diff --git a/NEWS b/NEWS
index 58d1854e8fa8..afdf739ffab7 100644
--- a/NEWS
+++ b/NEWS
@@ -2,6 +2,11 @@ This documents significant changes in the dev branch of ksh 93u+m.
 For full details, see the git log at: https://github.com/ksh93/ksh
 Uppercase BUG_* IDs are shell bug IDs as used by the Modernish shell library.
 
+2024-12-18:
+
+- Persuant to POSIX.1-2024, exec(1) will no longer cause the shell to exit
+  when it fails to replace an interactive shell with the given command.
+
 2024-12-08:
 
 - [v1.1] Fixed a bug in the test and [ built-in commands where superfluous
diff --git a/src/cmd/ksh93/include/version.h b/src/cmd/ksh93/include/version.h
index 639879835976..d69cfb1d38c7 100644
--- a/src/cmd/ksh93/include/version.h
+++ b/src/cmd/ksh93/include/version.h
@@ -18,7 +18,7 @@
 #include <ast_release.h>
 #include "git.h"
 
-#define SH_RELEASE_DATE	"2024-12-08"	/* must be in this format for $((.sh.version)) */
+#define SH_RELEASE_DATE	"2024-12-18"	/* must be in this format for $((.sh.version)) */
 /*
  * This comment keeps SH_RELEASE_DATE a few lines away from SH_RELEASE_SVER to avoid
  * merge conflicts when cherry-picking dev branch commits onto a release branch.
diff --git a/src/cmd/ksh93/sh/path.c b/src/cmd/ksh93/sh/path.c
index 4d8ef4591972..88dd83851083 100644
--- a/src/cmd/ksh93/sh/path.c
+++ b/src/cmd/ksh93/sh/path.c
@@ -1001,8 +1001,20 @@ noreturn void path_exec(const char *arg0,char *argv[],struct argnod *local)
 			pp = path_nextcomp(pp,arg0,0);
 	}
 	while(pp);
-	/* force an exit */
-	((struct checkpt*)sh.jmplist)->mode = SH_JMPEXIT;
+	if(sh_isstate(SH_EXEC) && sh_isstate(SH_INTERACTIVE))
+	{
+		/*
+		 * An error just occurred and the shell cannot exit because it's
+		 * interactive. Reincrement SHLVL and turn off the SH_EXEC state.
+		 */
+		sh.shlvl++;
+		sh_offstate(SH_EXEC);
+	}
+	else
+	{
+		/* Force an exit */
+		((struct checkpt*)sh.jmplist)->mode = SH_JMPEXIT;
+	}
 	errno = not_executable ? not_executable : sh.path_err;
 	switch(errno)
 	{
diff --git a/src/cmd/ksh93/tests/path.sh b/src/cmd/ksh93/tests/path.sh
index 6e3f233f0a53..c8561a8f1003 100755
--- a/src/cmd/ksh93/tests/path.sh
+++ b/src/cmd/ksh93/tests/path.sh
@@ -1037,5 +1037,17 @@ got=${ type -t whence_t_test 2>&1; }
 (((e = $?) > 1)) && err_exit 'getconf builtin fails when on same path as external getconf' \
 	"(got status $e$( ((e>128)) && print -n /SIG && kill -l "$e"))"
 
+# ======
+# POSIX.1-2024: If the exec command fails ... an interactive shell may exit from a
+#               subshell environment but shall not exit if the current shell environment
+#               is not a subshell environment.
+# https://pubs.opengroup.org/onlinepubs/9799919799/utilities/V3_chap02.html#tag_19_21
+if((!SHOPT_SCRIPTONLY));then
+exp=0
+output=$($SHELL -ic $'PATH=/dev/null exec notacommand\nexit 0' 2>&1)
+got=$?
+((got==exp)) || err_exit "interactive shells exit after exec(1) fails to run a command (expected status '$exp', got status '$got' with output $(printf %q "$output"))"
+fi # !SHOPT_SCRIPTONLY
+
 # ======
 exit $((Errors<125?Errors:125))