diff --git a/e2e/full/invite-signup.spec.ts b/e2e/full/invite-signup.spec.ts
index 17bc3a8f..925fdc92 100644
--- a/e2e/full/invite-signup.spec.ts
+++ b/e2e/full/invite-signup.spec.ts
@@ -113,4 +113,75 @@ test.describe("User Invitation & Signup Flow", () => {
     await expect(page.getByText("Full Flow")).toBeVisible();
     // Email is no longer displayed in user menu (removed in PR #871)
   });
+
+  test("should transfer machine ownership when invited user signs up", async ({
+    page,
+  }) => {
+    test.slow(); // Triple the timeout - complex multi-step flow
+    const testId = Math.random().toString(36).substring(7);
+    const userEmail = `owner-invite-${testId}@example.com`;
+    testEmails.add(userEmail);
+
+    // 1. Invite user via admin panel
+    await page.goto("/admin/users");
+    await page.getByRole("button", { name: /Invite User/i }).click();
+    await page.getByLabel(/First Name/i).fill("Owner");
+    await page.getByLabel(/Last Name/i).fill("Transfer");
+    await page.getByRole("textbox", { name: "Email" }).fill(userEmail);
+
+    const inviteSwitch = page.getByRole("switch", {
+      name: /Send invitation email/i,
+    });
+    if ((await inviteSwitch.getAttribute("aria-checked")) === "false") {
+      await inviteSwitch.click();
+    }
+
+    await page
+      .getByRole("button", { name: /Invite User/i, includeHidden: false })
+      .click();
+    await expect(page.getByRole("dialog")).not.toBeVisible();
+
+    // 2. Assign the invited user as owner of a machine (use Humpty Dumpty - HD)
+    await page.goto("/m/HD");
+    await expect(
+      page.getByRole("heading", { name: /Humpty Dumpty/i })
+    ).toBeVisible();
+
+    // Click the owner dropdown and select the invited user (shown with "(Invited)" suffix)
+    const ownerSelect = page.getByTestId("owner-select");
+    await ownerSelect.click();
+    await page
+      .getByRole("option", { name: /Owner Transfer.*\(Invited\)/i })
+      .click();
+
+    // Save the machine
+    await page.getByRole("button", { name: /Update Machine/i }).click();
+    await expect(page.getByText(/Machine updated/i)).toBeVisible();
+
+    // 3. Logout and complete signup
+    await logout(page);
+
+    await new Promise((resolve) => setTimeout(resolve, 2000));
+    const signupLink = await getSignupLink(userEmail);
+    await page.goto(signupLink);
+
+    await page.getByLabel("Password", { exact: true }).fill("TestPassword123!");
+    await page.getByLabel(/Confirm Password/i).fill("TestPassword123!");
+    await page.getByRole("button", { name: /Create Account/i }).click();
+
+    await expect(page).toHaveURL("/dashboard", { timeout: 15000 });
+
+    // 4. Verify machine ownership transferred
+    await page.goto("/m/HD");
+    await expect(
+      page.getByRole("heading", { name: /Humpty Dumpty/i })
+    ).toBeVisible();
+
+    // The owner display should show the real user name without "(Invited)" suffix
+    // Note: User is a member now, so they see the read-only owner display
+    const ownerDisplay = page.getByTestId("owner-display");
+    await expect(ownerDisplay).toContainText("Owner Transfer");
+    // After signup, the user is no longer "invited" - they're a real user
+    await expect(ownerDisplay).not.toContainText("(Invited)");
+  });
 });
diff --git a/src/app/api/test-data/cleanup/route.ts b/src/app/api/test-data/cleanup/route.ts
index a97e7b75..ee76addc 100644
--- a/src/app/api/test-data/cleanup/route.ts
+++ b/src/app/api/test-data/cleanup/route.ts
@@ -133,6 +133,35 @@ export async function POST(request: Request): Promise<Response> {
 
     const removedUsers: string[] = [];
     if (userEmails.length) {
+      // First, get user IDs from both invited_users and auth.users
+      const invitedUserIds = await db
+        .select({ id: invitedUsers.id })
+        .from(invitedUsers)
+        .where(inArray(invitedUsers.email, userEmails));
+
+      const authUserIds = await db
+        .select({ id: authUsers.id })
+        .from(authUsers)
+        .where(inArray(authUsers.email, userEmails));
+
+      const allUserIds = [
+        ...invitedUserIds.map((r) => r.id),
+        ...authUserIds.map((r) => r.id),
+      ];
+
+      // Clear machine ownership references BEFORE deleting users (FK constraint)
+      if (allUserIds.length) {
+        await db
+          .update(machines)
+          .set({ ownerId: null, invitedOwnerId: null })
+          .where(
+            or(
+              inArray(machines.ownerId, allUserIds),
+              inArray(machines.invitedOwnerId, allUserIds)
+            )
+          );
+      }
+
       const deletedInvited = await db
         .delete(invitedUsers)
         .where(inArray(invitedUsers.email, userEmails))
diff --git a/src/components/machines/OwnerSelect.tsx b/src/components/machines/OwnerSelect.tsx
index d920007b..4a15259a 100644
--- a/src/components/machines/OwnerSelect.tsx
+++ b/src/components/machines/OwnerSelect.tsx
@@ -77,6 +77,7 @@ export function OwnerSelect({
           id="ownerId"
           className="border-outline bg-surface text-on-surface"
           aria-describedby="owner-help"
+          data-testid="owner-select"
         >
           <SelectValue placeholder="Select an owner" />
         </SelectTrigger>