diff --git a/.idea/runConfigurations/runIde.xml b/.idea/runConfigurations/runIde.xml
index c15a19f7..e6cd6ed8 100644
--- a/.idea/runConfigurations/runIde.xml
+++ b/.idea/runConfigurations/runIde.xml
@@ -1,6 +1,6 @@
 <component name="ProjectRunConfigurationManager">
   <configuration default="false" name="runIde" type="GradleRunConfiguration" factoryName="Gradle">
-    <log_file alias="idea.log" path="$PROJECT_DIR$/build/idea-sandbox/system/log/idea.log" />
+    <log_file alias="idea.log" path="$PROJECT_DIR$/build/idea-sandbox/IC-2025.1/log/idea.log" />
     <ExternalSystemSettings>
       <option name="executionName" />
       <option name="externalProjectPath" value="$PROJECT_DIR$" />
diff --git a/src/main/kotlin/com/intellij/plugin/powershell/ide/debugger/PowerShellDebugSession.kt b/src/main/kotlin/com/intellij/plugin/powershell/ide/debugger/PowerShellDebugSession.kt
index 3a1d50a6..110ea751 100644
--- a/src/main/kotlin/com/intellij/plugin/powershell/ide/debugger/PowerShellDebugSession.kt
+++ b/src/main/kotlin/com/intellij/plugin/powershell/ide/debugger/PowerShellDebugSession.kt
@@ -20,6 +20,7 @@ import kotlinx.coroutines.sync.Mutex
 import kotlinx.coroutines.sync.withLock
 import org.eclipse.lsp4j.debug.*
 import org.eclipse.lsp4j.debug.services.IDebugProtocolServer
+import org.jetbrains.concurrency.await
 import java.nio.file.Path
 
 class PowerShellDebugSession(
@@ -41,6 +42,11 @@ class PowerShellDebugSession(
     client.sendKeyPress.adviseSuspend(Lifetime.Eternal, Dispatchers.EDT) {
       sendKeyPress.fire(Unit)
     }
+    client.terminated.adviseSuspend(Lifetime.Eternal, Dispatchers.IO) {
+      logger.info("Debug session has been terminated. Terminating debug server.")
+      session.debugProcess.stopAsync().await()
+      logger.info("Debug process had been terminated.")
+    }
   }
 
   fun setBreakpoint(filePath: Path, breakpoint: XLineBreakpoint<XBreakpointProperties<*>>) {
diff --git a/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramDebugRunner.kt b/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramDebugRunner.kt
index 041e5a3f..2074ae9d 100644
--- a/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramDebugRunner.kt
+++ b/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramDebugRunner.kt
@@ -41,6 +41,7 @@ import org.eclipse.lsp4j.debug.services.IDebugProtocolServer
 import org.eclipse.lsp4j.jsonrpc.Launcher
 import org.jetbrains.concurrency.Promise
 import java.nio.file.Path
+import java.util.concurrent.atomic.AtomicBoolean
 import kotlin.io.path.Path
 
 class PowerShellProgramDebugRunner : AsyncProgramRunner<RunnerSettings>() {
@@ -78,8 +79,26 @@ suspend fun bootstrapDebugSession(
   val inOutPair = processRunner.establishDebuggerConnection()
     ?: throw CantRunException(MessagesBundle.message("powershell.debugger.cantRunException"))
   val process = processRunner.getProcess() ?: error("Cannot get the debugger process.")
-  val handler = KillableProcessHandler(process, "PowerShellEditorService").apply {
-    setShouldKillProcessSoftly(false)
+  val handler = object : KillableProcessHandler(process, "PowerShellEditorService") {
+    // Here, we have to emulate graceful termination (exit code zero), since PowerShellEditorServices doesn't fully
+    // support it (in debug mode at least).
+    //
+    // The expected flow is:
+    // 1. We are asked to terminate gracefully. We track the attempt and return false (as if we refuse).
+    // 2. We are terminated in the hard mode, but we emulate the normal termination by returning a zero exit code.
+    //
+    // In case we weren't asked for graceful termination, then it means something else has killed the process, so we
+    // don't need to emulate graceful termination.
+
+    val gracefulTerminationRequested = AtomicBoolean()
+    override fun destroyProcessGracefully(): Boolean {
+      gracefulTerminationRequested.set(true)
+      return false // the graceful termination attempt is not successful, since it isn't supported
+    }
+
+    override fun notifyProcessTerminated(exitCode: Int) {
+      super.notifyProcessTerminated(if (gracefulTerminationRequested.get()) 0 else exitCode)
+    }
   }
   val console = TerminalExecutionConsole(project, handler)
   handler.startNotify()
diff --git a/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramRunner.kt b/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramRunner.kt
index 0b9aa1cb..b347d73b 100644
--- a/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramRunner.kt
+++ b/src/main/kotlin/com/intellij/plugin/powershell/ide/run/PowerShellProgramRunner.kt
@@ -19,7 +19,7 @@ import kotlinx.coroutines.withContext
 import org.jetbrains.concurrency.Promise
 
 /**
- * The main purpose of this runner is to call [RunProfileState.execute] or a background thread instead of a foreground
+ * The main purpose of this runner is to call [RunProfileState.execute] on a background thread instead of a foreground
  * one, as our [RunProfileState] implementation requires FS access that's only possible from the background.
  */
 class PowerShellProgramRunner : AsyncProgramRunner<RunnerSettings>() {
diff --git a/src/main/kotlin/com/intellij/plugin/powershell/lang/debugger/PSDebugClient.kt b/src/main/kotlin/com/intellij/plugin/powershell/lang/debugger/PSDebugClient.kt
index d39afe85..318667cb 100644
--- a/src/main/kotlin/com/intellij/plugin/powershell/lang/debugger/PSDebugClient.kt
+++ b/src/main/kotlin/com/intellij/plugin/powershell/lang/debugger/PSDebugClient.kt
@@ -1,17 +1,18 @@
 package com.intellij.plugin.powershell.lang.debugger
 
+import com.intellij.openapi.diagnostic.logger
+import com.intellij.openapi.diagnostic.trace
 import com.jetbrains.rd.util.reactive.Signal
 import org.eclipse.lsp4j.debug.*
 import org.eclipse.lsp4j.debug.services.IDebugProtocolClient
 import org.eclipse.lsp4j.jsonrpc.services.JsonNotification
 import java.util.concurrent.CompletableFuture
-import com.intellij.openapi.diagnostic.logger
-import com.intellij.openapi.diagnostic.trace
 
 class PSDebugClient: IDebugProtocolClient {
 
   val debugStopped = Signal<StoppedEventArguments>()
   val sendKeyPress = Signal<Unit>()
+  val terminated = Signal<Unit>()
 
   override fun breakpoint(args: BreakpointEventArguments) {
     logger.trace { "BreakpointEventArguments: $args" }
@@ -34,9 +35,10 @@ class PSDebugClient: IDebugProtocolClient {
     super.exited(args)
   }
 
-  override fun terminated(args: TerminatedEventArguments) {
+  override fun terminated(args: TerminatedEventArguments?) {
     logger.trace { "TerminatedEventArguments: $args" }
     super.terminated(args)
+    terminated.fire(Unit)
   }
 
   override fun thread(args: ThreadEventArguments) {