diff --git a/src/ex_eval.c b/src/ex_eval.c
index e996ce2..3c865c3 100644
--- a/src/ex_eval.c
+++ b/src/ex_eval.c
@@ -718,7 +718,7 @@
 /*
  * Remove an exception from the caught stack.
  */
-    static void
+    void
 finish_exception(except_T *excp)
 {
     if (excp != caught_stack)
diff --git a/src/proto/ex_eval.pro b/src/proto/ex_eval.pro
index 979d6fb..feffc8f 100644
--- a/src/proto/ex_eval.pro
+++ b/src/proto/ex_eval.pro
@@ -11,6 +11,7 @@
 int throw_exception(void *value, except_type_T type, char_u *cmdname);
 void discard_current_exception(void);
 void catch_exception(except_T *excp);
+void finish_exception(except_T *excp);
 void exception_state_save(exception_state_T *estate);
 void exception_state_restore(exception_state_T *estate);
 void exception_state_clear(void);
diff --git a/src/testdir/test_stacktrace.vim b/src/testdir/test_stacktrace.vim
index 5c71d50..fc8510a 100644
--- a/src/testdir/test_stacktrace.vim
+++ b/src/testdir/test_stacktrace.vim
@@ -10,7 +10,7 @@
 endfunc
 
 func AssertStacktrace(expect, actual)
-  call assert_equal(#{lnum: 617, filepath: Filepath('runtest.vim')}, a:actual[0])
+  call assert_equal(Filepath('runtest.vim'), a:actual[0]['filepath'])
   call assert_equal(a:expect, a:actual[-len(a:expect):])
 endfunc
 
@@ -97,6 +97,12 @@
     call Xfunc1()
   catch
     let stacktrace = v:stacktrace
+    try
+      call Xfunc1()
+    catch
+      let stacktrace_inner = v:stacktrace
+    endtry
+    let stacktrace_after = v:stacktrace " should be restored by the exception stack to the previous one
   endtry
   call assert_equal([], v:stacktrace)
   call AssertStacktrace([
@@ -104,9 +110,15 @@
        \ #{funcref: funcref('Xfunc1'), lnum: 5, filepath: Filepath('Xscript1')},
        \ #{funcref: funcref('Xfunc2'), lnum: 4, filepath: Filepath('Xscript2')},
        \ ], stacktrace)
+  call AssertStacktrace([
+       \ #{funcref: funcref('Test_vstacktrace'), lnum: 101, filepath: s:thisfile},
+       \ #{funcref: funcref('Xfunc1'), lnum: 5, filepath: Filepath('Xscript1')},
+       \ #{funcref: funcref('Xfunc2'), lnum: 4, filepath: Filepath('Xscript2')},
+       \ ], stacktrace_inner)
+  call assert_equal(stacktrace, stacktrace_after)
 endfunc
 
-func Test_zzz_stacktrace_vim9()
+func Test_stacktrace_vim9()
   let lines =<< trim [SCRIPT]
   var stacktrace = getstacktrace()
   assert_notequal([], stacktrace)
@@ -122,11 +134,9 @@
       assert_true(has_key(d, 'lnum'))
     endfor
   endtry
+  call assert_equal([], v:stacktrace)
   [SCRIPT]
   call v9.CheckDefSuccess(lines)
-  " FIXME: v:stacktrace is not cleared after the exception handling, and this
-  " test has to be run as the last one because of this.
-  " call assert_equal([], v:stacktrace)
 endfunc
 
