --git a/src/device/usbd.c b/src/device/usbd.c
index 79802e70f..f5c3046d6 100644
--- a/src/device/usbd.c
+++ b/src/device/usbd.c
@@ -1475,10 +1475,18 @@ TU_ATTR_FAST_FUNC void dcd_event_handler(dcd_event_t const* event, bool in_isr)
       break;
   }
 
-  if (send && !queue_event(event, in_isr) && event->event_id == DCD_EVENT_SETUP_RECEIVED) {
-    // dropped by a full queue: undo the increment, else every later SETUP is skipped as
-    // "other SETUP in queue" and EP0 is deaf until re-init
-    _usbd_queued_setup--;
+  if (send && !queue_event(event, in_isr)) {
+    // event dropped by a full queue: undo state that would otherwise wedge permanently
+    if (event->event_id == DCD_EVENT_SETUP_RECEIVED) {
+      // undo the increment, else every later SETUP is skipped as "other SETUP in queue"
+      // and EP0 is deaf until re-init
+      _usbd_queued_setup--;
+    } else if (event->event_id == DCD_EVENT_XFER_COMPLETE) {
+      // clear busy + claimed, else the endpoint can never be claimed or re-armed again
+      uint8_t const epnum = tu_edpt_number(event->xfer_complete.ep_addr);
+      uint8_t const ep_dir = tu_edpt_dir(event->xfer_complete.ep_addr);
+      _usbd_dev.ep_status[epnum][ep_dir] &= (uint8_t) ~(TU_EDPT_STATE_BUSY | TU_EDPT_STATE_CLAIMED);
+    }
   }
 }
 
diff --git a/test/unit-test/test/device/usbd/test_usbd.c b/test/unit-test/test/device/usbd/test_usbd.c
index 935a20221..849097326 100644
--- a/test/unit-test/test/device/usbd/test_usbd.c
+++ b/test/unit-test/test/device/usbd/test_usbd.c
@@ -29,6 +29,7 @@
 #include "tusb_fifo.h"
 #include "tusb.h"
 #include "usbd.h"
+#include "device/usbd_pvt.h"
 TEST_SOURCE_FILE("usbd.c")
 
 // Mock File
@@ -308,6 +309,52 @@ void test_usbd_setup_dropped_by_full_queue_recovers(void)
   tud_task();
 }
 
+//--------------------------------------------------------------------+
+// Transfer completion dropped by full event queue
+//--------------------------------------------------------------------+
+
+// When the event queue is full, queue_event() drops the XFER_COMPLETE event. The endpoint's
+// busy/claimed state must not survive the dropped completion: a leaked BUSY makes every later
+// usbd_edpt_claim()/usbd_edpt_xfer() on that endpoint fail, so the class never re-arms it.
+void test_usbd_xfer_complete_dropped_by_full_queue_recovers(void)
+{
+  // fillers drain through usbd_reset -> class reset
+  mscd_reset_Ignore();
+
+  // open + claim + arm a bulk OUT endpoint the way a class driver would
+  tusb_desc_endpoint_t desc_ep = {
+    .bLength          = sizeof(tusb_desc_endpoint_t),
+    .bDescriptorType  = TUSB_DESC_ENDPOINT,
+    .bEndpointAddress = 0x01,
+    .bmAttributes     = { .xfer = TUSB_XFER_BULK },
+    .wMaxPacketSize   = 64,
+    .bInterval        = 0
+  };
+  static uint8_t xfer_buf[64];
+
+  dcd_edpt_open_ExpectAndReturn(rhport, &desc_ep, true);
+  TEST_ASSERT_TRUE(usbd_edpt_open(rhport, &desc_ep));
+  TEST_ASSERT_TRUE(usbd_edpt_claim(rhport, 0x01));
+  dcd_edpt_xfer_ExpectAndReturn(rhport, 0x01, xfer_buf, 64, false, true);
+  TEST_ASSERT_TRUE(usbd_edpt_xfer(rhport, 0x01, xfer_buf, 64, false));
+
+  // fill the queue to the brim, then complete the transfer: queue_event() drops it
+  for (unsigned i = 0; i < CFG_TUD_TASK_QUEUE_SZ; i++) {
+    dcd_event_bus_signal(rhport, DCD_EVENT_UNPLUGGED, false);
+  }
+  dcd_event_xfer_complete(rhport, 0x01, 64, XFER_RESULT_SUCCESS, false);
+
+  // the endpoint must be re-armable: the dropped completion must not leak busy/claimed
+  TEST_ASSERT_TRUE(usbd_edpt_claim(rhport, 0x01));
+  dcd_edpt_xfer_ExpectAndReturn(rhport, 0x01, xfer_buf, 64, false, true);
+  TEST_ASSERT_TRUE(usbd_edpt_xfer(rhport, 0x01, xfer_buf, 64, false));
+
+  // drain the fillers so later tests start from an empty queue
+  for (unsigned i = 0; i < (CFG_TUD_TASK_QUEUE_SZ / CFG_TUD_TASK_EVENTS_PER_RUN) + 1; i++) {
+    tud_task();
+  }
+}
+
 //--------------------------------------------------------------------+
 // Control OUT data stage host overrun
 //--------------------------------------------------------------------+