diff --git a/pkg/kubelet/kubelet_pods.go b/pkg/kubelet/kubelet_pods.go
index 4b5e59f48f7..115161003cf 100644
--- a/pkg/kubelet/kubelet_pods.go
+++ b/pkg/kubelet/kubelet_pods.go
@@ -1447,6 +1447,20 @@ func (kl *Kubelet) generateAPIPodStatus(pod *v1.Pod, podStatus *kubecontainer.Po
 	allStatus := append(append([]v1.ContainerStatus{}, s.ContainerStatuses...), s.InitContainerStatuses...)
 	s.Phase = getPhase(&pod.Spec, allStatus)
 	klog.V(4).InfoS("Got phase for pod", "pod", klog.KObj(pod), "oldPhase", oldPodStatus.Phase, "phase", s.Phase)
+
+	// Perform a three-way merge between the statuses from the status manager,
+	// runtime, and generated status to ensure terminal status is correctly set.
+	if s.Phase != v1.PodFailed && s.Phase != v1.PodSucceeded {
+		switch {
+		case oldPodStatus.Phase == v1.PodFailed || oldPodStatus.Phase == v1.PodSucceeded:
+			klog.V(4).InfoS("Status manager phase was terminal, updating phase to match", "pod", klog.KObj(pod), "phase", oldPodStatus.Phase)
+			s.Phase = oldPodStatus.Phase
+		case pod.Status.Phase == v1.PodFailed || pod.Status.Phase == v1.PodSucceeded:
+			klog.V(4).InfoS("API phase was terminal, updating phase to match", "pod", klog.KObj(pod), "phase", pod.Status.Phase)
+			s.Phase = pod.Status.Phase
+		}
+	}
+
 	if s.Phase == oldPodStatus.Phase {
 		// preserve the reason and message which is associated with the phase
 		s.Reason = oldPodStatus.Reason
diff --git a/pkg/kubelet/kubelet_pods_test.go b/pkg/kubelet/kubelet_pods_test.go
index 655cb04d115..491a0a284b9 100644
--- a/pkg/kubelet/kubelet_pods_test.go
+++ b/pkg/kubelet/kubelet_pods_test.go
@@ -2595,6 +2595,95 @@ func Test_generateAPIPodStatus(t *testing.T) {
 				},
 			},
 		},
+		{
+			name: "terminal phase from previous status must remain terminal, restartAlways",
+			pod: &v1.Pod{
+				Spec: desiredState,
+				Status: v1.PodStatus{
+					Phase: v1.PodRunning,
+					ContainerStatuses: []v1.ContainerStatus{
+						runningState("containerA"),
+						runningState("containerB"),
+					},
+				},
+			},
+			currentStatus: &kubecontainer.PodStatus{},
+			previousStatus: v1.PodStatus{
+				Phase: v1.PodSucceeded,
+				ContainerStatuses: []v1.ContainerStatus{
+					runningState("containerA"),
+					runningState("containerB"),
+				},
+				// Reason and message should be preserved
+				Reason:  "Test",
+				Message: "test",
+			},
+			expected: v1.PodStatus{
+				Phase:    v1.PodSucceeded,
+				HostIP:   "127.0.0.1",
+				QOSClass: v1.PodQOSBestEffort,
+				Conditions: []v1.PodCondition{
+					{Type: v1.PodInitialized, Status: v1.ConditionTrue, Reason: "PodCompleted"},
+					{Type: v1.PodReady, Status: v1.ConditionFalse, Reason: "PodCompleted"},
+					{Type: v1.ContainersReady, Status: v1.ConditionFalse, Reason: "PodCompleted"},
+					{Type: v1.PodScheduled, Status: v1.ConditionTrue},
+				},
+				ContainerStatuses: []v1.ContainerStatus{
+					ready(waitingWithLastTerminationUnknown("containerA", 1)),
+					ready(waitingWithLastTerminationUnknown("containerB", 1)),
+				},
+				Reason:  "Test",
+				Message: "test",
+			},
+		},
+		{
+			name: "terminal phase from previous status must remain terminal, restartNever",
+			pod: &v1.Pod{
+				Spec: v1.PodSpec{
+					NodeName: "machine",
+					Containers: []v1.Container{
+						{Name: "containerA"},
+						{Name: "containerB"},
+					},
+					RestartPolicy: v1.RestartPolicyNever,
+				},
+				Status: v1.PodStatus{
+					Phase: v1.PodRunning,
+					ContainerStatuses: []v1.ContainerStatus{
+						runningState("containerA"),
+						runningState("containerB"),
+					},
+				},
+			},
+			currentStatus: &kubecontainer.PodStatus{},
+			previousStatus: v1.PodStatus{
+				Phase: v1.PodSucceeded,
+				ContainerStatuses: []v1.ContainerStatus{
+					succeededState("containerA"),
+					succeededState("containerB"),
+				},
+				// Reason and message should be preserved
+				Reason:  "Test",
+				Message: "test",
+			},
+			expected: v1.PodStatus{
+				Phase:    v1.PodSucceeded,
+				HostIP:   "127.0.0.1",
+				QOSClass: v1.PodQOSBestEffort,
+				Conditions: []v1.PodCondition{
+					{Type: v1.PodInitialized, Status: v1.ConditionTrue, Reason: "PodCompleted"},
+					{Type: v1.PodReady, Status: v1.ConditionFalse, Reason: "PodCompleted"},
+					{Type: v1.ContainersReady, Status: v1.ConditionFalse, Reason: "PodCompleted"},
+					{Type: v1.PodScheduled, Status: v1.ConditionTrue},
+				},
+				ContainerStatuses: []v1.ContainerStatus{
+					ready(succeededState("containerA")),
+					ready(succeededState("containerB")),
+				},
+				Reason:  "Test",
+				Message: "test",
+			},
+		},
 		{
 			name: "running can revert to pending",
 			pod: &v1.Pod{