diff --git a/hgext/rebase.py b/hgext/rebase.py
--- a/hgext/rebase.py
+++ b/hgext/rebase.py
@@ -865,7 +865,11 @@
         except error.InMemoryMergeConflictsError:
             ui.warn(_('hit merge conflicts; re-running rebase without in-memory'
                       ' merge\n'))
-            _dorebase(ui, repo, action='abort', opts={})
+            # TODO: Make in-memory merge not use the on-disk merge state, so
+            # we don't have to clean it here
+            mergemod.mergestate.clean(repo)
+            clearstatus(repo)
+            clearcollapsemsg(repo)
             return _dorebase(ui, repo, action, opts, inmemory=False)
     else:
         return _dorebase(ui, repo, action, opts)
diff --git a/tests/test-rebase-inmemory.t b/tests/test-rebase-inmemory.t
--- a/tests/test-rebase-inmemory.t
+++ b/tests/test-rebase-inmemory.t
@@ -422,7 +422,6 @@
   transaction abort!
   rollback completed
   hit merge conflicts; re-running rebase without in-memory merge
-  rebase aborted
   rebasing 2:177f92b77385 "c"
   rebasing 3:055a42cdd887 "d"
   rebasing 4:e860deea161a "e"
@@ -447,17 +446,10 @@
   transaction abort!
   rollback completed
   hit merge conflicts; re-running rebase without in-memory merge
-  rebase aborted
-  rebasing 2:177f92b77385 "c"
-  rebasing 3:055a42cdd887 "d"
-  rebasing 4:e860deea161a "e"
-  merging e
-  warning: conflicts while merging e! (edit, then use 'hg resolve --mark')
-  unresolved conflicts (see hg resolve, then hg rebase --continue)
-  [1]
-BROKEN: working copy change to "a" was lost
+  abort: uncommitted changes
+  [255]
   $ cat a
-  a
+  dirty
 
 Retrying without in-memory merge won't lose merge state
   $ cd ..