diff --git a/C4/Circulation.pm b/C4/Circulation.pm
index 54c8e4782c..c53e799dde 100644
--- a/C4/Circulation.pm
+++ b/C4/Circulation.pm
@@ -1768,14 +1768,29 @@ sub AddIssue {
             # and SwitchOnSiteCheckouts is enabled this converts it to a regular checkout
             $issue = Koha::Checkouts->find( { itemnumber => $item_object->itemnumber } );
 
-            #if this checkout is a booking mark it as completed
-            if (
-                my $booking = $item_object->find_booking(
-                    { checkout_date => $issuedate, due_date => $datedue, patron_id => $patron->borrowernumber }
-                )
-                )
-            {
-                $booking->status('completed')->store;
+            # If this checkout relates to a booking, handle booking status appropriately
+            if ( my $booking = $item_object->find_booking( { checkout_date => $issuedate, due_date => $datedue } ) ) {
+                if ( $booking->patron_id == $patron->borrowernumber ) {
+
+                    # Patron's own booking - mark as completed
+                    $booking->status('completed')->store;
+                } else {
+
+                    # Another patron's booking - only cancel if checkout period overlaps with actual booking period
+                    my $booking_start = dt_from_string( $booking->start_date );
+                    my $booking_end   = dt_from_string( $booking->end_date );
+
+                    # Check if checkout period overlaps with actual booking period (not just lead/trail)
+                    if (   ( $issuedate >= $booking_start && $issuedate <= $booking_end )
+                        || ( $datedue >= $booking_start   && $datedue <= $booking_end )
+                        || ( $issuedate <= $booking_start && $datedue >= $booking_end ) )
+                    {
+                        # Checkout overlaps with actual booking period - cancel the booking
+                        $booking->status('cancelled')->store;
+                    }
+
+                    # If only in lead/trail period, do nothing - librarian has made informed decision
+                }
             }
 
             if ($issue) {