 " vim: shiftwidth=2 sts=2 expandtab
diff --git a/src/testdir/test_vim9_script.vim b/src/testdir/test_vim9_script.vim
index 550c725..b29f3cd 100644
--- a/src/testdir/test_vim9_script.vim
+++ b/src/testdir/test_vim9_script.vim
@@ -945,6 +945,47 @@
       endif
   END
   v9.CheckDefAndScriptSuccess(lines)
+
+  # test that the v:exception stacks are correctly restored
+  try
+    try
+      throw 101
+    catch
+      assert_equal('101', v:exception)
+      try
+      catch
+      finally
+        assert_equal('101', v:exception) # finally shouldn't clear if it doesn't own it
+      endtry
+      assert_equal('101', v:exception)
+      throw 102 # Re-throw inside catch block
+    endtry
+  catch
+    assert_equal('102', v:exception)
+    try
+      throw 103 # throw inside nested exception stack
+    catch
+      assert_equal('103', v:exception)
+    endtry
+    assert_equal('102', v:exception) # restored stack
+  finally
+    assert_equal('', v:exception) # finally should clear if it owns the exception
+  endtry
+  try
+    try
+      throw 104
+    catch
+      try
+        exec 'nonexistent_cmd' # normal exception inside nested exception stack
+      catch
+        assert_match('E492:', v:exception)
+      endtry
+      eval [][0] # normal exception inside catch block
+    endtry
+  catch
+    assert_match('E684:', v:exception)
+  endtry
+  assert_equal('', v:exception) # All exceptions properly popped
 enddef
 
 def Test_unreachable_after()
@@ -1417,11 +1458,23 @@
     eval 2 + 2
     throw 'exception'
   enddef
+  def Func2()
+    eval 1 + 1
+    eval 2 + 2
+    eval 3 + 3
+    throw 'exception'
+  enddef
   try
     Func()
   catch /exception/
+    try
+      Func2()
+    catch /exception/
+      assert_match('line 4', v:throwpoint)
+    endtry
     assert_match('line 3', v:throwpoint)
   endtry
+  assert_match('', v:throwpoint)
 enddef
 
 
diff --git a/src/version.c b/src/version.c
index 49a3523..46b7e35 100644
--- a/src/version.c
+++ b/src/version.c
@@ -705,6 +705,8 @@
 static int included_patches[] =
 {   /* Add new patch number below this line */
 /**/
+    999,
+/**/
     998,
 /**/
     997,
diff --git a/src/vim9execute.c b/src/vim9execute.c
index d696280..c7f0e67 100644
--- a/src/vim9execute.c
+++ b/src/vim9execute.c
@@ -3281,7 +3281,15 @@
 		trycmd_T *trycmd = ((trycmd_T *)trystack->ga_data)
 							+ trystack->ga_len - 1;
 		if (trycmd->tcd_frame_idx == ectx->ec_frame_idx)
-		    trycmd->tcd_caught = FALSE;
+		{
+		    if (trycmd->tcd_caught)
+		    {
+			// Inside a "catch" we need to first discard the caught
+			// exception.
+			finish_exception(caught_stack);
+			trycmd->tcd_caught = FALSE;
+		    }
+		}
 	    }
 	}
 
@@ -4972,6 +4980,12 @@
 		    // Reset the index to avoid a return statement jumps here
 		    // again.
 		    trycmd->tcd_finally_idx = 0;
+		    if (trycmd->tcd_caught)
+		    {
+			// discard the exception
+			finish_exception(caught_stack);
+			trycmd->tcd_caught = FALSE;
+		    }
 		    break;
 		}
 
@@ -4986,12 +5000,10 @@
 		    trycmd = ((trycmd_T *)trystack->ga_data) + trystack->ga_len;
 		    if (trycmd->tcd_did_throw)
 			did_throw = TRUE;
-		    if (trycmd->tcd_caught && current_exception != NULL)
+		    if (trycmd->tcd_caught)
 		    {
 			// discard the exception
-			if (caught_stack == current_exception)
-			    caught_stack = caught_stack->caught;
-			discard_current_exception();
+			finish_exception(caught_stack);
 		    }
 
 		    if (trycmd->tcd_return)
@@ -5040,12 +5052,10 @@
 		    {
 			trycmd_T    *trycmd = ((trycmd_T *)trystack->ga_data)
 							+ trystack->ga_len - 1;
-			if (trycmd->tcd_caught && current_exception != NULL)
+			if (trycmd->tcd_caught)
 			{
 			    // discard the exception
-			    if (caught_stack == current_exception)
-				caught_stack = caught_stack->caught;
-			    discard_current_exception();
+			    finish_exception(caught_stack);
 			    trycmd->tcd_caught = FALSE;
 			}
 		    }