diff --git a/runtime/bundles/org.eclipse.core.jobs/META-INF/MANIFEST.MF b/runtime/bundles/org.eclipse.core.jobs/META-INF/MANIFEST.MF
index 1991fbccb97..be708b1eead 100644
--- a/runtime/bundles/org.eclipse.core.jobs/META-INF/MANIFEST.MF
+++ b/runtime/bundles/org.eclipse.core.jobs/META-INF/MANIFEST.MF
@@ -2,7 +2,7 @@ Manifest-Version: 1.0
 Bundle-ManifestVersion: 2
 Bundle-Name: %pluginName
 Bundle-SymbolicName: org.eclipse.core.jobs; singleton:=true
-Bundle-Version: 3.15.700.qualifier
+Bundle-Version: 3.15.800.qualifier
 Bundle-Vendor: %providerName
 Bundle-Localization: plugin
 Export-Package: org.eclipse.core.internal.jobs;x-internal:=true,
diff --git a/runtime/bundles/org.eclipse.core.jobs/src/org/eclipse/core/internal/jobs/JobManager.java b/runtime/bundles/org.eclipse.core.jobs/src/org/eclipse/core/internal/jobs/JobManager.java
index ef4005f7069..88e2a2d5ac5 100644
--- a/runtime/bundles/org.eclipse.core.jobs/src/org/eclipse/core/internal/jobs/JobManager.java
+++ b/runtime/bundles/org.eclipse.core.jobs/src/org/eclipse/core/internal/jobs/JobManager.java
@@ -1486,9 +1486,6 @@ protected boolean scheduleInternal(InternalJob job, long delay, boolean reschedu
 		}
 		Assert.isNotNull(job, "Job is null"); //$NON-NLS-1$
 		Assert.isLegal(delay >= 0, "Scheduling delay is negative"); //$NON-NLS-1$
-		if (!reschedule) {
-			job.setAboutToRunCanceled(false);
-		}
 		// if the job is already running, set it to be rescheduled when done
 		if (job.getState() == Job.RUNNING) {
 			job.setStartTime(delay); // XXX delay used as time
@@ -1498,6 +1495,10 @@ protected boolean scheduleInternal(InternalJob job, long delay, boolean reschedu
 		if (job.internalGetState() != Job.NONE) {
 			return false;
 		}
+		// Clear the about to run canceled flag when actually scheduling.
+		// A new explicit schedule() call should override any previous cancel() call.
+		// See https://github.com/eclipse-platform/eclipse.platform/issues/160
+		job.setAboutToRunCanceled(false);
 		if (JobManager.DEBUG) {
 			JobManager.debug("Scheduling job: " + job); //$NON-NLS-1$
 		}
diff --git a/runtime/tests/org.eclipse.core.tests.runtime/src/org/eclipse/core/tests/runtime/jobs/Bug_550738.java b/runtime/tests/org.eclipse.core.tests.runtime/src/org/eclipse/core/tests/runtime/jobs/Bug_550738.java
index 230b8c060fc..1ebbc844b34 100644
--- a/runtime/tests/org.eclipse.core.tests.runtime/src/org/eclipse/core/tests/runtime/jobs/Bug_550738.java
+++ b/runtime/tests/org.eclipse.core.tests.runtime/src/org/eclipse/core/tests/runtime/jobs/Bug_550738.java
@@ -134,4 +134,41 @@ public void testReportDoneOncePerSchedule() throws InterruptedException {
 			waitForCompletion(job);
 		}
 	}
+
+	/**
+	 * Test for issue #160: Job.schedule() should work after cancel() when job is running.
+	 * This tests the specific scenario where:
+	 * 1. Job is running
+	 * 2. cancel() is called
+	 * 3. schedule() is called immediately (while still running)
+	 * 4. Job finishes and should reschedule
+	 */
+	@Test
+	public void testCancelThenScheduleWhileRunning() throws InterruptedException {
+		BusyLoopJob job = new BusyLoopJob();
+		try {
+			for (int i = 0; i < 100; i++) {
+				CountDownLatch startedLatch = new CountDownLatch(1);
+				job.started = startedLatch::countDown;
+				job.schedule();
+				assertTrue("Job should start after schedule. Iteration " + i,
+						startedLatch.await(5, TimeUnit.SECONDS));
+
+				// While job is running, cancel it and then immediately schedule it again
+				Thread.sleep(i);
+				job.cancel();
+				job.schedule();
+
+				// The job should reschedule and not remain in NONE state
+				// Wait a bit to ensure the rescheduling happens
+				Thread.sleep(50);
+				int state = job.getState();
+				assertTrue("Job should not be in NONE state after cancel+schedule. Iteration " + i + ", state: " + state,
+						state != org.eclipse.core.runtime.jobs.Job.NONE);
+			}
+		} finally {
+			job.cancelWithoutRelyingOnFramework = true;
+			waitForCompletion(job);
+		}
+	}
 }