diff --git a/sc2/ChangeLog b/sc2/ChangeLog
index 144e38cf6..54dc90a58 100644
--- a/sc2/ChangeLog
+++ b/sc2/ChangeLog
@@ -1,4 +1,5 @@
 Changes towards version 0.5:
+- CANCEL now behaves as expected in setup menu - Michael
 - Only SELECT and CANCEL trigger the fade-to-black at the end of a
   Super Melee, solving the issue in bug #547 - Michael
 - Admiral ZEX is no longer referred to as "Commander" or "Zex" (bug 
diff --git a/sc2/src/sc2code/libs/graphics/widgets.c b/sc2/src/sc2code/libs/graphics/widgets.c
index 021af3420..7dbce104a 100644
--- a/sc2/src/sc2code/libs/graphics/widgets.c
+++ b/sc2/src/sc2code/libs/graphics/widgets.c
@@ -494,6 +494,11 @@ Widget_HandleEventMenuScreen (WIDGET *_self, int event)
 	case WIDGET_EVENT_DOWN:
 		dx = 1;
 		break;
+	case WIDGET_EVENT_CANCEL:
+		/* On cancel, shift focus to last element and send a SELECT. */
+		self->highlighted = self->num_children - 1;
+		widget_focus = self->child[self->highlighted];
+		return (widget_focus->handleEvent)(widget_focus, WIDGET_EVENT_SELECT);
 	default:
 		return FALSE;
 	}
diff --git a/sc2/src/sc2code/setupmenu.c b/sc2/src/sc2code/setupmenu.c
index fffd2cc94..4b3ea0115 100644
--- a/sc2/src/sc2code/setupmenu.c
+++ b/sc2/src/sc2code/setupmenu.c
@@ -731,11 +731,15 @@ DoSetupMenu (PSETUP_MENU_STATE pInputState)
 	{
 		Widget_Event (WIDGET_EVENT_SELECT);
 	}
+	if (PulsedInputState.key[KEY_MENU_CANCEL])
+	{
+		Widget_Event (WIDGET_EVENT_CANCEL);
+	}
 
 	SleepThreadUntil (pInputState->NextTime + MENU_FRAME_RATE);
 	pInputState->NextTime = GetTimeCounter ();
 	return !((GLOBAL (CurrentActivity) & CHECK_ABORT) || 
-		 PulsedInputState.key[KEY_MENU_CANCEL] || (next == NULL));
+		 (next == NULL));
 }
 
 void