diff --git a/src/js/builtins/ReadableStreamInternals.ts b/src/js/builtins/ReadableStreamInternals.ts
index abb4873b22..386750d621 100644
--- a/src/js/builtins/ReadableStreamInternals.ts
+++ b/src/js/builtins/ReadableStreamInternals.ts
@@ -683,17 +683,25 @@ export function readDirectStream(stream, sink, underlyingSource) {
   $putByIdDirectPrivate(stream, "underlyingSource", null); // doing this causes isReadableStreamDefaultController to return false
   $putByIdDirectPrivate(stream, "start", undefined);
   function close(stream, reason) {
-    const cancelFn = underlyingSource?.cancel;
-    if (cancelFn) {
-      try {
-        var prom = cancelFn.$call(underlyingSource, reason);
-        if ($isPromise(prom)) {
-          $markPromiseAsHandled(prom);
-        }
-      } catch {}
-
-      underlyingSource = undefined;
+    // Check if the stream is already closing/closed naturally
+    // If so, don't call cancel as this is a normal completion
+    const streamState = stream ? $getByIdDirectPrivate(stream, "state") : null;
+    const isNormalClose = streamState === $streamClosing || streamState === $streamClosed;
+    
+    // Only call cancel if there's a cancellation (not a normal close)
+    if (!isNormalClose) {
+      const cancelFn = underlyingSource?.cancel;
+      if (cancelFn) {
+        try {
+          var prom = cancelFn.$call(underlyingSource, reason);
+          if ($isPromise(prom)) {
+            $markPromiseAsHandled(prom);
+          }
+        } catch {}
+      }
     }
+    
+    underlyingSource = undefined;
 
     if (stream) {
       $putByIdDirectPrivate(stream, "readableStreamController", undefined);
diff --git a/test-direct-stream-2.js b/test-direct-stream-2.js
new file mode 100644
index 0000000000..62047c68ff
--- /dev/null
+++ b/test-direct-stream-2.js
@@ -0,0 +1,23 @@
+// Test direct stream without server
+console.log("Creating direct stream");
+const stream = new ReadableStream({
+  type: 'direct',
+  pull(controller) {
+    console.log("Pull called, writing 'Hello'");
+    controller.write('Hello');
+    console.log("Closing controller");
+    controller.close();
+  },
+  cancel(reason) {
+    console.log('Cancel called with reason:', reason);
+  },
+});
+
+console.log("Creating Response with stream");
+const response = new Response(stream, {
+  headers: { 'Content-Type': 'text/plain' },
+});
+
+console.log("Getting text from response");
+const text = await response.text();
+console.log("Got text:", JSON.stringify(text));
\ No newline at end of file
diff --git a/test-direct-stream-3.js b/test-direct-stream-3.js
new file mode 100644
index 0000000000..30d2e49d8e
--- /dev/null
+++ b/test-direct-stream-3.js
@@ -0,0 +1,36 @@
+// Test with async pull
+const server = Bun.serve({
+  port: 0,
+  async fetch(request) {
+    console.log("Creating direct stream with async pull");
+    const stream = new ReadableStream({
+      type: 'direct',
+      async pull(controller) {
+        console.log("Pull called, sleeping...");
+        await Bun.sleep(10);
+        console.log("Writing 'Hello'");
+        controller.write('Hello');
+        console.log("Closing controller");
+        controller.close();
+      },
+      cancel(reason) {
+        console.log('Cancel called with reason:', reason);
+      },
+    });
+
+    console.log("Returning Response with stream");
+    return new Response(stream, {
+      headers: { 'Content-Type': 'text/plain' },
+    });
+  },
+});
+
+console.log(`Server running on port ${server.port}`);
+
+// Make a request
+const response = await fetch(`http://localhost:${server.port}/`);
+console.log("Got response");
+const text = await response.text();
+console.log("Got text:", JSON.stringify(text));
+
+server.stop();
\ No newline at end of file
diff --git a/test-direct-stream-4.js b/test-direct-stream-4.js
new file mode 100644
index 0000000000..46cf95e4fd
--- /dev/null
+++ b/test-direct-stream-4.js
@@ -0,0 +1,37 @@
+// Test with synchronous pull but delayed close
+const server = Bun.serve({
+  port: 0,
+  fetch(request) {
+    console.log("Creating direct stream");
+    const stream = new ReadableStream({
+      type: 'direct',
+      pull(controller) {
+        console.log("Pull called, writing 'Hello'");
+        controller.write('Hello');
+        console.log("Setting timeout to close");
+        setTimeout(() => {
+          console.log("Closing controller");
+          controller.close();
+        }, 0);
+      },
+      cancel(reason) {
+        console.log('Cancel called with reason:', reason);
+      },
+    });
+
+    console.log("Returning Response with stream");
+    return new Response(stream, {
+      headers: { 'Content-Type': 'text/plain' },
+    });
+  },
+});
+
+console.log(`Server running on port ${server.port}`);
+
+// Make a request  
+const response = await fetch(`http://localhost:${server.port}/`);
+console.log("Got response");
+const text = await response.text();
+console.log("Got text:", JSON.stringify(text));
+
+server.stop();
\ No newline at end of file
diff --git a/test-direct-stream-cancel.js b/test-direct-stream-cancel.js
new file mode 100644
index 0000000000..00b2b728dc
--- /dev/null
+++ b/test-direct-stream-cancel.js
@@ -0,0 +1,45 @@
+// Test cancellation
+const cancelReasons = [];
+
+const server = Bun.serve({
+  port: 0,
+  async fetch(request) {
+    const stream = new ReadableStream({
+      type: 'direct',
+      async pull(controller) {
+        controller.write('Start');
+        await Bun.sleep(100); // Keep stream open
+      },
+      cancel(reason) {
+        cancelReasons.push(reason);
