diff --git a/memory-update.md b/memory-update.md
index ea616b36..8ec804ee 100644
--- a/memory-update.md
+++ b/memory-update.md
@@ -109,3 +109,8 @@
 - CI `test (ubuntu-latest, 3.10)` failed during test collection because `datetime.UTC` is unavailable on Python 3.10.
 - Replaced `datetime.UTC` usage with `timezone.utc` in `src/seedpass/cli/agent.py` and `scripts/ai_tui_agent_test.py`.
 - Verified with targeted tests: `src/tests/test_cli_agent_mode.py` and `src/tests/test_ai_tui_agent_harness.py`.
+
+## Settings Unlock Cancellation Robustness (2026-02-26)
+- CI showed `test_settings_lock_unlock_cancelled_is_graceful` intermittently receiving a generic exception path instead of `PasswordPromptError` during Settings -> Lock Vault unlock.
+- Hardened `handle_settings()` lock flow to treat any exception containing "cancelled by user" as cancellation, printing `Unlock cancelled: ...` instead of a hard failure message.
+- Verified with targeted pytest for the failing test.
diff --git a/src/main.py b/src/main.py
index 11fcb561..f85a88e3 100644
--- a/src/main.py
+++ b/src/main.py
@@ -1102,12 +1102,20 @@ def handle_settings(password_manager: PasswordManager) -> None:
                 except PasswordPromptError as exc:
                     print(colored(f"Unlock cancelled: {exc}", "yellow"))
                 except Exception as exc:
-                    logging.error(
-                        "Failed to unlock vault from settings: %s",
-                        exc,
-                        exc_info=True,
-                    )
-                    print(colored(f"Failed to unlock vault: {exc}", "red"))
+                    # Some environments can surface cancellation through a
+                    # different exception class; treat the message as cancel.
+                    if "cancelled by user" in str(exc).lower():
+                        logging.warning(
+                            "Unlock cancelled during settings lock flow: %s", exc
+                        )
+                        print(colored(f"Unlock cancelled: {exc}", "yellow"))
+                    else:
+                        logging.error(
+                            "Failed to unlock vault from settings: %s",
+                            exc,
+                            exc_info=True,
+                        )
+                        print(colored(f"Failed to unlock vault: {exc}", "red"))
                 else:
                     password_manager.start_background_sync()
                     getattr(