diff --git a/bundles/org.eclipse.ui.workbench.texteditor/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogic.java b/bundles/org.eclipse.ui.workbench.texteditor/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogic.java
index 76616e5c21d..75290ec0f00 100644
--- a/bundles/org.eclipse.ui.workbench.texteditor/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogic.java
+++ b/bundles/org.eclipse.ui.workbench.texteditor/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogic.java
@@ -50,7 +50,7 @@ public class FindReplaceLogic implements IFindReplaceLogic {
 	private IFindReplaceStatus status;
 	private IFindReplaceTarget target;
 	private Point incrementalBaseLocation;
-
+	private Point restoreBaseLocation = new Point(0, 0);
 	private boolean isTargetSupportingRegEx;
 	private boolean isTargetEditable;
 	private final Set<SearchOptions> searchOptions = new HashSet<>();
@@ -60,6 +60,12 @@ public class FindReplaceLogic implements IFindReplaceLogic {
 
 	@Override
 	public void setFindString(String findString) {
+		if (this.findString.isEmpty() && !findString.isEmpty()) {
+			// User just started a new search after clearing previous search.
+			if (target != null) {
+				restoreBaseLocation = target.getSelection();
+			}
+		}
 		this.findString = Objects.requireNonNull(findString);
 		if (isAvailableAndActive(SearchOptions.INCREMENTAL)) {
 			performSearch(true);
@@ -324,6 +330,7 @@ public boolean performSearch() {
 	private boolean performSearch(boolean updateFromIncrementalBaseLocation) {
 		resetStatus();
 		if (findString.isEmpty()) {
+			restoreSelectionIfEmpty();
 			return false;
 		}
 
@@ -338,6 +345,18 @@ private boolean performSearch(boolean updateFromIncrementalBaseLocation) {
 		return somethingFound;
 	}
 
+	/**
+	 * Restores the original caret/selection position when the search field becomes
+	 * empty.
+	 */
+	private void restoreSelectionIfEmpty() {
+		if (restoreBaseLocation == null)
+			return;
+		incrementalBaseLocation = restoreBaseLocation;
+		if (target instanceof IFindReplaceTargetExtension extension)
+			extension.setSelection(restoreBaseLocation.x, restoreBaseLocation.y);
+	}
+
 	/**
 	 * Replaces all occurrences of the user's findString with the replace string.
 	 * Returns the number of replacements that occur.
diff --git a/tests/org.eclipse.ui.workbench.texteditor.tests/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogicTest.java b/tests/org.eclipse.ui.workbench.texteditor.tests/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogicTest.java
index 992b4aefb8a..eee904f0fd2 100644
--- a/tests/org.eclipse.ui.workbench.texteditor.tests/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogicTest.java
+++ b/tests/org.eclipse.ui.workbench.texteditor.tests/src/org/eclipse/ui/internal/findandreplace/FindReplaceLogicTest.java
@@ -829,10 +829,91 @@ public void testResetIncrementalBaseLocation() {
 
 		findReplaceLogic.setFindString("test");
 		assertThat(textViewer.getSelectedRange(), is(new Point(0, 4)));
+
+		// Move caret after first "test" i.e., caret after "test\n", so after 5 characters
 		textViewer.setSelectedRange(5, 0);
 		findReplaceLogic.resetIncrementalBaseLocation();
 		findReplaceLogic.performSearch();
 		assertThat(textViewer.getSelectedRange(), is(new Point(5, 4)));
+
+		// Move caret inside second "test" i.e., caret after "test\nte", so after 7 characters
+		textViewer.setSelectedRange(7, 0);
+		findReplaceLogic.resetIncrementalBaseLocation();
+		findReplaceLogic.performSearch();
+		assertThat(textViewer.getSelectedRange(), is(new Point(10, 4)));
+
+		// Move caret to position to third "test" i.e., caret after "test\ntest\n", so after 10 characters
+		textViewer.setSelectedRange(10, 0);
+		findReplaceLogic.resetIncrementalBaseLocation();
+		findReplaceLogic.performSearch();
+		assertThat(textViewer.getSelectedRange(), is(new Point(10, 4)));
+
+		findReplaceLogic.setFindString("");
+		findReplaceLogic.performSearch();
+		assertThat(textViewer.getSelectedRange(), is(new Point(0, 0)));
+	}
+
+	@Test
+	public void testSelectionRestoredAfterClearingSearch() {
+		String setupString= "alpha beta gamma";
+		TextViewer textViewer= setupTextViewer(setupString);
+		textViewer.setSelectedRange(6, 0); // caret after 'alpha '
+		IFindReplaceLogic logic= setupFindReplaceLogicObject(textViewer);
+		logic.activate(SearchOptions.FORWARD);
+		logic.activate(SearchOptions.INCREMENTAL);
+
+		logic.setFindString("gamma");
+		assertThat(textViewer.getSelectedRange(), is(new Point(11, 5))); // "gamma" found
+
+		logic.setFindString("");
+		assertThat(textViewer.getSelectedRange(), is(new Point(6, 0)));
+	}
+
+
+	@Test
+	public void testCaretRestoredWhenSearchCleared() {
+		String setupString= "alpha beta gamma";
+		TextViewer textViewer= setupTextViewer(setupString);
+		textViewer.setSelectedRange(0, 0);
+		IFindReplaceLogic logic= setupFindReplaceLogicObject(textViewer);
+		logic.activate(SearchOptions.FORWARD);
+		logic.activate(SearchOptions.INCREMENTAL);
+
+		logic.setFindString("beta");
+		assertThat(textViewer.getSelectedRange(), is(new Point(6, 4))); // found "beta"
+
+		// Clear the search field - should restore caret
+		logic.setFindString("");
+		logic.performSearch();
+		// Expect caret restored to starting location (0,0)
+		assertThat(textViewer.getSelectedRange(), is(new Point(0, 0)));
+	}
+
+
+	@Test
+	public void testCaretRestoredBetweenSearchSessions() {
+		String setupString= "alpha beta gamma";
+		TextViewer textViewer= setupTextViewer(setupString);
+		IFindReplaceLogic logic= setupFindReplaceLogicObject(textViewer);
+		logic.activate(SearchOptions.FORWARD);
+		logic.activate(SearchOptions.INCREMENTAL);
+
+		textViewer.setSelectedRange(0, 0); // caret at start
+		logic.setFindString("alpha");
+		assertThat(textViewer.getSelectedRange(), is(new Point(0, 5))); // "alpha" found
+
+		// Clear the search (simulate reopen of overlay)
+		logic.setFindString("");
+		logic.performSearch();
+		assertThat(textViewer.getSelectedRange(), is(new Point(0, 0))); // caret restored
+
+		textViewer.setSelectedRange(6, 0); // caret before "beta"
+		logic.setFindString("beta");
+		assertThat(textViewer.getSelectedRange(), is(new Point(6, 4))); // "beta" found
+
+		logic.setFindString("");
+		logic.performSearch();
+		assertThat(textViewer.getSelectedRange(), is(new Point(6, 0))); // caret restored to new base
 	}
 
 	@Test
@@ -867,7 +948,7 @@ public void testSetFindString_incrementalActive() {
 		assertEquals(new Point(0, 2), findReplaceLogic.getTarget().getSelection());
 
 		findReplaceLogic.setFindString(""); // this clears the incremental search, but the "old search" still remains active
-		assertEquals(new Point(0, 2), findReplaceLogic.getTarget().getSelection());
+		assertEquals(new Point(0, 0), findReplaceLogic.getTarget().getSelection()); // after #3379 pr
 	}
 
 	@Test