+        console.log('Cancel called with reason:', reason);
+      },
+    });
+
+    return new Response(stream, {
+      headers: { 'Content-Type': 'text/plain' },
+    });
+  },
+});
+
+console.log(`Server running on port ${server.port}`);
+
+// Make a request and abort it
+const controller = new AbortController();
+const fetchPromise = fetch(`http://localhost:${server.port}/`, { signal: controller.signal });
+
+await Bun.sleep(50);
+console.log("Aborting request");
+controller.abort();
+
+try {
+  await fetchPromise;
+} catch (e) {
+  console.log("Fetch aborted as expected");
+}
+
+await Bun.sleep(100);
+console.log("Cancel reasons received:", cancelReasons.length);
+console.log("Cancel reasons:", cancelReasons);
+
+server.stop();
\ No newline at end of file
diff --git a/test-direct-stream.js b/test-direct-stream.js
new file mode 100644
index 0000000000..0a51c541ee
--- /dev/null
+++ b/test-direct-stream.js
@@ -0,0 +1,33 @@
+const server = Bun.serve({
+  port: 0,
+  fetch(request) {
+    console.log("Creating direct stream");
+    const stream = new ReadableStream({
+      type: 'direct',
+      pull(controller) {
+        console.log("Pull called, writing 'Hello'");
+        controller.write('Hello');
+        console.log("Closing controller");
+        controller.close();
+      },
+      cancel(reason) {
+        console.log('Cancel called with reason:', reason);
+      },
+    });
+
+    console.log("Returning Response with stream");
+    return new Response(stream, {
+      headers: { 'Content-Type': 'text/plain' },
+    });
+  },
+});
+
+console.log(`Server running on port ${server.port}`);
+
+// Make a request
+const response = await fetch(`http://localhost:${server.port}/`);
+console.log("Got response");
+const text = await response.text();
+console.log("Got text:", JSON.stringify(text));
+
+server.stop();
\ No newline at end of file
diff --git a/test/regression/issue/17175.test.ts b/test/regression/issue/17175.test.ts
new file mode 100644
index 0000000000..a2087a6201
--- /dev/null
+++ b/test/regression/issue/17175.test.ts
@@ -0,0 +1,130 @@
+import { test, expect } from "bun:test";
+import { bunEnv, bunExe } from "harness";
+
+test("direct ReadableStream should not trigger cancel when successfully consumed", async () => {
+  const cancelReasons: any[] = [];
+  
+  using server = Bun.serve({
+    port: 0,
+    fetch(request) {
+      const stream = new ReadableStream({
+        type: 'direct',
+        pull(controller) {
+          controller.write('Hello');
+          controller.close();
+        },
+        cancel(reason) {
+          cancelReasons.push(reason);
+        },
+      });
+
+      return new Response(stream, {
+        headers: { 'Content-Type': 'text/plain' },
+      });
+    },
+  });
+
+  const response = await fetch(`http://localhost:${server.port}/`);
+  const text = await response.text();
+  
+  expect(text).toBe('Hello');
+  expect(cancelReasons).toHaveLength(0);
+});
+
+test("direct ReadableStream with async pull should not trigger cancel when successfully consumed", async () => {
+  const cancelReasons: any[] = [];
+  
+  using server = Bun.serve({
+    port: 0,
+    fetch(request) {
+      const stream = new ReadableStream({
+        type: 'direct',
+        async pull(controller) {
+          await Bun.sleep(10);
+          controller.write('Hello');
+          controller.close();
+        },
+        cancel(reason) {
+          cancelReasons.push(reason);
+        },
+      });
+
+      return new Response(stream, {
+        headers: { 'Content-Type': 'text/plain' },
+      });
+    },
+  });
+
+  const response = await fetch(`http://localhost:${server.port}/`);
+  const text = await response.text();
+  
+  expect(text).toBe('Hello');
+  expect(cancelReasons).toHaveLength(0);
+});
+
+test("direct ReadableStream with await controller.close() should not trigger cancel", async () => {
+  const cancelReasons: any[] = [];
+  
+  using server = Bun.serve({
+    port: 0,
+    fetch(request) {
+      const stream = new ReadableStream({
+        type: 'direct',
+        async pull(controller) {
+          controller.write('Hello');
+          await controller.close();
+        },
+        cancel(reason) {
+          cancelReasons.push(reason);
+        },
+      });
+
+      return new Response(stream, {
+        headers: { 'Content-Type': 'text/plain' },
+      });
+    },
+  });
+
+  const response = await fetch(`http://localhost:${server.port}/`);
+  const text = await response.text();
+  
+  expect(text).toBe('Hello');
+  expect(cancelReasons).toHaveLength(0);
+});
+
+test("direct ReadableStream should only cancel when client disconnects", async () => {
+  const cancelReasons: any[] = [];
+  let streamController: any;
+  
+  using server = Bun.serve({
+    port: 0,
+    fetch(request) {
+      const stream = new ReadableStream({
+        type: 'direct',
+        async pull(controller) {
+          streamController = controller;
+          controller.write('Start');
+          await Bun.sleep(100);
+        },
+        cancel(reason) {
+          cancelReasons.push(reason);
+        },
+      });
+
+      return new Response(stream, {
+        headers: { 'Content-Type': 'text/plain' },
+      });
+    },
+  });
+
+  const controller = new AbortController();
+  const fetchPromise = fetch(`http://localhost:${server.port}/`, { signal: controller.signal });
+  
+  await Bun.sleep(50);
+  controller.abort();
+  
+  await fetchPromise.catch(() => {});
+  await Bun.sleep(100);
+  
+  expect(cancelReasons.length).toBeGreaterThan(0);
+});
\ No newline at end of file